Stop Treating Brand as a Department. Make It Your OS.

In 1999, Sony watched Apple steal the category they invented.

Sony had the Walkman. The technology. The music catalog. Everything needed to own digital music.

But within five years, the iPod won.

The root cause wasn't Sony's engineering. It wasn't their ads. It was that their department heads were never part of the brand strategy. Instead, they were told to carry it out after the fact.

Most leaders think brand consistency is a marketing problem. It's not. It's an alignment problem.

Part 1: The Invisible War Inside Your Company

You can craft perfect positioning. Hire the best creative agency. Hand out pristine brand guidelines to every department.

None of it matters if your department heads see the brand as marketing's job, not their own.

Your brand is the sum of what customers experience at every touchpoint. And those touchpoints are run by departments that don't report to your CMO.

When sales, product, operations, and finance each chase their own metrics without a shared vision, customers don't experience a brand.

They experience chaos and confusion.

The Agency Problem

Economists call this the Agency Problem.

When you give someone authority, their goals do not match yours by default.

Your company wants long-term brand equity and customer lifetime value. Your division heads want to hit quarterly targets tied to their bonuses.

Your company will sacrifice some current products to win in future categories. Your division heads protect current revenue because it sets their pay.

Your company thinks resources should flow to the highest return. Your division heads think resources must be hoarded to keep their power.

This is a systems problem.

When divisions run separate P&Ls, the brand's vision becomes abstract. The quarterly target is real. It decides if the division head keeps their job.

Without something that ties their win to the brand's win, managers will always put their own metrics first.

And each department eyes the others with suspicion.

Operations sees Marketing as careless with costs. Marketing sees Operations as rigid. Finance sees everyone as wasteful. Sales sees everyone as out of touch.

The brand becomes shapeless. Defined by the messy outputs of warring groups.

Brand Entropy

This breakdown has a name: Brand Entropy.

Think of your company as an open system. Without constant focus, it drifts toward disorder. Physicists call this entropy. The same principle applies to organizations.

Your brand requires constant energy to stay coherent: leadership attention, cross-functional alignment, ongoing communication. When that energy stops, departments stray. The system falls apart.

Low Entropy: Finance policies match Marketing promises. Operations delivery fits brand positioning. Every department reinforces the same message.

High Entropy: The brand says one thing but does another. Marketing promises personal care. But Operations cuts call times to hit efficiency targets. Sales promises partnership. But quotas reward one-time transactions over relationships.

A 2020 study by Erdem, Keller, Kuksov, and Pieters looked at 615 brands. It found that 55% of Brand Entropy's damage to customer preference comes from customers feeling risk.

When customers see an inconsistent brand, they feel confused. And it's hard to trust something that's confusing. It feels risky.

Our brains read unpredictability as danger. A messy brand triggers the same alarm.

The customer doesn't see a nuanced brand.

They see chaos.

And chaos doesn't win customers.

The Service-Profit Chain

Harvard researchers mapped how this decay turns into lost money. They call it the Service-Profit Chain:

Internal Service Quality → Employee Satisfaction → Employee Retention → External Service Value → Customer Satisfaction → Profit

The Agency Problem breaks every link.

When Finance cuts spending to boost quarterly margins, employees lack the tools to do their jobs. When Operations eliminates buffer time to boost efficiency metrics, employees can't spend extra time solving customer problems.

Poor internal quality leads to burnout and turnover. New hires are less productive and less able to deliver what the brand promises.

Customers feel the hit. Service gets slow, sloppy, and impersonal. The brand becomes the frustration at the counter, not the promise in the ad.

The bitter irony: Finance thought cutting training would boost profits. Operations thought faster service meant better efficiency.

But by chasing their own metrics in isolation, they broke the machine that makes profit: customer preference built on consistent experiences.

Why Co-Creation Stops the War

When department heads join after the brand strategy is done (told to carry it out), they default to protecting their turf.

This is structural, not personal.

Research on Procedural Justice explains why: Commitment to a decision depends less on the outcome and more on whether the process felt fair.

When strategy comes down from Marketing, the Finance VP feels no ownership. If it clashes with their P&L, they see it as something forced on them. Something unfair.

So, they push back.

But when the Finance VP helps build the brand strategy, the process feels fair. Even if the strategy means short-term margin pain, they back it because they had a voice.

Co-creation forces executives to hash out conflicts before the strategy is final.

