Clever Geek Handbook
6 August 2025

Building Brand Authenticity

Recommendation

Authenticity, by its very nature, can’t be faked – at least not for long. Consumers know intuitively when something is authentic, regardless of what marketers say. People yearn to feel enthusiastic about the products they buy. They seek brands that make them feel validated, understood and connected, and when they find them, they demonstrate their loyalty. That’s why fans display tattoos of the Harley-Davidson logo, or make pilgrimages to the Zippo Visitors Center, or even pay hundreds of dollars for Manolo Blahnik high heels. Yet these brand-devoted consumers are quick to blog, tweet or text when a product doesn’t meet their expectations for authenticity and quality. You’ll nod in recognition as branding expert Michael B. Beverland identifies “seven habits” of authentic brands, including passion for excellence, devotion to a craft, and respect for heritage, tradition and place. His use of inside-the-arena marketing war stories will intrigue any marketer and many consumers. While smoothly written, his book would benefit from a fresher graphic design, since its long, unbroken paragraphs make it challenging to read. But, if you stick with it, BooksInShort promises you’ll find smart, knowledgeable – and authentic – branding advice.

Take-Aways

  • The public loves authentic brands in a way that belies popular branding advice.
  • Traditional marketers attempt to control the consumer’s image of a brand, yet customers always have had a say in brand image, and their influence is growing.
  • Authenticity is subjective, but authentic brands do share some definitive traits.
  • Authentic brands “stick to their roots,” and revere their heritage and traditions.
  • People who make authentic brands are passionate about their product or service.
  • Artisans who create authentic brand merchandise are devoted to their craft.
  • Authentic brands generate breakthrough innovations by immersing themselves in their markets.
  • Brand stories provide a shared context that links like-minded people.
  • Authentic brands nurture connections to their communities, even if their products become global.
  • The employees at authentic brand companies are as dedicated to the brand as are their managers and executives.

Summary

Lighting Up for Zippo

Why would people love a cigarette lighter so much that they’d join the Zippo Click Club? Perhaps it’s for the same reason that thousands visit the Zippo Visitors Center in Pennsylvania every year. The Zippo is a dependable lighter in any weather. If yours breaks, the company’s technicians will fix it for free and will try to determine why it broke. Zippo lighters have been a staple for U.S. troops since World War II, and they’re a familiar flicker in a soldier’s hands in numerous war movies. People’s devotion to Zippo springs from the sort of feelings that impel fans to collect vintage Altoids mint tins or display their Dyson vacuum cleaners in their living rooms. Zippo is an authentic brand with a loyal fan base – beloved in a way that defies popular marketing advice.

What Is Authenticity?

Snapple, a juice drink, began as an authentic brand. Then Quaker Oats bought the line for $1.7 billion, and applied a tried-and-true marketing approach based on “price, product, promotion and placement.” Four years later, Quaker Oats sold Snapple for $300 million. Why did the brand’s value plummet despite sharp marketing? Quaker Oats’ slick marketers didn’t understand that people had loved Snapple’s “quirky” authenticity, its amateurish – not slick – marketing and its lack of conformity. They didn’t want a mass-market drink.

“The desire for authenticity has now crossed into the brand arena as many consumers look for alternatives to mass-marketed, overly commercialized and meaningless brands.”

Authenticity is fluid and varying; it is “the manifestation of the search for what is real.” Certain brands help buyers define who they are or want to be. This communal expression reflects specific social norms. Authenticity is subjective, but authentic brands share some definitive traits. They come from companies with leaders who are passionate about their products, involved in any decisions that affect their brands, and committed to a heritage that is rooted in place and tradition.

Traditional Marketing Versus Authenticity

The ways that people traditionally formed individual identities are shifting as society’s ideas about family, culture and place evolve. Changes driven by “globalization,” “deterritorialization” (the loss of “connections to place”) and “hyperreality” (the blurring of the line between “real” and “fake”) have splintered people’s shared perspective. Amid such shifts, consumers are forming identities and communities around “brands, branded spaces or activities.” Skateboarders relate to each other, as do people who drive Volkswagens or those who wear Converse shoes.

