Archive for June, 2012

Developing a Mittel-brand

posted by Matt Battersby

GE Capital (one of our clients) recently hosted a very successful event about midmarket businesses in the UK called ‘Leading From The Middle: The Untold Story of British Business’. The speeches (including one from Vince Cable) and panel discussions focused on how we can strengthen the UK’s mid-sized businesses that are currently providing much of the UK’s economic growth but still not performing to their full potential.

One interesting point raised was the impact of having no clear label or brand for mid-sized companies in the UK. This is unlike Germany where Mittelstand has become a globally recognised term for more than three million firms known for their family ownership, market niches and high-quality products. 

In the UK the closest term we have is SMEs (Small and Medium Enterprises) but this is much more associated with small or even micro businesses rather than the €20m-€1bn turnover companies in the midmarket.  We also have much clearer terms for larger businesses such as ‘multinational’ which again most of the population would recognise and be able to describe the characteristics of such a business.

Why do we not have a commonly accepted term for midmarket companies and does it matter?

One reason for the lack of a term may be that the whole notion of being ‘middle’ has little instantly apparent positive attributes. Whilst small may be beautiful and might is right, being middle is just, well, distinctly average. Add to this the slightly pejorative use of the term ‘Middle Britain’ and it’s perhaps unlikely that any use of the ‘middle’ label will catch on.

Another reason for the lack of a brand may be that midmarket firms themselves have a bit of an identity crisis. They seem much more likely to identify with their sector than their peers. A midmarket engineering firm, for example, is much more likely to think of itself as manufacturing business than a midmarket one.  The owner of a hairdresser, however, will likely readily identify him or herself as a running a small businesses. This may be one reason why there is a Federation of Small Businesses in the UK but not a Federation of Medium Businesses.

But these explanations assume that for a brand or label to successfully apply to a group of individual entities, the entities themselves need to at least recognise the label as applying to them and also want to identify themselves as such. This is clearly not the case as there are numerous examples of labels being applied to people or organisations that would not necessarily recognise the label as applying to them.

What I believe is clearer, is that a lack of a brand does make a difference for midmarket firms and creating one could bring benefits.

What’s your BRIC strategy?

Perhaps the most successful label to have been created in recent years has been BRIC, which was coined by Jim O’Neill from Goldman Sachs. In little over 10 years, the acronym for Brazil, Russia, India and China has not just defined a group of countries but a whole outlook on the global economy and politics. As Gillian Tett wrote in an article about origins and influence of the BRIC label, it “has become a near ubiquitous financial term, shaping how a generation of investors, financiers and policymakers view the emerging markets.”

Labels may often be too simplistic and downplay the differences between individual entities but they can be very powerful in focusing attention on the importance of the similarities. They not only reflect a current reality but can influence the future as well. How many companies have decided they needed a ‘BRIC strategy’ since the label was created?

Without a midmarket brand name, talking to or about companies as ‘midmarket businesses’ is unlikely to resonate as strongly as it could.  If companies do not think of themselves as a midmarket business, then providing midmarket initiatives, strategy or insights is unlikely to affect the change that is needed for them to compete even more effectively on the international stage.

 Creating a label

So what label or brand name might work for midmarket businesses? The CBI has clearly recognised the importance of creating one and have used terms such as ‘future champions’ and ‘Gazelles’. The advantage of these terms is they focus on common attributes of the midmarket firms rather than just their size. They are also positive labels which means firms themselves may be more willing to classify themselves as such.

Neither seems likely to become the universally recognised label though as most people would find it hard to identify what makes a ‘future champion’ or ‘Gazelle’ let alone apply it to companies they’ve heard of.

Made in Britain?

One thought is that more should be made of the ‘British’ brand. Many at the GE Capital event believed the ‘Made in Britain’ stamp still has significant value, particularly in developing markets and that perhaps UK businesses are too reticent in exploiting this. There may be a lot of truth in this but the term ‘British’ is unlikely to lead us to our midmarket brand name, not least because many firms, even in the midmarket, are foreign owned. Being British should likely form a key part of some business’s messaging but it is not the unifying label.

Given the increasing focus on midmarket business from the Government, CBI and the media, what is clear is that whoever can successfully coin a term for UK midmarket businesses is likely to make a name for themselves.

I’m afraid I am not that person (although I’m still trying). But perhaps there is a reason for that. Perhaps we aren’t ready for a midmarket brand name yet. As the term BRIC showed, labels only work when they group together common attributes and characteristics- when they define a pattern that people had not necessarily seen before but instantly recognise once they are made aware of it.

Perhaps the biggest problem is that too few midmarket firms are well known enough for there to be common attributes that the public would recognise. Labels work best when they group a certain type of person, country or companies that you know. Even midmarket companies themselves do not know many of their midmarket peers.