It surfaces the tension (if we launch Office on iPad, Windows revenue drops) and resolves it at the top.

When the leadership team co-creates the vision, they own the trade-offs together.

The Windows VP can't later block the iPad launch to save their P&L. They already agreed the company goal comes first.

The vision becomes a binding contract.

You cannot build a brand when department heads chase different outcomes.

And you can't win in the market when you're fighting yourself.

Part 2: The Cautionary Tale (Sony)

In 1999, Sony sat at the top of consumer electronics. The Walkman meant portable music. A cultural icon for two decades.

Sony had everything to own digital music:

• The Brand: Walkman had unmatched equity in portable music.

• The Technology: Flash memory, batteries, audio codecs, miniaturization know-how.

• The Content: Sony Music controlled Michael Jackson, Bruce Springsteen, Celine Dion.

Within five years, that dominance vanished.

The iPod captured the culture. Sony scrambled with confused, clashing products that customers rejected.

This was an alignment failure, not a capability failure.

The Silo Structure That Broke Sony

Sony's divisions ran separate P&Ls with separate goals. By the late 1990s, vertical silos had created clashing business models under one roof.

Sony Electronics sold devices: low margin, high volume, needing new formats to drive hardware sales. Sony Music sold copyrights: high margin, needing to protect physical CD sales from digital threats.

When MP3 arrived, it threatened Sony Music while helping Sony Electronics.

With no way to settle this clash, Sony chose to support MP3 in name only. Electronics could build digital players, but they couldn't play MP3 files. They had to use Sony's proprietary format instead.

This pleased neither division. And it pushed customers away.

Sony Music lobbied to block Electronics from supporting MP3s.

Electronics had to fight with one hand tied, unable to support the format the market wanted.

The clash spilled into the courts. In 2000, Sony Music sued Napster. At the same time, the Consumer Electronics Association, which included Sony Electronics, filed a brief backing Napster's technology. Sony was suing itself.

But the crack ran deeper.

Inside Electronics, two groups started building rival music players at the same time.

The Personal Audio Company (Walkman loyalists) pushed proprietary formats to protect Sony Music.

The VAIO Division (the computer team) wanted devices that worked seamlessly with PCs.

Instead of pooling resources, Sony split talent across two clashing lines. Internal politics drove the call, not market logic.

Two Products, One Disaster

In late 1999 and early 2000, Sony launched two digital music players.

The Memory Stick Walkman cost $400. It didn't play MP3s, only Sony's proprietary format.

The VAIO Music Clip also didn't play MP3s. The two devices weren't compatible with each other.

Sony asked the market to pick between two Sony visions. Neither played MP3s. And they didn't work together.

The software was worse. To satisfy Sony Music, Sony's software viewed every customer as a possible pirate. Songs could only be checked out to three devices. If your hard drive crashed, your music vanished forever.

The Fatal Licensing Deal

The final blow came in 2003. Apple needed record labels to license songs for iTunes at 99 cents per track. Sony Music signed the deal.

The division logic was clear: We need digital revenue. Apple has a secure platform. This helps our quarterly P&L.

Sony Music gave Apple the final piece to destroy Sony Electronics.

If Sony had acted as one company, leadership could have blocked the deal. But the silo structure meant Sony Music chased quarterly results. They armed the enemy.

Sony had every ingredient to win. Their structure turned those assets into liabilities.

Their content library forced hardware to treat customers like criminals through copy protection.

Their technology fractured into competing product lines that confused the market.

Their brand bred arrogance. Leadership thought customers would put up with anything from Sony.

Apple didn't have better engineering. Apple had better alignment.

Apple organized every part of their company around reducing friction for users.

Sony organized around reducing risk for divisions.

The Walkman didn't die of natural causes. It was strangled by the company that created it.

Part 3: The Turnaround (Microsoft)

While Sony bled market share, Microsoft bled relevance.

By 2013, Microsoft's stock had been flat for a decade. The Lost Decade.

The company missed every key shift: search with Google, smartphones with Apple, and social media with Facebook.

Analysts saw it as a wealthy dinosaur milking Windows and Office. Innovation happened elsewhere.

But Microsoft had something Sony didn't. A leader willing to co-create the fix with his department heads.

The Gladiatorial Culture

Under Steve Ballmer, Microsoft was a financial powerhouse and a cultural war zone.

Meetings were battles. Senior leadership sessions had executives attacking each other's divisions. Everyone guarded their turf.

