Volume 168: The Intrinsic vs Extrinsic Promise.
The Intrinsic vs. Extrinsic Promise.
tl;dr: Two different brand approaches that are rarely explained.
Of all the myriad definitions of the word ‘brand,’ I consistently find myself returning to the very simple idea that the brand is a promise…and that this promise must be delivered consistently for the brand to ‘work.’ In other words, the primary job of the brand is to create a set of consistent expectations among your stakeholders that your offerings then live up to, which reinforces the promise you made, which makes people more likely to believe and remember it, which makes them more likely to buy again and to recommend to others…all in a self-reinforcing loop.
However, a question arises when we start positioning or perhaps repositioning a brand because we must very quickly consider the nature of the promise for this particular brand and how deeply embedded it should (or should not be) in the heart of the corporation, which brings me to an area of very real confusion I’ve seen play out many times over the years, yet rarely gets mentioned, namely, whether we should philosophically consider the promise we make through an intrinsic or an extrinsic lens.
What I mean by this is whether the promise is intrinsic to the business—helping direct, guide, and shape internal decision-making as a part of the ‘cultural OS,’ if you will—or whether this promise is extrinsic to the business—meaning it acts primarily as a layer of externally focused artifice presented primarily through marketing communications.
Why it’s important to differentiate between the two isn’t that one is right and the other wrong, because years of evidence prove that both can work and work well under the right circumstances. Rather, it’s because when you don’t specifically articulate which path you intend to pursue or you apply the wrong approach in a circumstance that demands the opposite, it introduces a significant risk of confusion and frustration, not to mention very real cognitive dissonance relative to the kinds of partners you may choose to work with.
In broad terms, the extrinsic promise is most common in low-engagement consumer categories, primarily CPG/FMCG, where the brand represents a layer of meaning built atop a commoditized product. (Think Evian, which is water in a plastic bottle) The intrinsic promise, by contrast, tends to be more closely aligned to what is commonly labeled corporate branding (I prefer the term organizational since it’s the brand for the organization and not all organizations are corporations). Here, the brand represents the entirety of the organization's offerings and its employees’ intellectual output. (Think Microsoft, with 220,000 employees, multiple disparate offerings, and constant ongoing innovation).
The majority of the literature on branding you may have read tends to stem from the extrinsic side of the ledger. An approach that was notably scaled across the economy by CPG/FMCG brands starting in the mid-20th century, driven by the confluence of post-WWII demographics, a rapidly growing middle class, and the advent of television as a mass advertising medium. It’s because of this that soap opera exists as a term, and it’s why television-centric creative agencies became so influential by the end of the 20th century before fading under the rapidly fragmenting shift to digital.
Today, the most notable exponents of this extrinsic branding philosophy are in the marketing science community, which seeks to establish evidence-based theory from quantitatively derived extrinsic evidence. This is likely why many of today’s CPG/FMCG marketers are finding success using marketing-science-derived concepts and why it appears to be becoming the baseline marketing theory within such categories.
However, we need to understand that in the modern economy, not all category dynamics mirror CPG/FMCG, where decision-making is low-involvement, where we literally take milliseconds to decide, and, crucially, where we don’t need to worry about whether the people working alongside us in the organization believe in and know how to deliver on our promise.
By contrast, while it ultimately encompasses extrinsic factors, the intrinsic approach tends to differ markedly in initial focus, process, outputs, and desired business outcomes. Compared to an extrinsic approach that adds a layer of meaning atop a low-involvement commodity, intrinsic branding tends to be more effective in categories that are high involvement, where there are varied offerings under the same brand, price points tend to be higher, the pace of disruption faster, the buying decision process is longer and vastly more complex, and vastly more complex, and where the risk of making a bad choice is potentially disastrous.
This is why we often see an intrinsic approach to branding in the B2B space, where there’s typically more complexity in both the offerings and the purchase journey and where purchase decisions are often being made based on decidedly intangible factors – for example, having already decided that three potential vendors have a good enough product before you even talk to them, B2B buyers are often left making decisions based on things like “who will be there for me when it all goes wrong at 3 am?” Or “Which vendor's product vision and future roadmap most closely align with our own?” Or “Which vendor is most likely to treat us as a business partner?” or “Which vendor will my boss be OK with us buying?” or, or, or.
While the extrinsic approach largely starts and finishes as an exercise in messaging, visual signaling, and marketing communications, the intrinsic approach seeks to first embed the brand more deeply within the decision-making of the organization and, as a result, places more emphasis on acting as a guiding hand relative to internal actions and innovations before worrying about the subsequent extrinsic effects. In other words, the promise doesn’t just live in how the brand is communicated; it first lives in how business decisions get made.