Traditional brand marketers want to show or tell consumers how to feel about a brand. They use such techniques as “reinforcement,” “positioning” and “core messaging” to build positive brand images. A marketer using this “top-down” approach hopes to manage consumers’ image of the brand. Yet customers always have had a say in brand image, and their voices are louder than ever. Fast communication platforms, from cellphones to online outlets such as blogs, Twitter, YouTube and Facebook, give people new forums for finding and discussing brands. If they think a brand has a disingenuous message, they will shun the product, and they’ll tell their friends why. Brands gain meaning from marketing that evokes sociological influences. Harley-Davidson fans imbue its bikes with the idea of freedom. Harley marketers reinforce this concept with ads, sponsorships and promotions. The brand’s meaning also emerges from its fans’ subcultures. Think of the movie image of Peter Fonda and Dennis Hopper on their Harleys in Easy Rider.

“Seven habits” define authentic brands. They are:

1. “The Authenticity of Stories”

Brand stories provide a shared context that unites like-minded people. For example, Mac computer users who refer to themselves as “Apple people” credit the brand with being creative, innovative and unconventional. Traditional marketers tell simple stories – “Ajax drives away germs” – with little emotional meaning. Authentic brands tell layered stories or even myths created by the company, consumers, fans, critics and the media. The 10 most common types of brand stories are:

  1. “Founding” – A company’s beginning and early challenges.
  2. “Family” – The role of the founding family.
  3. “Conflict and struggle” – The challenges the brand overcame on the way to success.
  4. “Triumph and tragedy” – The ups and downs of the firm and its people.
  5. “Creation” – How the brand came to be, including innovative problem solving and a passion for its products.
  6. “History” – The role the brand and its founders played in the past.
  7. “Community” – The brand’s influence on its community.
  8. “Place” – The link between the brand and its physical location.
  9. “Consumers” – Stories that originate with the brand user.
  10. “Product” and “service” – The saga of the merchandise or service itself.

2. “Appearing as Artisanal Amateurs”

Why would Manolo Blahnik and Ralph Lauren boast that they have no formal training? Rather than following the usual path, authentic brand creators present themselves as zealous artisans devoted to their craft. They project the image that they started with little or no money, and stumbled onto success with a superior product that evolved from their passion. Even when an authentic brand becomes an industry front-runner, its marketers continue to downplay any mainstream image. Instead, they promote the brand’s commitment to its craft. For example, ads for Champagne Krug always talk about hands-on production and the skill of the vintner. While its bottles are no longer turned by hand, the company would like you to feel as if they were.

“The desire for authenticity has always been a reaction to ‘progress’.”

Authentic brand marketers seem to eschew the idea of marketing (though that’s what they do). They want their products to speak for themselves. Brand owners will admit that they’ve been lucky and survived failure, and these human experiences ring true with their customers. The manufacturers of authentic brands let you know they love what they do and have fun with it. That’s why Quiksilver staffers leave work when the waves get high enough for great surfing.

3. “Sticking to Your Roots”

Authentic brand marketers walk a fine line. Their products must “stick to their roots,” that is, uphold the tenets that made them popular, while evolving with the times. They maintain their basic style and attributes even as they innovate. That’s why you can tell Hermes luggage from its competition and detect echoes of the original Beetle in the latest Volkswagen. Authentic brands revere traditions. In-N-Out Burger retains its ’50s style even when it updates its menu. Authentic brands operate in their founders’ spirit, staying playful and not sacrificing quality for economy.

4. “Love the Doing”

The makers of authentic brands are passionate about their products or services in a way that communicates their commitment and sincerity. They are in business because of their unwavering enthusiasm for their products. They love what they do. Being totally product-centered defies traditional marketing axioms about being entirely consumer-centered, but people seem entranced by companies that appear more interested in their products than in their consumers’ whims.

“Authentic brands collect stories the way a hurricane draws energy as it moves over water.”

Authentic brands are transparent or even boastful about their production processes. Many, including Krispy Kreme Doughnuts and In-N-Out Burger, welcome customers behind the scenes. Schwinn Bicycles pioneered this approach by letting customers watch bikes being fixed. The executives at firms with authentic brands stay involved in production, in contrast to sales- or finance-oriented CEOs. Moreover, authentic brand manufacturers love the creative process and continue to make improvements. Georg Riedel and his Riedel glassware researchers continually try to make better wine glasses. They embody the authentic brands’ typical quest for great design.

