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My musings on brands

Brand Strategy - CAPEX and OPEX stage gates

Actionability is the lifeblood of any successful strategy. The lack of it is the single biggest contributor towards its failure. In majority of instances, actionability is not a dimension that is taken into account when a strategy is being formulated. This is exactly where the problem starts. It is very difficult to make a strategy actionable, if the whole process of formulations hasn’t given it a deep thought.

When we talk about corporate strategy, critical financial metrics like CAPEX (Capital Expenditures) and OPEX (Operating Expenses) keep on coming up. When we talk about brand strategy, these kind of financial metrics are surprisingly non-existent (as if they are too boring for something as exciting as a brand). In reality, to make a brand strategy actionable, we need to have the concepts of CAPEX and OPEX extended into the brand space. 

‘How’ is the key question?

Apart from different brand valuation techniques that jostle around for credibility in the market, the critical role of finance plays a very minimal role in the crafting of a brand strategy. The reason why it has a diminished presence is because ‘actionability’ as a dimension is always an afterthought. Actionability is about implementation, which is where metrics like CAPEX and OPEX come into the picture.

Consider a typical example – a strategic segmentation study commissioned to identify growth opportunities identifies 4 need segments where the client brand has an opportunity to tap into (in a spectrum of strong to moderate). When we bring in the concept of actionability, suddenly 2 out of these 4 need segments disappear out of the strategic consideration set because of reasons like:

  • the brand cannot stretch into that segment because it requires line extension for which we have CAPEX constraints (no budget for expanding manufacturing lines or production capabilities)
  • the brand cannot enter that segment because it requires an overhaul of the brand’s positioning – there is a significant OPEX for such kind of a wide-remit change
  • the brand cannot enter that segment because it will make the brand assets fragmented – there is a need to consolidate asset creation and development to a few parties
  • .......

Manufacturing constraints is one of the many impediments. The other barriers, which are again linked to actionability, lie in advertising and communication. Low attention to actionability can lead to a multitude of problems, which range from lack of budget for an omni-channel campaign, lack of budget for creative editing or long-term spot booking or to allow for a visual identity refresh.

It is important that any form of brand strategy formulation considers the actionability perspective (which is then related to financial metrics). Starting from a packaging change to a wider positioning change, when implemented requires money. In the complex world of today’s marketing and branding, this money is not only for organic strategy creation but also to bring it to life (which involves negotiations with key players in the whole ecosystem).

Each and every brand strategy should have CAPEX and OPEX constraints as stage gates. If the strategy does not pass these gates, then it is time to go back to the drawing board. To ensure that efficiency is not sacrificed and strategy formulation does not become a never-ending exercise, the earlier these gates are negotiated successfully, the better.