Why The Company's Brand Is More Important Than The Entrepreneur's

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Whenever you are creating a new company you are also starting the journey to create a brand that people can love and trust. If the entrepreneur carries his own brand equity from past, for example, an ex-IIT, IIM-pass out, ex-McKinsey or a successful serial entrepreneur, he will straightaway use some of this equity for his startup. It will open doors for him and lend him an air of credibility, which increases the chances of the entrepreneur getting early in-roads with potential investors or customers or even other co-founders and employees.

Whenever you are creating a new company you are also starting the journey to create a brand that people can love and trust. If the entrepreneur carries his own brand equity from past, for example, an ex-IIT, IIM-pass out, ex-McKinsey or a successful serial entrepreneur, he will straightaway use some of this equity for his startup. It will open doors for him and lend him an air of credibility, which increases the chances of the entrepreneur getting early in-roads with potential investors or customers or even other co-founders and employees.

The different types:

As an entrepreneur, you are using your brand equity to create your company's brand. This cycle can go on till the time the business becomes a larger brand compared to the entrepreneur. However, you will notice that many entrepreneurs do not like to be the face of the companies they run. They like to take the back seat and do not want to be seen as the person influencing the success of the company using their brand value. They would rather use their skill-sets to grow and scale the company.

We have examples where the brand value of the company becomes bigger than the entrepreneur. On the other hand, we have examples where the brand value of the company and the brand value of the entrepreneur are quite distinct and unrelated from each other. There are, then, companies where the brand value of the entrepreneur is entwined with its brand image and both sink or swim together.

Beyond that, there are entrepreneurs that run much faster than the company they run and the entrepreneur is able to use his own equity to create new ventures out of it. Peter Thiel, who co-founded PayPal and then went on to start Palantir, is a great example of this. The trick is the entrepreneur works as a brand ambassador in this case, where the company piggybacks on the entrepreneur's personal equity.

The repercussions:

The flip side is the moment a significant equity is created for the entrepreneur and the company is linked to this brand equity, if anything goes wrong with the entrepreneur's image, the company's brand takes a tumble. For example, in the Satyam case, while the company was also a brand, Ramalinga Raju's personal brand equity was big enough to drag the company down. It took years of repair and a merger with Tech Mahindra to recover some of the equity erosion.

If you look at mature MNCs across the world, they try and enforce such corporate governance controls that they do not allow the Founder, CEO or the key members of the management to become bigger brands compared to the corporation. The risk is so much more because individuals at the end of the day are prone to committing mistakes. For example, if Larry Page will commit a mistake today, Google will be largely unaffected by it. At home, you have companies like Infosys that have created structures so that the company is insulated against strong individual brands that may be present in its management team. A relatively recent instance is the sacking of Rahul Yadav, CEO and co-founder of Housing.com by its investors.

Even internally it is sometimes a risk to have a larger than life brand image of an entrepreneur because when things go downhill, employees lose focus and trust in management. Like your customers and external stakeholders stop trusting you, your employees too lose faith.

The challenge is when an entrepreneur starts to believe that he is the best person to take all major decisions about the enterprise. In such a situation the fate of the entrepreneur and the company gets interlinked. Any mistake made by an entrepreneur will adversely affect the entrepreneur and his company. For an entrepreneur, it is best to systematically decouple themselves from the company they have founded, something which entrepreneurs find very difficult to do. The name and brand of an entrepreneur is useful initially but beyond a point it can get threatening. It is important to realize that enterprise value affects several stakeholders - employees, customers and investors.

Many entrepreneurs hold the ambition to become big and famous brands themselves. This calls for a company to draw up a well-defined de-coupling strategy for the entrepreneur and a protocol for his interactions with the outside world and the media in particular. This is where the role of communication governance needs to be taken seriously as a company scales up. As per the conventional definition of marketing you should keep hitting the customer with a message. However, do it too often and you risk fatigue kicking in. When it comes to branding, an entrepreneur has to really pace it out.

It is a double-edged sword for the company where on one hand you want a powerful leader, but on the other, you do not want the fate of the two to be interlinked. Finding the middle-path between the two is the key.

Published in Economic Times

 

Founding Partner & Director Creative Development
World Communication Forum Association,
Jyotika Nair (Guest) The points you have highlighted are in fact things that all the young entrepreneurs must lend an ear to. 
24 Jul 2015 Reply
Debpriya Pal (Guest) Balance is crucial in every field and everything that a person/people do. 
24 Jul 2015 Reply

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