The inextricable link between external brand and internal culture.

In professional services and knowledge-intensive B2B, a strong external brand and a strong internal culture are two sides of the same coin – they are so fundamentally linked that one cannot exist without the other.

Leaders of these organisations are best placed, in terms of the levers they can pull, to connect the two in developing a compelling and authentic brand strategy.

And so, even though CMOs generally lead on developing brand strategy, the wisest involve their CPO peers from the very beginning and see them as instrumental to the process.

The pandemic put extreme pressure on organisational culture, further emphasising its importance as a critical strategic asset

CORPORATE ZEITGEIST

The interdependence of culture and brand has rapidly climbed the corporate branding agenda for a decade or more.

The meteoric rise of tech brands like Apple, Google and Facebook and the more sedate but relentless rise of corporate brands like Unilever, Zara and Nike has demonstrated, to even the most cynical investor, that businesses with strong, authentic internal cultures produce external brands with sustainable long-term advantage.

The pandemic put extreme pressure on organisational culture, emphasising its importance as a critical strategic asset. It’s fair to say that firms that started the dislocation with stronger cultures adapted with greater agility and emerged much better than those that didn’t.

Research from EY and the Harvard Business Review found that organisations with strong cultures and purpose performed far better across a range of performance measures than those without – precisely five times better, according to Bain & Co.

In professional services and B2B, the interdependence between internal culture and external brand is arguably even more intrinsic and vital because the client experience is delivered directly and exclusively by people who work for the firm – with no 3rd party retailers, showroom staff or franchised store owners to get in the way.

Anyone who’s worked with or for Goldman Sachs will know that the firm has a powerful and distinctive culture

Leaders have always taken culture seriously – at least those with their eyes open. What’s new is that culture is being taken today to mean more than how the people in the firm ‘rub along together’ – for better or for worse – but rather, how they collaborate in the service of the firm’s clients and customers and how they project the image of the firm to potential clients and recruits.

Most firms have an employer brand, but if that isn’t joined at the hip with the external brand strategy, it’s unlikely to galvanise the attitudes and behaviours among their people that the leaders want to see. A good brand strategy should be ambitious, stretching, and demanding – but without this tension, employer brands can become too soft and cuddly.

Google is renowned for its strong culture, but it’s not soft and cuddly.

Focused on continuous innovation, Google’s culture makes it a high-pressure environment to work in. But that’s its purpose: to ensure the company retains its leadership position on innovation as disruptors everywhere nip at its heels.

Netflix is also an excellent example of brand and culture being two sides of the same coin.

Netflix has survived and thrived through its organisational agility – shifting from renting DVDs by post to online streaming and, more recently, producing Oscar-winning content – an agile brand powered by an agile culture.

FIRST AMONG EQUALS

Two iconic professional service firms are shining examples of strong external brands fundamentally intertwined with strong internal cultures: Goldman Sachs and McKinsey & Co.

Anyone who’s worked with or for Goldman Sachs will know that the firm has a powerful and distinctive culture. There are enough anecdotes about it to fill a book (and they have).

Hank Paulson (Former GS Chair and Secretary of the US Treasury) captured it well in an Economist interview when he said, “It’s a hard place to be hired, a hard place to be promoted and a hard place to stay”.

In a word, the internal culture and the external brand of Goldman Sachs are connected by being ‘uncompromising’ in pursuing excellence. Not a place for everyone – but that’s not the ambition; the goal is to do whatever it takes to be the best and only the best.

Observers of McKinsey’s culture have recently suggested that it may be so strong that its impact on its external brand could be damaging

McKinsey has an equally powerful culture, but one that, although also dedicated to excellence, has a slightly less aggressive and more cerebral approach to their goal – one of ‘rigour.’

Legend has it that in the guise that led to the current McKinsey, the partners sat down sometime around 1932 and produced a paper – some might have called it a brochure! ­– that laid out the principles of the firm that they intended to build. One that would bring a culture of rigour (borrowed from the legal training some of the partners had experienced at law firm Jones Day) to the then more anecdotal business of ‘management efficiency’ as it was then.

1932 is a very long time ago, but those who’ve worked at or with McKinsey in the intervening years will testify to the rigorous attitude towards everything from hiring, promoting and firing to the focus on evidence and facts to support their recommendations on strategy to clients.

It’s no accident that the McKinsey internal research lab is called the McKinsey Global Institute. Everything about it, including the name, screams academic rigour.

Observers of McKinsey’s culture have recently suggested that it may be so strong that its impact on its external brand could be damaging. This doesn’t change the idea that culture and brand are two sides of the same coin; it’s further evidence that they are. Goldman Sachs faced similar questions following the 2008 financial crisis.

Both examples demonstrate that the internal culture (aka the employer brand) need not be limited to warm words and gentle encouragement. These firms have highly demanding internal cultures that the leaders would say are important in shaping the behaviours and attitudes among their people to deliver a superior service for their clients.

STAND FOR TO STAND OUT

So, what does all this mean for today’s leaders looking for sustainable competitive advantage?

Simply put, a solid and authentic external brand is built on a strong internal culture – one which includes the essential but more hygiene-level components of being ‘nice to each other’ and ‘striving to serve clients’ etc., but also elevates things to a level of focus and distinctiveness that not all firms could, or even would, sign up to.

The starting point is to look at what you’ve got already ­– any firm that is even alive today, let alone thriving, is without a doubt doing something right already

At the core of what a firm stands for, that level of differentiation begins to become a source of external brand differentiation in the marketplace if carefully nurtured and appropriately channelled into the day-to-day work done at the coal-face for the firm’s clients.

Goldman and McKinsey may be genuinely iconic brands in their fields and tough (or perhaps undesirable in some ways) to replicate. But, they can be studied, and best practices disseminated that can be applied to firms today facing the challenge of differentiating themselves in the global professional services market.

The starting point is to look at what you’ve got already ­– any firm that is even alive today, let alone thriving, is without a doubt doing something right already.

The challenge is to identify what’s ‘useful’ and what’s merely ‘there’ and ensure that the external brand is driven by the elements of the firm’s culture that have teeth in the marketplace and can be globally applied — no mean feat.