The most toxic system was stack ranking. Every team had to rate employees on a forced curve: 20% were stars, 70% were average, and 10% got fired. The percentages were fixed, no matter how well people performed.

This meant a colleague's success came at your expense. If they got a top rating, you couldn't.

The results were toxic: sabotage, secrecy, fear of risk.

A 2011 viral cartoon nailed it: Microsoft's org chart showed Windows, Office, and Xbox pointing guns at each other.

Windows blocked Office from appearing on iPad. Xbox wanted Windows integration; Windows refused.

Each division optimized for itself while the company suffered.

The Co-Creation Strategy

When Satya Nadella became CEO in February 2014, he recognized something critical: he couldn't force buy-in. He had to co-create it.

So he built systems that made department heads co-authors of the transformation.

First, he co-created the culture. Nadella and Chief People Officer Kathleen Hogan formed a Culture Cabinet. They selected 17 influential leaders from different, warring divisions. This group debated and defined what Growth Mindset would mean for Microsoft.

Because these leaders helped write the new cultural standards, they became evangelists rather than resisters. They had ownership before the transformation was even announced.

Second, he co-created the mission. In one of his first moves, Nadella took his Senior Leadership Team on an offsite. Instead of reviewing P&L sheets or product roadmaps, he asked them to share their personal philosophies.

Department heads who had spent years competing were forced to see each other as humans. By connecting their personal purpose to the company's mission, they forged a shared sense of purpose. Buy-in wasn't mandated. It was built through vulnerability.

Third, he operationalized co-creation. Nadella replaced stack ranking with a new system called Connect. Every employee is evaluated on three circles:

• Circle 1: What was your individual impact?

• Circle 2: How did you contribute to the success of others?

• Circle 3: How did you leverage the work of others?

In the old Microsoft, using another department's code was a sign of weakness. In the new Microsoft, you cannot get a top bonus unless you prove you co-created with other teams.

The Test of Safety

A culture of co-creation requires psychological safety. If you punish failure, people retreat to silos.

In 2016, Microsoft launched Tay, an AI chatbot. Within 24 hours, the internet corrupted it into spewing offensive hate speech.

In the old Microsoft, the department head would have been fired. Instead, Nadella emailed the engineering team: Keep pushing, and know that I am with you.

This signaled to every department head that it was safe to take risks and collaborate, even if it didn't work perfectly the first time.

The Results

Microsoft's market cap went from $300 billion in 2014 to over $3 trillion today.

The Cloud segment went from almost nothing to over $30 billion per quarter.

Department heads voluntarily sacrificed their own turf to support the broader mission. Xbox released games on PC. Office ran on iPad. Moves that would have been impossible under the old siloed model.

Sony had better resources. Microsoft had better alignment.

Sony's divisions were told to get along. Microsoft's leaders co-created the vision together.

When you co-author the strategy, you defend it.

Make Department Heads Co-Creators, Not Implementers

The gap between Sony and Microsoft comes down to alignment.

When department heads join after the brand strategy is set, they protect their turf. When they co-create the strategy from the start, they own it.

Ask these questions about your business:

1. Are your department heads measured on brand outcomes, or just their own metrics? If Finance only gets judged on cost cuts, they'll slash training that builds brand capability. If Sales only gets judged on volume, they'll push products that don't fit customer needs. Build a scorecard that ties department metrics to brand health.

2. Do you have a forcing mechanism that makes teamwork mandatory? Microsoft didn't ask divisions to work together. They made it impossible not to. Set up a Brand Council, a cross-functional team that reviews big decisions against brand impact before they go live.

3. Who defines what the brand promise means in practice? If Marketing defines we care about customers and hands it to Support, Support will read it through their own lens. The promise dies in translation. Bring department heads into defining brand strategy from day one.

Sony had everything and lost because divisions warred with each other. Microsoft was losing but saved itself by making leaders co-authors of the turnaround.

Your brand is the sum of promises kept by every department. Those promises start with alignment.

Make department heads co-creators, not implementers. Stop treating the brand as a department. Start treating it as the operating system of your company.

Onward,

Aaron Shields

P.S. Are your department heads fighting each other while customers feel chaos? That misalignment costs more than you think: wasted resources, mixed messages, lost market share.

If you're ready to stop building on sand and start building real alignment, respond to this email and I'll set up a free 20-Minute Alignment Call. We'll find where silos are costing you growth and map a clear path forward. No pressure, no pitch, just clarity.