The fact is, Jobs is one of many players in the highly crowded market for consumer gadgets, but he holds a virtual monopoly in the market for self-expression. And that is the true source of Apple’s sustained competitive advantage. By maniacally focusing on its brand ideal — to empower people to express themselves — Apple has created a market that it singularly owns. We predict that the best businesses of the future will be those that, like Apple, serve a human ideal.

The Traditional View Of Market Strategy

If, when Jobs returned to Apple in 1996, he had hired a traditional strategy consulting house to advise him on “where to play and how to win,” the consultants would have looked at the existing market for white spaces and trends. They would likely have forecast the following for the first decade in the new millennium: a rising population, more disposable income for many more consumers, Western values going global, the rise of a new middle class, technology everywhere, and wireless expanding to become the norm. Their white space analysis might have led to the recommendation: “Go after consumer gadgets.”

Ideal-Driven Business

This advice would not have got Apple to where it is now. In 1996 (and even more so today), the market for consumer gadgets was replete with competitors. Had Apple taken such a traditional approach to market entry, its efforts would likely have been overshadowed by strong, established players such as Microsoft and Sony. By focusing on a shared human motivation – the desire to express one’s individuality – Jobs transcended the saturated market of consumer gadgets to create a whole new market — a market focused on the ideal of fulfilling the primordial human quest for self-expression.

The means through which Jobs manifested this ideal may have been what others consider “gadgets,” but what Jobs brought to the world was a new and different way of understanding ourselves, our lives, and our interactions with each other through technology. For example, Apple’s innovation in iTunes allowed people to create their unique music imprints. Much like our DNA, no two people have the same iTunes libraries or playlists. Similarly, Apple stores go beyond retail outlets to become experiential environments for customers to unleash their creativity and self expression.

By placing the “why?” at the center of all that Apple did, he avoided being defined by or confined to a particular product category. This is why it is so easy for us to imagine the way an Apple automobile or dishwasher would look and behave. The astonishing financial growth of Apple reported by The Wall Street Journal was a byproduct, not a driver, of Jobs’ decision to serve the ideal of self-expression.

The Business Case For Ideals

As I have shared before on Branding Strategy Insider, the businesses that have generated the most financial value are those that operate from a “brand ideal” — a higher purpose that appeals to a universal human value and governs everything an organization does. Jobs managed to look beyond the clutter of features and functions to recognize that, in a world of overwhelming material abundance, people still need a platform for creative expression. So what Jobs gambled on was not the continuing popularity of computers or MP3 players, but rather our desire to express ourselves.

By selling self-expression first and products second, Apple succeeded in creating a passionate, devoted community of followers. By operating on the higher level of human actualization, ideal-based businesses succeed in connecting consumers to themselves, each other, and the world. Apple literally connects people through its phones and laptops, but its success as a brand and a business is ultimately rooted in the ability of its ideal to inspire a higher-order connectedness to a common purpose. As social researcher Dr. Brené Brown has shown — at the deepest levels of human neurobiology — connection drives happiness. And as Apple shows, it can also drive profits.

Though Apple’s ideal-based vision and approach to business leadership are non-traditional, they can still be evaluated using traditional business tools, such as Porter’s famous Five Forces, which delineate the factors that are thought to influence any industry: Rivalry, Threat of Substitutes, Buyer Power, Supplier Power, and Barriers to Entry. Companies like Apple, which operate in an intangible, higher-order marketplace, are better protected than those with businesses grounded in a specific product, service, or experience. While gadgets can have infinite iterations, ideals are singular and pure, which makes rivalry in the intangible marketplace nearly impossible.

The degree of leadership required to run an ideal-based business affords another level of protection. Ideals galvanize entire organizations and inspire individuals to higher levels of commitment and achievement, thus creating another powerful barrier to entry.

Beyond Apple: Ideals In B2B

Apple may currently be the most striking example of ideals-driven brand leadership, but it is by no means the only one. IBM shows us how this can be done in the B2B arena. A gigantic corporation that until a decade ago was known for providing a very specific set of products and services has transformed itself into a company that has transcended any functional category in the minds of its customers. To do this, IBM utilized the power of an ideal. IBM’s ideal — to create a smarter planet — is a concept that is becoming increasingly critical to human sustainability.

“Smarter” underlines a definitional element of our species: intelligence. IBM’s ideal points us to the imperative to evolve our very definition of intelligence. For millennia, being individually intelligent has worked for mankind. As codified in 1776 in Adam Smith’s Wealth of Nations (the cornerstone of modern economics), the premise is that people acting on their self-interest will maximize efficiency, thus maximizing output, production, and consumption for everyone.