5. “Market Immersion”

Market research led to New Coke and to Ford’s Edsel model, both disasters for their brands. Authentic brands rely on market immersion, not market research, to drive new products. They interact with their fans. They develop knowledge and intuition about their core markets, so they can create breakthrough innovations people will want. They even employ their fans. Nike hires sports buffs; Morgan Motor Company enlists car enthusiasts. Leica’s photographer-employees helped it achieve cutting-edge status. When your employees resemble your customers, they can relate to your buyers’ lives and habits. This helps authentic brands identify new trends and stay relevant. These brands find multiple ways to connect to their fans. For example, Peter Jackson, the director of the Lord of the Rings, uses a blog to inform fans about his latest films.

“Authenticity takes time to build, but can be lost in an instant.”

Some companies, such as Google, encourage employees to take time from the workday to test fresh ideas, or “dabble.” This encourages designers and other insiders to create fresh products and services that might have otherwise stayed in the box. Market research is not useful with startlingly new ideas. Since consumers had no frame of reference for the iPod – and couldn’t have explained what they wanted it to do before it came out – the breakthrough device might not have come to fruition if Apple’s knowledge of its customers hadn’t transcended market research.

6. “Be at One with the Community”

Authentic brands promote their community ties, even after they become global. Starbucks has its roots in coffee-crazed Seattle, but it was just another coffeehouse in Australia. Stripped of its geographical and cultural context, it failed to thrive there. Authentic brands embed themselves physically in their native geography, and in their original culture and subcultures. Thousands of subcultures are watchdogs of authenticity. The gay community is devoted to Levi’s and Absolut because of their commitment to the gay movement. Skateboarders loved Vans shoes, but when Vans expanded into other markets, that subculture turned away and Vans went bankrupt.

“You cannot tell consumers that your brand is authentic – you have to show them.”

A brand can reaffirm community ties. Authentic brands value their heritage. The Morgan Motor Company, firmly rooted in Malvern Link, England, epitomizes the British sports car tradition in its styling and its involvement in racing. Like Morgan, many authentic brands emphasize their home country. Audi, BMW and Mercedes-Benz are highlighting their nationality when they urge buyers to see their cars as models of “German engineering.” Brands also promote regional roots. Burt’s Bees and L.L. Bean always evoke outdoorsy, no-nonsense Maine. Authentic brands are proud of their part in shaping and changing their industries. Imagine the computer industry without Apple, fashion without Chanel or car manufacturing without Mercedes.

7. “Indoctrinate Staff into the Brand Cult”

The employees at authentic brand organizations tend to be as devoted to their products as if they were CEOs. And their companies generally make a determined effort to recruit the best, most suitable people. A Virgin Airlines job interviewer might ask a prospective hire to dance or sing, because the airline seeks people who can step out of their comfort zones. Once such firms hire good people, they take care of them. The Body Shop offers in-house childcare, and Google provides massages, gyms and on-site medical clinics.

“When brand managers and marketers talk of engaging in an authentic brand strategy they miss the point.”

Why would anyone work for Gordon Ramsay? The “rock star” chef has made a career of being obnoxious and temperamental. Yet, despite his tantrums, he’s had an 80% staff retention rate over the past 10 years. Perhaps his staffers stay because he’s passionate about his work, encourages their best efforts and gets rid of people who don’t perform. Like Ramsay, authentic brand managers don’t let poor performers linger and hurt the team. They encourage creativity and give public and private credit to employees who make significant contributions. Lastly, staff members who work for authentic brands get to know their top executives. These leaders stay involved with daily challenges and take pride in their hands-on approach. They know authentic leaders show up.

About the Author

Michael B. Beverland, a professor of marketing at the Royal Melbourne Institute of Technology in Australia, is a brand marketing researcher, writer and speaker.

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Building Brand Authenticity

Book Building Brand Authenticity

7 Habits of Iconic Brands

Palgrave Macmillan,
 


6 August 2025

The New Brazil

Recommendation

If you only associate Brazil with soccer, samba and “The Girl from Ipanema,” adjust your thinking. Brazil inaugurated its first female president, Dilma Rousseff, in 2011, and it will host the 2014 World Cup and the 2016 Olympic Games. But even more significantly, Brazil has become a global economic powerhouse. Political scientist Riordan Roett explains how it all happened – from Brazil’s status as a neglected Portuguese colony to its 20th-century military dictatorship to its modern role as a commercially influential nation. Published just prior to Rousseff’s election, Roett’s slightly stolid book ends with former President Luiz Inácio (Lula) da Silva’s second term and leaves you wanting to know more, though it reveals in exhaustive detail how this dynamic democracy has come so far so fast. Roett’s tough-going textbook style can be dense, but BooksInShort promises you will learn a lot about Brazil, the 21st century’s “crafty superpower.”

