When Brands Are Like Packaged Bad Mortgages

by Bob Schwartz

Once upon a time, a home loan was a simple but powerful thing. It allowed people who could not afford a house get one and get on the path to full ownership. And it allowed financial institutions to have a concrete obligation that could be sold, the value of which was based on the house and on the ability and duty of the borrower to pay.

If the solid simplicity of that is not completely gone, we know that over the last few decades, culminating in a mighty disaster, very creative financial craftsman were able to turn this into something supposedly bigger and better, but something not rooted in anything other than itself. Once that became obvious, as with the naked emperor, all hell broke loose, and the economy collapsed

Every maker and marketer of goods and services should be students of this phenomenon. Brands, for example, are truly things, and things of value. So much value that we attach a measure to it—brand equity—and for some companies, it is their greatest asset.

The idea that brand, or marketing, or messaging, exists independent of some more basic thing is seductive but silly. In American politics, we are witnessing this debate on a grand scale. Is reliance on creating or refurbishing a brand, ignoring the unvarnished nature of the product you’re selling, a form of denial? Or is it an implicit acknowledgement that adapting products to the times, to demographics, and to competition is just really, really hard—and sometimes impossible.

This isn’t only, or primarily, about politics. It is about business, about companies who may have come to believe that marketing is all there is, and that ever more sophisticated approaches can leave the basic realities behind for fancier and more valuable derivatives. The sophisticated and fancy can be important, but it’s not all of it, or even most of it.

The smartest people in the room (they would say in the world) forgot that a mortgage was nothing more than a house and borrower. We all, sadly, paid the price for that arrogance and, let’s say it, stupidity. Products and services of all kinds are exactly the same. Businesses, no matter how big, no matter how branded, forget those basics at their peril.