Hernando de Soto was on to something

In his book titled, “The Mystery of Capital”, he spoke about how 80% of the population in developing and former communist countries, who have been classified as being some of the world’s poorest. His idea goes contrary to folk wisdom and identifies this population as possessing far more in terms of assets than their current worth. Unfortunately in these countries, there is lacking the prerequisite economic and political infrastructure to explore these assets in their full potential as capital. For instance, in parts of Latin America a building may only serve three purposes or so: place of abode for the owner, leased accommodation, a storage facility or a few others. However, his research organization (the Institute for Liberty and Democracy) have identified up to a hundred uses that same building may serve in a place like the United States.

The key is the ability of these assets (more accurately referred to as “Capital”) to take on another form independent of their physical forms. To take on parallel lives primarily through the economic instrument of documentation. He gives an example of the Peruvian telephone company which was valued at the stock exchange at $53 million dollars and was up for privatization. By extending it beyond its physical assets to its potential to generate more value, they were able to sell it at $2 billion (a staggering 37 times its original value!)

Applying this economic framework to branding, it is clear that the brand in its intangible form takes on a “parallel life” in the mind of its audience through interaction with expressions from corporate culture to visual ID.

It is imperative that a more empirical view be taken on branding. Brand equity presupposes measurements through which brands may be compared with each other especially in terms of monetary value. According to Nitza Sasson and Idan Doron of Tefen IL in their article “Measuring Brand Equity: the first crucial step maximizing value”, measurement of brand equity has some relevance in Mergers & Acquisition, settlement disputes, events of ownerships, lawsuits, partnership conflicts and licensing agreement. The methodologies for assessing this are varied and out of the scope of this article.

The important point is brand value needs to be unpacked further beyond just merchandising and sponsorships. With the dramatic changes in the world today, as noted in the internet revolution for instance; are their new ways to “unpack” this value. Can brand value be harnessed by the consumer just the same way money is?

I admit I have not thought this through but it is obvious there is room for some pretty good ideas in this area. Or what do you think?