Take-Aways

  • Smart fiscal policies, savvy political moves and a growing economy contribute to Brazil’s rise onto the world stage.
  • As a neglected Portuguese colony, Brazil lagged behind its South American neighbors.
  • Its natural resources, particularly its coffee crop, kept the nation dependent on exports.
  • In 1930, Getúlio Vargas, “the father of modern Brazil,” put the country on the road to economic development.
  • Brazil became a democratic state after World War II, though the military exerted influence behind the scenes.
  • The republic collapsed in 1964, and a “bureaucratic-authoritarian” regime ruled Brazil for the next two decades.
  • From 1985 to 1994, Brazil drifted through political and economic crises.
  • President Fernando Henrique Cardoso created economic stability with the Real Plan.
  • President Luiz Inácio (Lula) da Silva built on Cardoso’s policies, turning Brazil into a 21st-century economic, energy and agricultural giant.
  • Brazil partners with Russia, India and China in the influential BRIC coalition.

Summary

“The New Brazil”

While its path to modernization has not been smooth, Brazil now is an economic and political world leader. It is a rising star on the newly reconfigured, post–Cold War global stage along with its BRIC partners – Russia, India and China. Thanks in part to the sensible fiscal measures Brazil has undertaken since 1994, the South American nation weathered the 2008–2009 financial crisis better than most countries. Like its fellow BRICs, it is a major player in international trade and development. With its energy independence, robust ethanol program, and discovery of large oil and natural gas reserves off its coast, Brazil has become a leading voice in international energy policies. The country also has joined its BRIC cohorts in squaring off against the world’s industrialized nations on such issues as global growth and climate change. How did this “new Brazil” come into being? First, you have to understand the history of the “old Brazil.”

“Colony, Empire and Republic”

Portugal’s 16th-century king Dom João III divided heavily rural Brazil into “large landed estates” known as “hereditary captaincies.” Portuguese court favorites took responsibility for developing these territories. As a colony, Brazil – though South America’s largest country – lagged behind the rest of the continent in development. While other countries under Spanish settlement broke away and became independent republics, Brazil remained a monarchy until 1889. Its feudal system defined Brazil’s evolution and “contributed to income inequality, limited the internal market and maintained a strict division between the haves and have-nots.”

“Brazil’s emergence as a new player in world affairs could not have been predicted just two decades ago.”

Brazil’s economic strength came from its rich “natural and mineral resources” – sugar, coffee, gold, diamonds, brazilwood and cotton. Portuguese slave traders imported more than four million Africans to work the estates. “African slavery helped to define and demarcate the social and class lines of Brazilian society for centuries.” The country expanded over a vast area comprising more than half of South America.

“Brazil was almost an afterthought for the seagoing Portuguese, who were much more interested in India and Africa.”

Portugal, though benefiting from the wealth and riches Brazil provided, never integrated the colony into its own society. After the revolutionary movements at the end of the 18th century, Brazil eventually achieved independence from Portugal in 1822. The Portuguese royal family, which was under siege by Napoleon’s forces, escaped to Brazil and settled there, ruling as emperors even after independence. Brazil opened its ports to the major European powers and, under the influence of the monarchy, began to develop politically, artistically and economically.

“The end of the empire, while abrupt, transpired quietly and without violence, leaving the military and civilian elites to struggle with the question of what to do next.”

Brazil needed a government that recognized the emperor’s role and incorporated its vast territory. In 1824, it adopted a new constitution that guaranteed “individual liberty and rights” and that provided for the election of representatives to both houses of the national legislature. But many Brazilians remained disenfranchised. The emperor, opposed by liberal parties, abdicated in 1831. After much political wrangling, the country installed his 14-year-old son as emperor in 1840.

“Once again, the armed forces used their ‘moderating power’ to introduce regime change, and, once again, the central figure in the old regime understood the rules of the game and left peacefully.”

Coffee soon became Brazil’s main export. The British recognized Brazil’s economic opportunities and invested in the country, sending in engineers and growers who hired nonslave workers. Additional immigration helped reduce reliance on the slave trade, which ended in 1855 (and was outlawed in 1870). By the 1850s, the country moved toward republicanism, due in part to coffee growers’ influence in the provinces. These “coffee elites” and the military pressed “for renewal and modernization.” In 1889, the emperor went into permanent exile in Europe.

“In politics, timing is often critical. Brazil was unlucky in the timing of its return to civilian government in March 1985.”

