There's trouble in store

Two great institutions are wobbling. But, writes HAMISH McRAE, the same solution could save them both.

Two great British brand names are in serious trouble.

They were both founded by immigrants, both are roughly a century old - one was founded in 1894, the other took its present form in 1917 - and for most of that period both brands steadily grew in British and global clout.

But both have deteriorated. They have become dull, their reputation for quality has been tarnished and each has been hit, in the past week, by spectacular public relations blows.

The first brand is Marks & Spencer, wounded by its botched withdrawal from Europe and leaked news of bad trading conditions in Britain.

The other is the House of Windsor, damaged by the leaked interview by Sophie, Countess of Wessex, and the botched handling of the subsequent row.

It might seem frivolous to compare the two for they are quite different enterprises. But in brand terms the position is remarkably similar and the lessons for the rest of the business community remarkably clear.

There are at least five similarities. For a start, though both have part-Continental origins, both have long stressed their Britishness.

Michael Marks was a Russian refugee who ran a market stall in Leeds before establishing his partnership with Tom Spencer.

The House of Windsor was originally the House of Saxe-Coburg, founded by Queen Victoria, whose partner was the German Prince Albert. But the Saxe-Coburg brand was changed to the Windsor one to sound less German during the First World War. (The Battenberg family name was anglicised to Mountbatten for the same reason.)

Second, both were able to sell a slightly stodgy version of Britain to an international audience.

Neither M&S nor Windsor appear particularly smart to British people, but they have great appeal to foreigners because they convey a perception of Britain other countries seem to like.

That both were a bit out of date did not matter too much to us, for at least they were reliable.

Third, both managed at times to be remarkably innovative in product development.

In the case of M&S the triumph was food: bringing high-quality, interesting, ready-prepared dishes to the British supper table.

Despite all the difficulties with the rest of the business, M&S food sales are doing as well as ever.

With the Windsors, the triumph was the updating achieved by Diana. Unfortunately, Windsor was not really able to manage this as well as it should, partly because it did not realise what an asset she was. But even now, after her death, the name and image live on.

Fourth, the recent spate of catastrophes stem from a similar cause - that key executives are unaware of the damage an ill-considered statement might cause.

It is especially odd that the experienced Belgian chairman of M&S should not pick up the dangers of shutting down French and Belgian branches without appropriate notice.

It is also especially odd that an experienced public relations executive should not spot the danger that inappropriate comments to strangers might appear in the press.

Finally, there is a similar management failure in both organisations, which stems mainly from an excess of deference.

Employees and suppliers treated the M&S executives like, well, like royalty, which meant signals of things going wrong were not passed up the line.

A similar problem clearly exists in the House of Windsor, although the failure is more understandable, given the nature of the operation.

So what is to be done? Both problems need a broadly similar approach - the classic path that damaged brands trying to recover their position should follow.

Rule one is to fix the product. M&S has to to go back to its roots as a solid, reliable, high-quality, good-value operation.

There is no point in trying to rescue a brand until the product is competitive. Similarly, the Windsors have to do a solid, reliable, high-quality, good-value job.

Both are aiming for the same market: both can be stylish without being trendy. Both should also focus on the home market, where the power base is, rather than chase foreign appeal. Cost? People do not mind paying for quality. What they resent is paying high prices for tat.

Rule two is to fix the management. The similarity is not in human terms for M&S as it has a new and inexperienced executive chairman, whereas the Queen is immensely experienced. Rather it lies in internal communications.

In both institutions, senior managers feel they are not listened to, or rewarded for making the right judgments. Both are still too "top-down."

Rule three is not to try to make a radical relaunch - you may turn off your existing admirers without gaining new ones.

Instead, both should make a series of limited PR changes, aiming to gradually establish a modern version of the traditional product virtues.

None of this is easy, of course. But it is not impossible. Most companies would love to have the brand recognition of M&S or the Windsors.

Potentially these are enormously powerful, with a resonance far beyond their actual importance to the world.

- INDEPENDENT