Much has been written about ‘key man’ risk — the danger for corporations that rely on one or a few individuals — and its impact on business value. Fashion firms with a celebrity designer, for example, or asset management firms with a star investment manager, are particularly vulnerable. Yet, even large, global firms can be exposed.
In late 2019, with his company’s Sprint seemingly takeover secure, T-Mobile US CEO John Legere announced he would be stepping down from his post ahead of schedule. The news led to much speculation: as Bloomberg writer Tara LaChappelle put it, “What is T-Mobile US Inc. without John Legere?” Legere — with his long hair and pink tees and foul mouth — had become synonymous with the T-Mobile brand, particularly among investors. Although Legere was leaving at the top of his game, and had been preparing his replacement for years, commentators saw his departure as a fracture with the T-Mobile of the past. LaChappele expressed skepticism that the new CEO, Mike Sievert, would be able to continue the rapid growth the company saw under Legere. Karl Bode of Techdirt speculated that Legere had left because he didn’t want to watch T-Mobile become “everything he claims to despise.”
Although the T-Mobile US stock has continued to rise, the consensus seems to be that with John Legere goes the T-Mobile disruptor brand. T-Mobile, with its large budgets and high name recognition, can likely take a hollowing out of its brand in stride, providing enough investment to fill the void and pivot its positioning. However, for other companies without T-Mobile’s marketing resources, the exit of a charismatic CEO might pose a larger problem. What should companies like these be doing from a corporate branding perspective to mitigate key man risk going forward?
A firm’s brand – the perceptions it holds in the minds of its most important audiences – can be a powerful tool for mitigating this risk. Here are some key questions to use when evaluating whether your brand is built around a company and its value proposition or an individual:
- Do key messages address the breadth, depth or specialization of the team’s expertise or just the experience one person?
- Have you developed — and communicated — a strong firm culture that does not depend on a “cult of personality”?
- Do communications, such as marketing collateral, press releases, websites, videos and emails, feature multiple people at the company or just the key man?
- Is it clear that the key differentiators — both tangible and intangible — are institutionalized, a framework of the company, and not all based on the talents and reputation of one person?
We have worked with a number of companies that have strong, very well-known founders. It can be a challenge creating a brand for these organizations that isn’t reliant on the reputation of the founder. (When the founder is deeply involved in the branding process, it can also require chutzpah!) But it needs to be done. In developing a brand for an asset management client, for example, we focused on the firm’s focused, unwavering investment strategy rather than the fame and acumen of its star founder. This took the emphasis away from the individual and placed it squarely on the firm itself. The subtle underlying message: the firm is stronger than any one individual.
Companies spend significant time and resources developing succession plans, operating procedures and other strategic business initiatives to ensure that business success does not hinge on one person. But to truly mitigate key man risk, firms cannot ignore brand strategy. To ensure success, brand and business strategy must be aligned and positioning and messaging must be built around the firm, not the person.
Make it about the message, not the person communicating the message.