From the late 1800s until 1930, Brazil governed itself as “the old republic.” In 1891, a new constitution created a classic federal system that devolved some power to Brazil’s individual states but centralized the national government in Rio de Janeiro. While the military exerted power behind the scenes, all but three of Brazil’s leaders during this period were civilians who introduced universal suffrage and separation of church and state.

“As the new plan gained popularity, the economic team decided to introduce a new currency...they called it the real.”

Domestic politics stabilized, but no one leader or institution effectively unified the country or established a national identity. Coffee continued to drive the economy, crowding out other industries. In the 1920s, revolts challenged the coffee-based oligarchy. After much political turmoil – and the economic crash of 1929 – Getúlio Vargas assumed power, becoming one of Brazil’s most important 20th-century leaders.

The Beginnings of a Modern Brazil

Vargas ruled Brazil for 18 years in many capacities: as a provisional leader, as an appointed chief executive, as a “soft” dictator and as an elected president. He centralized authority by nationalizing the labor force under the first Ministry of Labor, Industry and Commerce, establishing a Ministry of Education and Health, and securing close relations with the Catholic Church (resulting in the raising of the Christ the Redeemer statue on Rio’s Corcovado Mountain).

“For decades Brazil’s political leaders had been unable to provide the vision and leadership needed to realize the country’s vast potential. Cardoso was the first president who seemed up to the job.”

In 1934, the national assembly crafted a new constitution that established a one-term, four-year presidency, but by 1938, Brazil faced renewed political upheaval. Just before the end of his presidency, Vargas swept away “representative government” and cracked down by creating the estado novo – “the new state.” Quashing his political opponents, Vargas shifted his focus to industrialization. Using both economic initiatives and canny political instincts, Vargas was able to consolidate his power throughout the early 1940s despite the emergence of opposing factions. Promoted as “the father of modern Brazil,” he stepped down only in the face of military opposition after World War II.

“Lula’s commitment to economic orthodoxy as president...led to marked improvement in Brazil’s economic performance.”

In 1946, Brazil established a new republic and began a gradual transition to democracy. But “Brazilian leaders became increasingly pessimistic about the country’s economic future,” mostly due to its overreliance on exports. Eurico Gaspar Dutra’s administration could not grapple well enough with these issues to stave off Vargas’ return in 1950.

“Something had changed in Brazil since the opening of the century. Was it due to luck? Careful planning? Or is Brazil’s rise best explained by one of Lula’s favorite sayings, ‘God is a Brazilian’?”

Upon reassuming the presidency, Vargas established the National Bank of Economic and Social Development and, in 1953, created the national oil company, Petrobras. But he lost his significant influence after one of his political opponents suffered an assassination attempt. With the military again calling for his resignation, Getúlio Vargas committed suicide in 1954.

“Looking forward at the end of the Lula years, Brazil appears poised to consolidate its lead role as an emerging-market economy.”

For 10 years, Brazil lurched through several presidential administrations, each unable to deal effectively with the country’s national debt, inadequate education system and crumbling infrastructure. “Import substitution” policies promoted industry, but economic difficulties continued to exacerbate political tensions. Communist groups gained increasing popularity. Brazil’s military, operating in the background, stepped forward in 1964 to force massive change.

Brazil: 1964-1985

The chief executive fled the country and an acting president took office. No one really knew what to expect, but Brazilian leaders felt they had reached a watershed moment. Brazil needed to “modernize and deradicalize.” The answer was a “smart state”: The military established a “bureaucratic-authoritarian government” under civilian administration. The government kept its constitution, but the new leader assumed broader powers. Unfortunately, this included police action against “subversive” groups, a campaign that led to torture and suppression.

“There is no doubt that Lula has been a ‘lucky’ president.”

The new regime implemented its “Economic Miracle” between 1968 and 1973. Brazil’s economy improved with an increased federal role in investments and expenditures. But despite new programs and progress on the fiscal front, the repressive government’s popularity fell dramatically. Civil unrest increased.

“As the Lula administration comes to an end, the question is whether the glass is half full or half empty.”

To maintain its hold on power during the economic difficulties and energy shortages of the early 1970s, the military government instituted another state-sponsored economic development plan that focused on import substitutions and infrastructure investments as well as sustained economic growth. The plan was successful enough, but the country’s debt burden increased.

“[The new president’s] inauguration in January 2011 will be one more milestone in the long road to economic and political consolidation.”

