IBM's "Smarter" Brand #1 on Davis Brand Capital 25

On Monday Davis Brand Capital released the 2009 Davis Brand Capital 25, and IBM took the top spot.  IBM's #1 ranking may surprise some at first glance.  After all, brand is typically viewed primarily through a marketing lens, and therefore tends to be more closely associated with consumer-centric - and arguably more glamorous - companies such as Apple or Nike.

But the Davis Brand Capital 25 examines brand more holistically: as a collective set of intangibles, including brand value, competitive performance, innovation strength, company culture and social impact. The following commentary and qualitative assessment of top-ranked IBM highlights the company's  successful management of these five intangibles that comprise brand capital and provides context for its #1 ranking.

Brand Value

IBM's heritage is firmly grounded in business - making it more productive and efficient by improving processes and the management of information assets.  Since 1896, the company that would become IBM has demonstrated operational excellence that enables the same in its customers.  IBM is a longstanding example of the alignment between brand promise and the fulfillment of that promise through operations. 

IBM's ability to consistently deliver on its promise in myriad industry sectors has earned the company brand accolades.  It has ranked in the top three on the "Interbrand 100" for the past nine years the ranking has been compiled, overtaking Microsoft for the number-two spot in 2008 and 2009; and it has been in the top 10 on Millward-Brown's "BrandZ" ranking since its inception in 2006, moving from #9 in '06 to #4 in '09. IBM is one of the most widely known acronyms that transcends languages, and the moniker "Big Blue" is synonymous with computing.       

Competitive Position

IBM is the largest and one of the most profitable information technology company in the world.  Although it has trailed rival HP in total revenue since 2006, it has been more profitable.  The company leads the market in many of its business areas.  According to Gartner, IBM has consistently led the server market in terms of market share and revenue (HP has led based on estimated units shipped).  IBM has cultivated a diversified brand portfolio with depth and breadth in the information technology sector, including: IT services, hardware, mainframe, consulting, financial management,  enterprise architecture, virtualization, business processes management (BPM), and many others. 

The company has consistently managed and leveraged its brand capital to create new value through well-aligned, strategic extensions and growth by acquisition.  According to IBM, it has acquired more than 100 companies in the past decade alone.

IBM continues to deploy its brand capital to create additional brand value.  Although it's too soon to tell, IBM's acquisition of SPSS, Inc., the industry-leading predictive analytics software and consulting firm, appears to be a good fit for the brand.  Integrated with IBM's expertise in consulting and database infrastructure and management, both the parent and the sub-brand have an opportunity to benefit to create new brand value for customers and shareholders alike.

Innovation Strength

In 2008 alone, IBM earned more than 4,000 U.S. patents, breaking the record for the number of patents filed by a single company in one year.  Last year the USPTO filed more patents to the company than Microsoft, Oracle, Apple, EMC, Accenture, Google and Hewlett-Packard combined.  IBM has been issued more U.S. patents per year than any other company for 16 years running.

While the quantity of patent filings is less important than the quality of patents, IBM's performance is testament to the market impact of its patented innovations.  According to BusinessWeek, the company invests $6 billion a year in research and development.  It boasts eight research laboratories around the world.  Over the years, the company has been able to translate capital investment in R&D to meaningful innovations.  Five IBM employees have received the Nobel Peace Prize, and five have earned National Medals of Science.

Company Culture

Commenting on a company's culture from the outside in is difficult.  However, in addition to IBM's strong performance on annual lists evaluating company culture, including a #10 ranking on BusinessWeek's "Best Places to Launch a Carrer," IBM's publicly referenced culture-building programs point to the company's disciplined management of its internal brand.

In 1928, the company pioneered what today might be called an open or crowd-sourced employee innovation program, called Suggestion Plan.  The program pays cash to employees that provide actionable ideas for improving IBM processes or products.  

Building on that model, the company more recently leveraged social media tools to clarify the brand's mission, vision and values.  IBM used its intranet, wiki tools and a Facebook network of company alumni to develop the "IBMers Value" guidelines.  This open, inclusive, and tech-centric internal brand initiative is, in and of itself, a prime example of the resulting values statement: "Innovation that matters - for our company and for the world."

The brand continues to invest in its people.  According to IBM, the company invested $600 million ($1,600 per employee) in employee training and development in 2008.  Since 2004, IBM has increased its learning hours per employee by 33 percent.  The company provides a Personalized Learning Account (PLA) program that offers employees up to $1,000 per year towards continuing education to expand their skill sets.  In addition, 40 percent of its employees work remotely, enabling flexibility and arguably a healthier work/life balance.

Social Impact

Finally, IBM demonstrates excellence in its social impact.  The company has been included on CRO Magazine's "100 Best Corporate Citizens" ranking nearly every year since the list's inception. 

IBM has successfully aligned is core business functions with its social responsibility initiatives.  For example, IBM's Transition to Teaching program helps company alumni become teachers in order to address the shortage of high school math and science instructors in the U.S. and the U.K.

Many Eyes, part of IBM's Collaborative User Experience Open Research Group, is an open collaboration to "'democratize' [data] visualization and to enable a new kind of data analysis."  The site and its software allow any user to upload and visualize data using a variety of Web-based software tools.  The project leverages IBM's computing expertise to advance leading-edge approaches to data visualization and to uncover patterns in data - all open and completely transparent to the world.

The brand also is integral to the World Community Grid, the largest humanitarian computing grid in existence.  It enables one of the world's largest virtual supercomputers, and has been used by the international scientific community to explore pressing global issues, including famine, disease and energy production.  The brand is leveraging its core operational function to set a social agenda by playing a key role in advancing the global community's understanding of some of its most complex problems.

Bringing it all Together

All of these examples point to IBM's outstanding achievements in successfully managing the five intangibles that comprise brand capital.  IBM consistently demonstrates excellence in brand value, competitive performance, innovation strength, company culture and social impact.  And its disciplined deployment, management and measurement of these assets puts the company at the top spot on the Davis Brand Capital 25.

Although it consists of so much more, brand is still arguably most approachable, easily understood and related to through a marketing lens.  Therefore, we'll come full circle and use IBM's "Smarter" advertising campaign to illustrate how the company translates its brand capital and the five intangibles of which it's comprised into beautifully executed, strategic brand communications.