Should We Try to Save the Damaged Brands?
As the American government struggles with what to do with its new ownership stake in storied corporate brands like AIG, Chrysler, Citigroup and General Motors, one of the fundamental questions that must be asked now is, can these brands - after months of stories about their insolvency - be saved?
I'm not so sure.
Consider this passage from a NYTimes piece by Keith Bradsher about AIG's struggle with their damaged global brand:
Less than two months after changing its name, the biggest and best-known unit of American International Group is preparing to change its name again, in the latest sign of damage to one of the world’s most famous brands.
A.I.G. changed the name of the worldwide holding company for its property and casualty unit to American International Underwriters in early March.
The renamed A.I.U. quickly began issuing new business cards to employees and printing promotional materials, particularly in Asia. But A.I.G. has now decided that the A.I.U. name does not represent enough of a change, and is in the final stages of choosing a new one, said Leslie J. Mouat, A.I.U.’s regional president for Southeast Asia.
“The advice we’ve received is A.I.U. may be a bit close to A.I.G. — we don’t want to appear as the same leopard with different spots,” Mr. Mouat said in an interview, adding that he was told only Saturday of the decision to change the name again, which has not been publicly announced.
The question facing the Obama Administration now has to be not whether these companies can be saved, but what is the best way for valuable parts of the company to succeed and provide return to their investors (in this case the government). One way is to prop up the companies, as we are doing now. But there is a strong argument that these companies are so damaged now that their brand itself is permanently insolvent, and that the best course would be to break the companies up and sell their parts off to other stronger less damaged brands.
AIG may be changing its name, but I think it will have to do much more than that to convince future customers that this not the same enterprise which made some of the greatest corporate blunders in the history of commerce. All things being equal, would you buy a car from General Motors now, or or insurance from that company formally known as AIG, or open a new account with Citigroup?
The answer to this question needs to be an important part of what comes next in this difficult debate.
- Simon Rosenberg's blog
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