Because of this, the process of defining the brand intrinsically tends to be more involved and more strategic in terms of its connection to the business. As a result, it tends to directly include the organization's most senior leadership, including the C-Suite, the board, and the owners (especially in family or PE-owned corporations).
Multiple second and third-order effects stem from this difference in approach, some of which can be quite profound. Three important differences that typically distinguish the intrinsic approach from the extrinsic are as follows:
The ‘intrinsic’ brand acts as the translation layer for the business strategy.
In most corporations, understanding of the business strategy declines rapidly as one moves down from the C-suite. Sometimes, this is because the strategy is poorly articulated, too complicated, or too vague, and sometimes, it’s because there isn’t a clear strategy to begin with.
Under such circumstances, it’s very common for an intrinsically defined brand to become the translation layer between the business strategy - where the company is going and how it’s getting there - and the customer experience - what the customer gets. Because the brand connects the inside (supply side) with the outside (demand side) through the lens of the promise you choose to make, it affords us an almost unique opportunity to connect the storytelling dots and very simply articulate the business strategy through the lens of how and what we expect people to activate to deliver the promise we want our customer to experience.The ‘intrinsic’ brand drives change.
While change at an organizational level tends to be minimal when pursuing the extrinsic approach to branding: “new package, same great taste,” it tends to play a major role in the intrinsic approach. For example, a whopping 45% of CEOs are concerned their business model will be obsolete in the future unless they make major changes, while similar concerns are almost unheard of among CPG/FMCG brand managers.
As a result, pretty much every corporate/organizational branding project will have a significant transformational element underpinning it. While the brand is rarely the initiator of this transformation, it commonly acts as a major carrier and driver of the change message—right from the visioning workshops that might be held with senior executives near the beginning of the project to the guidance and expectations that are then provided to people throughout the organization as any refreshed promise gets rolled out.The ‘intrinsic’ brand creates cultural glue across disparate activities.
One of the defining factors of the past twenty or so years of business has been the flattening of hierarchies and the shift of control from centralized decision-making toward decentralized, agile teams.
And while flattened hierarchies encourage greater speed of action, a common challenge is what might be labeled ‘corporate chaos.’
Relative to the risk of chaos, one of the largely unheralded roles of a corporate-level promise is how it acts as cultural ‘glue’ across such decentralized decision-making, especially when pursuing ongoing innovation and where there’s a strong risk of cross-silo incoherence without it.
Here, the ‘cultural OS’ analogy becomes most powerful, especially when it encompasses a shared promise connecting to the kinds of systems, tools, policies, and principles individual teams then work off of to deliver it.
Of course, one risk when different stakeholders have different philosophical start points is that it can be easy to muddle things up unless you’re clear from the get-go. For example, I’ve seen extrinsically focused clients struggle to follow an intrinsic process and intrinsically focused clients frustrated at what they perceive to be an exercise in ‘lipsticking the pig.’ To make things even more challenging, it’s not uncommon for external partners to be muddled, too.
Take brand purpose as one apropos example. To be effective, any purpose pursued by any organization should be highly intrinsic to its internal belief systems and competencies. Yet the purpose approach went horribly wrong when peddled by extrinsically focused advertising and PR agencies because rather than an OS-level change, it led to little more than ineffective virtue signaling that rarely lived anywhere beyond an ad.
While this is a broad overgeneralization, my experience is that the following tends to hold true:
Advertising agencies, PR agencies, digital agencies, and CPG/FMCG-oriented design-first branding shops all tend to be extrinsic in their perspective. Their focus tends to be very much on the external presentation of your brand, with a fairly anemic connection to the corporation's intrinsic belief systems, differences, and unique competencies.
Corporate brand consultancies, by contrast, tend to be fairly universally intrinsic, although their approaches to the task may vary greatly. However, they’ll all place greater emphasis on connecting the dots between the intrinsic and the extrinsic.
Between these poles are a range of innovation, culture, organizational design, and management consultancies that rarely use such terms but dance between the lines of the intrinsic and the extrinsic.
Of course, there’s a point to all of this: which is that when thinking about your brand and your promise to stakeholders, you must also consider whether you intend to pursue an extrinsic or an intrinsic approach to the task. While, in principle, this tends to be decided for you based on the nature of the category you compete within and whether you’re branding a product or the organization itself, that doesn’t necessarily point you toward the right kinds of partners (or employees if hiring internally).
While I’ve personally spent my entire career working with clients on developing brands from an intrinsic perspective, I’m not so naive as to believe this is a one-size-fits-all solution for all clients.
No, it’s more of a category-level concern. If your category dynamics look more like CPG/FMCG, then an extrinsic approach will likely be the most fruitful option. However, if your category dynamics are different and you’re defining a brand for an organization, especially one undergoing a transformation of some form or another, then the intrinsic promise will be your better bet, even if it does tend to be a more involved and more senior-level process.