The Business World: Nations move to develop their brand identity

COMPANIES ARE becoming more like countries and countries are becoming more like countries. The fact that the turnover of many multinationals exceeds the GNP of many countries has been widely noted, but the idea that countries are being forced to behave more and more like companies has been less widely recognised.

Most of us tend to think of this process in economic or financial terms. Multinationals, by their sheer size and wealth, have resources that most countries cannot match. Most countries, remember, are pretty small both in population and economic output. Countries, even large ones, are however being compared more closely with each other by would-be international investors. So if they wish to get their share of world investment funds (and the knowledge that is transferred with these) they are forced to adopt best-practice policies - best from an economic point of view.

But you can also see this process from a marketing point of view, and I am grateful to Wally Olins for writing a pamphlet (K) pointing this out. He is best known as co-founder of Wolff Olins, a brand consultancy, and sees the issue in terms of branding. Countries are being rebranded, with varying degrees of success: "Cool Britannia" would not rank as a triumph. Meanwhile, countries that are unbranded need an identity. How do you tell Uzbekistan, Kyrgistan, Turkmenistan, Kazakhstan and Tajikistan apart?

Add this to the practical ways in which countries are changing - in particular the downsizing of government, and the setting of performance targets - and you can see corporate management attitudes and techniques becoming more and more evident.

As for companies, they are developing marketing features that, up to now, have been developed most strongly in countries. One is corporate patriotism, the way in which companies develop myths about themselves and encourage their employees to think of themselves as identifying with the company rather than their original nationalities. Another is ethics, with companies seeking to establish policies of their own on issues like employment and the environment independently of the policies of the national government concerned.Another is welfare policies, where companies provide benefits independently of those offered by countries to their citizens.

Beyond these familiar functions, Olins points out that companies now have "embassies" abroad: foreign offices that gather information and lobby on their behalf; they have democratic functions, producing "corporate constitutions", and may start to develop multinational agencies to foster their aims - a "NATO for companies" perhaps.

The newest ideas here are the branding ones: why brands seem to be becoming more and more important for countries as well as companies and why "corporate patriotism" is becoming more important for companies as well as countries. Are we really moving to a world in which style everywhere triumphs over substance?

Well, not everywhere. But branding is becoming more important for at least three reasons. First and most obviously, the surge in information means that any body, be it a country or a company, finds it harder to be heard. Shouting louder is at best pointless and may even be counter- productive, for it merely adds to the clamour. For countries,the surge in new nations is a catastrophe. The more countries there are, the harder it becomes to distinguish between them.

Second, branding is needed to counter the noise from the news media. Next time you see an advertisement from Libya, saying what a wonderful place it would be to visit, ask yourself: am I really likely to go there as a result of the ad? The strongest brand image of Libya is Colonel Gaddafi, a chap who doubtless has many sterling qualities, but not ones that are going to do much for the tourist trade. Any signal from the advert will either get lost in the background noise or remind people of the Lockerbie crash. To get a positive message across needs a clear brand identity focusing on the historical and cultural virtues of the country, which are many, rather than the present political leader.

Third, the growth of international trade in goods and services means that consumers are flooded with choice. Take tourism again: not only are there are many more countries, cheap air travel brings into reach many destinations that previously were only accessible to the few. The same goes for products. If consumers are faced with a plethora of choice, they will tend to grab names they know. Brands again.

As for companies, they are needing to brand to hold on to employees and attract potential employees. Go back even 10 years and solid, well-known companies could fill most positions without too much difficulty. Small companies always struggled to attract talent, but big ones went into the local pool and usually found what they wanted.

The jobs market has utterly changed. Talent has become global: the pool of one country, however big, cannot supply the needs of a multinational. US companies cannot staff their global offices with ex-pats: most Americans lack the cultural and language skills to do the overseas jobs. Japanese companies have found even greater difficulty in staffing overseas activities.

In addition, multinationals have found that key staff can be lured away by tiny start-up companies. This phenomenon is beyond their ken. Big companies used to be able to get the top talent because they could pay top dollar; now small companies can offer shares in the business that will potentially make people far richer, and probably give them more fun in the process.

Further, multinationals can no longer offer more job security than small: waves of redundancies remind people, if they needed any reminding, that there is no such thing as a job for life.

So suddenly, large companies, seeking clever people the world over, are having to try and brand themselves as good employers - places that will inspire loyalty even if the jobs can never be guaranteed.

What should anyone running a company try and draw from all this? There is, I think, a general rule that any wise manager should note. It is that many of the skills needed to run a successful democracy - in particular the ability to persuade people of a different opinion - are now needed in companies too.

Command and control management works badly with clever people who can walk out of the door at a moment's notice. If companies can give lessons in marketing and branding to countries, countries can in return give a few lessons in democracy to companies.

K `Trading Identities', published by the Foreign Policy Centre, 25 Haymarket, London SW1