In classical economics, individuals maximize consumption (utility) and businesses maximize profits. This may work in a world where resources seem unlimited, and by and large, resources have seemed unlimited up to now. However, those same forces that would have led our imaginary consultants to a “consumer gadget” recommendation for Apple — a rising population, more disposable income, globalization — are now the forces that render the resources on our planet limited. To address this new reality, we need a new kind of intelligence. We need a shift from intelligent individuals to an intelligent planet. For businesses that maximize profits, this shift is not possible; for businesses that help build a smarter planet, it is.

Why Ideals Drive Value

Does it seem ironic that the businesses that focus on ideals rather than profits actually make more money? The explanation lies in analyzing a quote by Jim Stengel: “Brands are people.” And here we define “people” as employees and customers.

Our world has transcended the structures of the past. Generations that “changed” every 25 years are now changing every 10, and the rate is only accelerating. Previously, leadership was about anticipating and planning for the needs and events of the future. That is impossible now. Reality is changing so fast that leadership is no longer about planning for what will happen next (because we can’t), but rather about building enough flexibility into our organizations and our people so that they can handle that which will happen next.

We are realizing that what is most important is to facilitate our organizations and our people to “sense and seize emerging opportunities as they arise,” as Otto Scharmer writes in Theory U. To achieve this, our people must operate from a different place than before, from a place of higher purpose, from an ideal they can connect to. What applies to good parenting at the individual level — that one cannot foresee or guarantee a child’s future, that one can only teach children principles to use to respond to life’s events — now applies at the collective level to organizational leadership. To truly tap into our employees’ potential, we need to provide them with a compass and then let them free to create, co-create, and innovate.

As complexity increases, the shift from the individual to the collective emerges not only for employees but also for consumers. The result is an evolution of consciousness from egocentric to ethnocentric to world-centric. Social networking, the darling of current marketing discussions, is but one manifestation of this shift.

Brands that operate from a higher purpose are therefore successful due to at least two reasons. First, they better equip their employees to tap into their deepest reservoirs of intuition and imagination to address the changing reality as it unfolds. Second, they create deep relationships with customers who are yearning for connection, for community, and for participation in something bigger than themselves.

The challenge for brands going forward will be to authentically create and sustain their own intangible marketplaces, using their ideals to connect, unite, and inspire.

The Blake Project Can Help: Please email us for more about our brand community and brand culture workshops and programs

Branding Strategy Insider is a service of The Blake Project: A strategic brand consultancy specializing in Brand Research, Brand Strategy, Brand Growth and Brand Education

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Business leadership and brand leadership have become inextricably linked.

According to Millward Brown Optimor’s analysis, in 1980 virtually the entire value of an average S&P 500 company was comprised of tangible assets (chairs, factories, inventory, etetera). In 2010, tangible assets account for only 30 to 40 percent of a company’s value. The rest is intangible value, and about half of that intangible portion, close to 30 percent of total business value, is attributed to brands. Therefore it is not a stretch to say that for many companies, brand is their single biggest asset. What has led to this change in what matters to business success?

Why is brand driving business leadership – the Post-Information Era

The technological advances of the 20^th century generated more prosperity than ever existed before. Consumers in developed markets came to have almost limitless choices in almost every category. What is more, as companies innovated into new spaces, there are now many new categories to choose from.

Abundance and prosperity have allowed companies to redefine what consumers “need.” Yet wealth hasn’t necessarily made us much happier. As Daniel Pink writes in A Whole New Mind, “The paradox of prosperity is that while living standards have risen steadily decade after decade, personal, family and life satisfaction haven’t budged. That’s why more people – liberated by prosperity but not fulfilled by it – are resolving the paradox by searching for meaning.” This quest for meaning has huge implications for brands. As people find their basic consumption needs satisfied, brands are uniquely positioned to help add a higher order of meaning and fulfillment to purchase decisions, and consumers’ lives.

What used to be sufficient for a company’s success – an excellent product and superior execution of service delivery – are now merely table stakes. The emergence of higher meaning, or purpose, as a critical consumer decision factor, represents a unique opportunity for companies willing to reinvent themselves through, and invest in, their brands. Brands, unlike products, are impossible to imitate. In fact, by one definition, a brand is the unique place occupied in the customer’s mind by a product or service. Therefore, if a brand is able to create a strong connection with its customer base, it has created the ultimate source of differentiation and therefore competitive advantage. Visionary business leaders have anticipated this and have carefully invested in their brands, making them the cornerstone of their business strategy. It is not necessarily the amount of investment behind the brand that has made the difference, but the fundamental principles these leaders have followed. This gives rise to the question: how have brands driven business success?

