What should Goldman Do?
Goldman Sachs need to do to save its brand? In a word, nothing.
powerful, leading brand is practically bullet-proof.
It’s not what
you do wrong that determines if your brand will survive a scandal. It’s how strong
your brand is in the mind that determines if your brand will survive. Strong
brands survive even the worst catastrophes, while weak ones can easily be
destroyed by minor ones.
have cheated a few clients and Tiger definitely cheated on his wife but it
doesn’t really matter. As long as Goldman makes money and Tiger makes good golf
shots, neither brand is likely to suffer any long-term damage.
Is that fair?
No, but that’s life. And that is why it is so important to build a brand in the
first place. And even more important to build a brand that dominates a
dominate a category, your existence is crucial to that category. The category
needs you and will support you. Investment banking needs Goldman in the same
way the PGA needs Tiger Woods.
What made the
Goldman brand so special? Goldman is the gold standard. It is the world’s
largest and most respected investment bank. The “culture of success” is how the
firm is described.
Goldman Sachs stock dropped on Friday after the SEC charges, it was back up
again on Monday. Why? People saw it as a buying opportunity. Buying a strong
brand at a discounted price. Not unlike the situation at Toyota.
cars were found to have unintended acceleration problems, the Toyota brand was
hit with a huge crisis. Even worse, it seems that the company knew about the problems
and delayed reporting them and delayed recalling the vehicles.
destroy the Toyota brand in the long term? Nope. Toyota is the largest auto
maker in the world and owns “reliability” in the mind. Consumers will give
Toyota the benefit of the doubt and a second chance to make things right.
the case for poor Audi. After 60 minutes accused the car maker of the same
unintended acceleration issues (which were eventually proven false), Audi’s
sales plummeted. Audi was a weak brand in the mind. So the negative news took
over and that was all people ever thought of when they hear the name Audi.
saying that Toyota or Goldman should do nothing. I’m just saying that neither
needs to do anything to save their brands. For a leading brand, getting back to
business as usual and giving the crisis enough time to blow over is pretty much
enough to save the brand.
In the case
of Goldman, it would definitely be a good idea to apologize and solemnly swear
to do better in the future. Firing the mastermind of the Abacus deal, Fabrice
Tourre, who calls himself “Fabulous Fab” wouldn’t be a bad idea either.
Bringing in a respected outsider to help advise the board is another good idea.
Someone like Warren Buffet whose firm is already one of Goldman’s largest
showing actions and following through with future reforms are all the classic
ways to survive a crisis. Unfortunately, these work a lot better and a lot
easier if you have a strong brand. If your brand is weak, you can hold as many
press conferences, run as many ads, fire as many people and it won’t matter.
that Toyota, Goldman and Tiger will survive the scandals is the strength and
dominance of their brands.
Bad press and
scandals can happen to anyone. Your best defense is to build a strong brand to
begin with. That and praying for another volcano to erupt and take over the
front page of the papers.