What does Goldman Sachs need to do to save its brand? In a word, nothing.
A strong, powerful, leading brand is practically bullet-proof.
It’s not what you do wrong that determines if your brand will survive a scandal. It’s how strong your brand is in the mind that determines if your brand will survive. Strong brands survive even the worst catastrophes, while weak ones can easily be destroyed by minor ones.
Goldman may have cheated a few clients and Tiger definitely cheated on his wife but it doesn’t really matter. As long as Goldman makes money and Tiger makes good golf shots, neither brand is likely to suffer any long-term damage.
Is that fair? No, but that’s life. And that is why it is so important to build a brand in the first place. And even more important to build a brand that dominates a category.
When you dominate a category, your existence is crucial to that category. The category needs you and will support you. Investment banking needs Goldman in the same way the PGA needs Tiger Woods.
What made the Goldman brand so special? Goldman is the gold standard. It is the world’s largest and most respected investment bank. The “culture of success” is how the firm is described.
So while Goldman Sachs stock dropped on Friday after the SEC charges, it was back up again on Monday. Why? People saw it as a buying opportunity. Buying a strong brand at a discounted price. Not unlike the situation at Toyota.
After its cars were found to have unintended acceleration problems, the Toyota brand was hit with a huge crisis. Even worse, it seems that the company knew about the problems and delayed reporting them and delayed recalling the vehicles.
Will this destroy the Toyota brand in the long term? Nope. Toyota is the largest auto maker in the world and owns “reliability” in the mind. Consumers will give Toyota the benefit of the doubt and a second chance to make things right.
This wasn’t the case for poor Audi. After 60 minutes accused the car maker of the same unintended acceleration issues (which were eventually proven false), Audi’s sales plummeted. Audi was a weak brand in the mind. So the negative news took over and that was all people ever thought of when they hear the name Audi.
I’m not saying that Toyota or Goldman should do nothing. I’m just saying that neither needs to do anything to save their brands. For a leading brand, getting back to business as usual and giving the crisis enough time to blow over is pretty much enough to save the brand.
In the case of Goldman, it would definitely be a good idea to apologize and solemnly swear to do better in the future. Firing the mastermind of the Abacus deal, Fabrice Tourre, who calls himself “Fabulous Fab” wouldn’t be a bad idea either. Bringing in a respected outsider to help advise the board is another good idea. Someone like Warren Buffet whose firm is already one of Goldman’s largest investors.
Saying sorry, showing actions and following through with future reforms are all the classic ways to survive a crisis. Unfortunately, these work a lot better and a lot easier if you have a strong brand. If your brand is weak, you can hold as many press conferences, run as many ads, fire as many people and it won’t matter.
What ensures that Toyota, Goldman and Tiger will survive the scandals is the strength and dominance of their brands.
Bad press and scandals can happen to anyone. Your best defense is to build a strong brand to begin with. That and praying for another volcano to erupt and take over the front page of the papers.