Death of a Brand

As recently as a few months ago, if you had introduced yourself as being from Lehman Brothers, you would have been wrapped in the mantle of one of the most storied financial brands in the world. The brand’s halo would have automatically bestowed upon you attributes of investment savvy, Wall Street pedigree and no shortage of professional acumen. But in less time than it takes to put together a simple merger, one hundred and fifty eight years of success through civil and world wars, a great depression, numerous recessions and several varieties of “bubble”, one of the world’s most successful financial brands died. How could this celebrated and respected brand die so quickly, when it’s building exceeded two thirds of U.S. history itself? Was it the securitized subprime mortgages in Lehman’s portfolio? Was it bad timing or bad luck? Was it the failure of the government or other financial institutions to bail Lehman out like Bear Stearns or Freddie and Fannie? Was it management not seeing sooner the extent of the danger? I believe all of these factors contributed, but none is primary. To me, the primary reason Lehman Brothers died so quickly is a loss in confidence. For weeks now, customers and business partners have been pulling away from Lehman Brothers because they lost confidence in the brand. Most brands, but especially financial brands, live, and die, by the confidence people have in them. And confidence, like its brother reputation, is a volatile thing: It takes a long time to build but can be lost very quickly. The real window of opportunity for Lehman was many weeks ago when confidence started to wane, not last week when it was all but gone. When perception gets too far ahead of reality, pain is likely to follow. Fortunately, perception cannot be significantly out of synch with reality for too long before a correction takes place and perception and reality again become more closely aligned. We see this in bubbles and their corrections just as we see it in brands. Unfortunately, as in the case of Lehman Brothers, it doesn’t always happen fast enough to stave off the death of a brand, even one as storied as Lehman Brothers.

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