How is brand driving business leadership – the rise of brand purpose

Earlier we explored how prosperity has prompted people’s search for meaning beyond basic need on a mass scale. Brands have the unique ability to tap into this pursuit for meaning, because both brand and meaning are intangibles. Both operate on the same plane of human existence and consciousness. Which brands will therefore be most successful at connecting with their customers? A simple look at the brands that have created the most value over time can provide clues to the answer.

According to the BrandZ Top 100 Most Powerful Brands study published annually in the Financial Times, the three largest brands today are Google, IBM and Apple. What do they have in common? Although all three can be generally described as “technology” companies, their business models, their products, and their customers are wildly different. Yet, all three are at the top of the list. I argue that what sets these brands apart from their many competitors is an orientation towards a brand ideal, a brand purpose. Google, since its inception, has single-mindedly focused on the ideal of liberating people through the universal availability of information. IBM has taken on helping create a “smarter planet,” and Apple invites people to create their world through self-expression; to “think different.”

Therefore, the brands that have created the largest connection with their audiences (and the largest values for their companies) are those that stand for true ideals, because true ideals directly tap into people’s quest for meaning.

Jim Stengel, former global marketing officer of Procter & Gamble and arguably today’s most influential marketer, is propagating the movement of Brand Ideal as the way to explain brands’ role in driving business leadership. He identifies the conceptual elements of the brand ideal, noting, “The Ideal is a higher order benefit that a brand gives to the world… The ideal actively improves the quality of people’s lives.”

To create a brand ideal a company must identify a higher calling than simply selling its product. This ideal drives innovation and inspiration, enhances recognition and unifies the organization in delivering against it. It does not only inform business strategy; in a very essential way it is the business strategy.

Brand ideals are not proprietary to large brands. A personal favorite of mine due to its authentic application of a brand ideal is Method. Method surprised consumers by bringing design and emotion into the mundane category of home cleaning products. Its brand ideal, to inspire a healthy happy home created the aspirational lifestyle of a ‘Method home.’  Method built a culture that reflects its values – ‘People against Dirty’ – and engaged its advocates in exciting and inclusive ways. The result has been astonishing growth in a very short time.

Indeed, brand ideals executed authentically drive business success. A shocking 87 percent of consumers say they are likely to switch to a brand that is associated with a higher purpose. While many companies have focused on cause-marketing or corporate social responsibility (CSR), humanitarian goals are neither a prerequisite nor sufficient conditions for a brand to have an ideal. The ideal needs to serve and make reference to universal human truth, but that truth does not have to be always connected to a social value.

For example, Red Bull has developed a $4.4 billion business based on a brand ideal that does not have a humanitarian bent. Red Bull created a category by serving the individual ideal of energy and freedom and by empowering people to lift their body and spirit. Red Bull’s example also illustrates how a brand ideal differs from CSR and cause-marketing. Energy and freedom is not a “project” that the brand undertook. It is not a marketing initiative to fulfill the company’s responsibility to society. Red Bull’s brand ideal is what the company does. From the way its offices are designed – with ramps so employees can skateboard from floor to floor – to the kinds of people it hires to every participatory event it organizes – such as the Red Bull Air Race World Championship and the Red Bull Storm Chase – to every piece of communication it transmits, the brand “gives you wings.”

The ultimate test of the brand ideal’s authenticity lies in the degree to which it permeates the business and provides a compass for everything the company does. The brand ideal is first and foremost an internal organizing principle. This has a tremendous impact on alignment and on employee behavior, satisfaction and retention. This in turn allows the brand to show up in the world with an intentionality and purpose that is instantly transmitted to customers. Starbucks was such a brand a few years ago. Despite virtually no advertising communication investment the brand through the choices and behaviors of its employees created a customer experience and a “third place” between the home and the workplace where people could create human connections.

So is the importance of brand and brand ideals a permanent structural shift in the way we conduct our economic lives, or is it a transitory phenomenon? The answer to this question can be found in the very roots of this shift from product to purpose. As long as global output expands through technological advances and as long as prosperity reaches a larger number of consumers, brands and brand ideals will not only drive business success but their importance will continue to increase. The businesses therefore that will make it their priority to organize around a higher purpose are and will continue to be the leaders of the 21^st century.

The Blake Project Can Help: Please email us for more about our purpose, mission, vision and values and brand culture workshops.

Branding Strategy Insider is a service of The Blake Project: A strategic brand consultancy specializing in Brand Research, Brand Strategy, Brand Licensing and Brand Education

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