I am an entrepreneur on a mission to inspire people to do new things. In 2000, I started our strategy consulting firm to help top executives grow their business. I, like many senior executives I have talked to, really never paid much attention to brand licensing as a serious growth strategy. However, over a decade ago we added brand licensing to our services, because it goes well with our growth strategy and innovation services for the reasons I will outline here. I prompt you, as CEO, to take another look at how brand licensing may fit your growth goals.
As strategists focused on business growth for our clients, we were always looking at how companies could use their capabilities to do new things, looking at new business models, acquisitions, partnerships, really anything that had significant growth. We were doing a lot of work in strategic partnerships and many times the essential deal payout was where one company would take the majority of work (and risk) developing and executing the product and the other a share of revenue; in other words a licensing deal! Also, when we stepped back and took a critical look at category growth for companies who needed brands, or others who had a brand but shouldn’t take the risk or build/buy the capability to get into a strategic growth area, we realized the value of brand licensing. It is at its essence a type of transaction for strategic partnerships to fulfill certain strategies.
I am not here to say that brand licensing is for every company or brand – it is a strategic choice for the CEO. But it is undeniable that growth beyond the core business and brand ubiquity through partnerships is critical to gain or maintain a leadership position for the most valuable brands in your portfolio. There are many examples from our experience working with major brands of outcomes in how brand licensing creates value in unique ways to further the company growth strategy that might surprise you. We call it Strategic Brand Licensing and it is a partnership growth strategy model.
To reiterate, brand licensing in and of itself is not a strategy. It is a specific type of partnership transaction utilized to fulfill a growth strategy, that’s it. The best way to assess brand licensing opportunity is in context of your strategic options and growth needs. Furthermore, partnerships, including brand licensing, are not for every culture and require a high degree of skill in managing relationships – such as being open, inclusive and a good communicator – as well as having a willingness to see both sides and find win-wins. However, once harnessed, brand licensing opens up options for what “new” things the company can do because of instant and relatively low cost access to new capabilities.
As for how to get started, we do not recommend that companies “do” a deal just because they can. We conduct strategy work to determine the strategic options and, along with senior management, ensure licensing fits a well-designed growth strategy. Sometimes we collectively determine that licensing isn’t for your organization.
In summary, many CEOs have a misconception of Brand Licensing and summarily dismiss it. But you, as a CEO now armed with this new perspective, can explore the concept as a way to provide new growth capabilities and possibly find that Brand Licensing is a significant value driver in your growth strategy.