So yes let’s work towards creating Mittel-brand. But in the meantime, let’s also focus on creating the right environment for a name to be created organically. We can do this by better publicising midmarket firm success stories and building greater awareness amongst the public. Creating more opportunities for midmarket firms to network with their peers will also be important so they start to recognise how they are similar and share common interests. Who knows, once we can name more midmarket companies and they better know themselves, we may find that a label develops naturally and begins to change the way everyone thinks about this vital element of the British economy.

What PR was like in the B.G. era (Before Gorkana)

For many of us in the Financial & Professional Services team, it’s impossible to conceive how the world of PR worked before the digital age really got going. The idea of posting/faxing press releases, having to wait to read the newspapers every morning to know what was happening in the news, or keeping actual physical media contact books just seems alien.

Some of the older members of the team assure me it really did used to be this way though and earlier this week I found some evidence for it. While clearing out some of our filing cabinets, I came across a dusty, weighty tome entitled “Financial Press Facts: Forty-ninth Edition October 2003″. This, in essence was an analogue, print version of Gorkana – all the correspondents, on all the papers and trade magazines, and even the forward feature lists as well.

This is how PR looked before databases like Gorkana

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5 things we learnt from the i’s summer party

Last Thursday Jonathan and I attended one of the ‘i’ newspaper’s regular events for readers at London’s Transport Museum. i’s editor, Stefano Hatfield, gave a speech during the night which discussed both why he believed i had beaten expectations to date (it’s circulation rose again last month) and what the future held for journalism (he maintained that print has a future).

The speech itself was interesting but there were also a number of points of interest that we picked up from the night as a whole:

1. Demographics remain against newspapers: Hatfield talked enthusiastically in his speech about the number of young i readers he heard from and indeed had talked to on the night. Yet to my eyes the evidence painted the opposite picture – most of the audience was over 40 and a large chunk were 60+. The challenge of attracting younger readers to pay for news remains as difficult as ever.

H+K went to the i's summer party last week

2. Maybe people do care about Leveson: For a while now I’ve held the suspicion that most of the general public don’t really care that much about phone hacking, especially given the more immediate focus on financial constraints and employment prospects. However, the most common line of questioning put to Hatfield on Thursday was related to this issue. Granted, the audience was hardly representative (as noted above) but it still made me reappraise my view slightly.

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When is a bailout not a bailout?

After several weeks of speculation, the government of Spain this weekend confirmed that money would be accepted to help support the country’s banking system.

Spain’s politicians have been at pains to point out that this is not a bailout of the kind witnessed in countries such as Greece and Ireland where outside officials will effectively be making decisions about the countries’ public finances.

Spanish minsters have clearly been briefed to communicate the distinction as the following quotes from Mr de Guindos, the economy minister, in the initial Financial Times article indicate:

  • “What is being requested is financial assistance. It has nothing to do with a rescue”
  • “The conditions will be applied to the banks, not Spanish society”

I’d argue that Spanish ministers have effectively made their point but in a situation which continues to develop at pace, and where details are easily forgotten, they may well be lumped together with those who have requested funds before as the dust begins to settle on the decision. As a collegue pointed out, it could well be seen as an exercise in putting lipstick on PIGS

Why Ricky was the wrong person to win the Apprentice (and the others would have been too)

Several of our Financial & Professional Services team are avid Apprentice viewers and in previous years we’ve delighted in writing about the tribulations of the candidates each week (Michael Sophocles and Alex Epstein being two of my all-time favourites).

To my mind, this year’s crop have been less exciting and able than previous vintages, but that didn’t stop me from tuning in for the final last weekend. What I saw though was deeply disappointing.

The Apprentice claims that it aims to find an entrepreneur to “kickstart a company”, backed by the “nation’s most demanding investor” who is “willing to bankroll new business in tough times”.

For the Government, intent on job creation, actively promoting the entrepreneurial spirit and keen on encouraging the “industries of the future” that sounds like manna from heaven – what better shop window for the nation’s entrepreneurial talent than primetime television? Yet once the candidates revealed their ideas and business plans I noticed a distinct trend – for reference their ideas were as follows:

Ricky – a specialist recruitment agency for the pharmaceutical and biotech industries

Tom – a hedge fund focused on the wine industry

Jade – a call centre aimed at securing and selling customer leads on specific product lines

Nick – an online website for ordering recipe lists direct from supermarkets

My disappointment came when I realised two things – firstly, that with the exception of Nick, all the ideas were copycat businesses based on the jobs they already worked in (for example, Ricky is a recruitment consultant). And secondly, that all four of them are essentially service-based companies (again, with the possible exception of Nick).

Nothing wrong with that you say – the UK economy is built on services after all. Yes, that’s very true and services will continue to be the bedrock of the UK’s economy, because, well, we’re very good at it. But considering the Apprentice likely attracted over 7 million viewers on Sunday, surely the public and especially the Government (with its desire to reinvigorate manufacturing and high-tech industries) deserved better than to see a services clean sweep?