When Ants Swallow Elephants

Ants are small. But they are remarkably strong for their size. They are also able to adapt to almost any environment, including the man-made one. Elephants, on the other hand, are remarkably strong but not in direct proportion to their size. In fact, they have innumerable weaknesses due to their prodigious presence, and can only survive in an environment that is kept intentionally free of human intrusion.

What, oh what does this have to do with branding?

In mergers & acquisitions, a lot of time and effort is spent in valuation of the business assets of the company being acquired. Almost always the company with greater tangible assets (the elephant) is acquiring one of lesser (the ant), which makes obvious business sense.

The bigger company then goes on, in an almost perfunctory manner, to swallow, digest, and eventually eliminate the brand of the smaller company that has been acquired.

This does not always make the most sense. What if the smaller company actually has far more potential brand value? Brand value is an asset that is often overlooked because it is intangible, and in the case of an M&A, the acquiring brand tends to think of itself as a victor and of their acquisition as the vanquished. But when the brand narrative of the victor is far less compelling than that of the soon-to-be-vanquished, it is up to leadership to swallow their pride and allow the larger company's brand to be subsumed by the potentially more powerful brand of the smaller.

This is not an easy opportunity to identify nor is it an easy decision to make, but as I always say, "Branding Takes Guts."

Wells Fargo is perhaps the most perfect example of brand leadership in an M&A situation. As the very first National Bank charter, Wells has a deep connection to the American story. It's place in history includes the settling of the Wild West, the Pony Express, the building of the Transcontinental Railroad, the Gold Rush, the recovery from the Great San Francisco Earthquake, and more. It is a tremendous story that truly resonates with the brand's customers and beyond.

When Wells merged with the larger Norwest Bank Corporation of Minneapolis, it was a moment of reckoning. Although Norwest was the nominal "survivor" of the merger, Norwest, under the leadership of CEO Richard M. Kovacevich, made the fateful decision to forgo the spoils of victory and assume the Wells Fargo brand.

Can you imagine the fight in the boardroom that day? There would be the staunch believers in the Norwest brand – after all, hadn't they built it up from nothing, steered it through adverse waters, and weren't about to let some California bank trample their Minnesotan pride? Then there would be the clear thinkers, also proud Minnesotans, but who would see through the fog of M&A into a future where the Wells Fargo stagecoach would ride proudly across the entire country, not just the storied trails of the golden west.

Yes, I've begun to head into melodramatic territory, and I apologize for that. It was really just to dramatically prove the point, that the default position of winner takes all is not always the best brand strategy.

This scenario plays out across the globe on a regular basis. I personally know of several companies in different industries that are wrestling with this exact challenge. Sometimes, it's complicated even more by the existence of family names on the doors. Think it was hard for the Norwest board to give their company's name the axe? What if the company was named Smith, and there were three generations of Smiths sitting on that board? We might just have Smith Bank gracing the corners of busy intersections or anchoring a corner of a strip mall somewhere in this country.

But it's doubtful. Smith Bank likely would have failed. My guess is Norwest would have failed. Only Wells Fargo possessed the brand narrative that propelled it to national success. Not because the Smiths aren't lovely people who achieved great things – just because Henry Wells and William G. Fargo had a story to which customers were more likely to relate. If the Smiths could come to an understanding of the power of narrative, they would be able to leverage that power for even greater achievement and prestige for their name, even if it weren't on the door.

With branding, it often makes more sense for the ant to consume the elephant and assume it's size. Think of it this way: Regular ants are powerful enough. Giant ants would be practically unstoppable.


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