The Alpha of Cohesiveness

Josh Feldmeth

The fastest growing businesses in the world, and the strongest brands, are those with the most cohesive business systems. Across product and service touchpoints, companies like Amazon and Apple deliver seamless, intuitive, and distinctive experiences. These networks drive revenue growth (cross-selling products inside their connected ecosystem is effortless) and customer lifetime value as customers are more willing to share their personal data because it makes the experience exponentially more relevant. By generating outperforming growth via integrated products and services platforms, these companies are in the vanguard of performance, achieving what we call the Alpha of Cohesiveness.

This is a sharp departure from what traditionally passes as “branding.” In a world where customers expect everything to work as seamlessly and easily as their favorite apps, we can no longer think of brands in terms of identities and campaigns. A company cannot assert its brand in the market through communications alone. Brands emerge from the collective experiences of users, patients, customers—i.e., people. The strongest brands are built through the most cohesive businesses.

Ecosystems of value

A deeper look at Apple shows how ecosystems drive value. Analysts have often pointed out that Apple has superior products. While true, this opinion undersells the brilliance of Apple’s functionally-integrated model, where software, hardware, and other touchpoints are connected not just by beautiful design aesthetics, but by a level of interoperability that justifies the Apple premium and discourages defections to another platform.

Apple users experience firsthand the draw of a cohesive system. Your iPhone and MacBook connect to one another through shared iCloud accounts. Your apps from the App Store can appear on your iPhone and iPad, and you can AirDrop files across any Apple device. You can start watching something on your commute, and then finish it on your Apple TV. This functional integration is the lasting genius of Steve Jobs and of Apple’s model, in which an unfailing insistence on quality throughout the experience creates an environment where “it all just works”. The more data you share, the more personal it becomes—adding new devices is painless and the thought of switching increasingly unpromising. Apple is the Alpha of Cohesiveness in full effect.

Businesses that deliver cohesive brand experiences—product ecosystems, consistent touchpoints, and a common story or narrative—generate more growth relative to the industry benchmark. We’ve created a subset of the Best Global Brands, characterized by the degree of cohesiveness of their ecosystems. This basket of companies includes both tech leaders (Amazon, Apple, and Google) and “traditional” product companies (Nike, BMW).

Cohesiveness

 

Digging into the drivers of a cohesive business system, we can identify the reasons these companies are growing.

Ecosystem product effects

Products are designed based on user needs, across multiple touchpoints. Software and hardware are integrated, allowing a degree of personalization and predictive analytics. Working together with a services layer, the products create a complete platform that is responsive to user data and grows in value over time.

Two best-in-class examples of product ecosystems effects are Amazon Prime and GE’s Predix. Prime links products and value-add services like, video, music, and cloud services, with convenience logistics like two-day shipping and personal recommendations. In the industrial sector, GE Predix is connecting industrial assets and using data to deliver real-time insights for optimizing operations.

A common narrative

Much has been made about increased “transparency” in businesses today and the companion need for greater “authenticity.” Of course, this is not just jargon, they are real operating imperatives as the social/mobile marketplace, and the risk of cyber security breaches, create an environment in which anything you do as an organization can and will be made public. However, there is more at play here than simply being open and honest. Belief systems have power. With confidence in institutions at historic lows, particularly among millennials and generation Z, organizations that offer a powerful story, brought to life through the behavior of their people and products, will generate a higher level of loyalty and emotional engagement from customers actively looking for confidence amid uncertainty.

Good examples of the power of narrative are BMW and Goldman Sachs. BMW remains committed to transparency across the supply chain, and their head of brand has insisted that marketing must be about “a truth well told.” Goldman Sachs has built a sustainable business model around the quality of their people and a set of shared values. Whether you are a competitor, customer, or counterparty, it is clear what to expect from Goldman Sachs employees, an expectation they rarely fail to meet.

Cohesive, connected experiences

Connected experiences require alignment across sales channels, customer support, and every branded touchpoint. Cohesiveness requires discipline, as customers are sensitive to disconnects. Delivering high functioning touchpoints has become the table stakes for winning-over increasingly sophisticated customers. However, true cohesiveness connects high-utility touchpoints, making them interoperable and distinctively branded.

Adobe has transformed its business model into a cloud-based platform serving marketers and creatives, with embedded analytics and social functionality. They aren’t selling discrete seats but rather access to a platform of possibility. Thompson Reuters is migrating along a similar path. The point of these examples and others is that touchpoints must be individually useful while enabling collectively more powerful experiences, driving exponential value for users and customers.

Cohesiveness drives demand

As a theory, cohesiveness works because it is essentially a customer/user-centric business model. A company’s market-facing platform is designed to address user needs and maximize value for ecosystem participants. The data suggest that customers reward cohesive businesses through increased use, resulting in growth.

Looking at members of the Best Global Brands plotted along growth and cohesiveness axes, the correlation between the two is clear:Screen Shot 2016-10-03 at 1.01.14 PM

Each of the Best Global Brands is a benchmark for the strength of both its value proposition and the relationships its company is able to sustain. However, even within this group, the companies with higher degrees of functional integration and cohesive experiences generate higher levels of growth. Granted, this is easier for technology companies, for whom data—the glue of a cohesive business—is an integrated product component. But every company today should consider itself a data business, regardless of category. All customers demand seamless, frictionless, and responsive experiences. For companies failing to meet this market requirement, growth will continue to be a challenge. However, the reward for the cohesive business will be greater product use and long-term loyalty to the brand.

Chief Executive Officer, North America