At the same time, the nation’s leaders came to understand that the only way to address internal unrest was for the political system to achieve abertura, or openness. The idea of transitioning back to civilian rule met with increasing public acceptance. At the same time, Brazilian unions began gathering new political strength, staging strikes and slowdowns in the latter part of the decade. A new labor union leader emerged: Luiz Inácio da Silva, also known as Lula.

Brazil’s looming debt crisis forced its politicians to institute an austerity program in 1979; in 1982, the government overcame its reluctance to accept the International Monetary Fund’s conditions in exchange for its economic help. By 1984, inflation had spiraled completely out of control, reaching 200%. A civilian government won the 1985 presidential election, but the new president, Tancredo Neves, died before he could take office, ushering in Brazil’s “incomplete transition” years.

Cardoso Ends Years of Drift

The unexpected president, José Sarney, had to negotiate perilous political and economic waters. His efforts to control Brazil’s debt and runaway inflation generally failed. A number of presidents and finance ministers came and went, ushering in colorfully named economic plans, establishing and devaluing currencies, and imposing taxes. After years of floundering, Brazil reached a “critical juncture” with the ascension of President Fernando Henrique Cardoso in 1995. Cardoso had introduced the Real Plan (named for the country’s currency) in 1993 when he was finance minister. The plan checked inflation, stimulated GDP and raised citizens’ purchasing power. As president, Cardoso continued policies to reduce the size of the public sector, increase privatization and institutionalize fiscal responsibility. While some of his measures – such as reforming social security – failed, the economic tide had turned, and long-term solutions were taking hold.

Although external crises such as the 1994 Mexican peso crisis and Russia’s 1998 debt default buffeted Brazil, Cardoso’s policies were successful enough to earn him a second term. Then, in 1999, economic tensions pressured the overvalued real; Cardoso’s government had no choice but to allow the currency to float free from its US dollar-pegged range. The real lost 40% of its value, and Cardoso never recovered. Lula seized his opportunity.

“Lula’s Brazil”

The milestone presidency of Luiz Inácio da Silva began in 2003, after he won his fourth try for national office. Although a union leader and leftist, Lula had shown the voters that “he had a pragmatic side as well” through his carta ao povo brasileiro (letter to the Brazilian people). His presidency combined progressive social policies with fiscally conservative principles. The result: a vitally reinvigorated Brazil.

During his eight years in office, Lula oversaw several successes: He 1) reformed the social security system; 2) lifted millions of Brazilians out of poverty through the Bolsa Família (“Family Basket”) aid program; 3) increased local education funding; 4) helped the country become “a net foreign creditor for the first time”; 5) established Brazil as a leader in ethanol production and prepared it to become a major fossil-fuel exporter; 6) integrated the financial sector with worldwide markets; 7) welcomed new domestic and foreign investors; 8) promoted “economic integration” in South America; and 9) established Brazil as a global political leader by working with the other BRIC countries to challenge the political supremacy of the G-20 industrialized nations, particularly the United States.

Although Lula has made some controversial political moves on the world stage – expressing support for Iranian president Mahmud Ahmadinejad’s “civilian nuclear program,” for example – he leaves office with his country recognized across the globe as an engaged, forward-looking economic and political force. While some questions remain – “Lula, or his successor, will need to understand that an increase in Brazil’s profile entails responsible global conduct” – the future is bright. “The country of ‘tomorrow (and always will be)’ has become a significant actor today.”

About the Author

Riordan Roett is a professor at Johns Hopkins University, where he leads the Western Hemisphere and Latin American Studies programs.

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The New Brazil

Book The New Brazil

Brookings Institution Press,
 


6 August 2025

Austerity Business

Recommendation

Business always has run in cycles, from exhilarating highs to devastating lows. Monetary tremors typically register somewhere in the middle range, but every so often, tectonic financial plates shift worldwide, creating permanent change. Scarcely any entity has emerged unscathed from the international economic crisis that began in 2008 and that continues to wreak havoc. Pretending that things will one day “return to normal” means denying reality, insists Alex Pratt, a veteran entrepreneur. He believes business must adopt a new philosophy in this “age of austerity,” when there’s less money, reduced workforces and smaller appetites for risk. He calls for businesses to return to the fundamentals: intelligent spending, informed decisions, smart staffing and first-rate customer service. Yes, current economic conditions have created hesitancy and insecurity, but now is your opportunity to formulate a strategy and execute an action plan that will help ensure your survival and, perhaps, lead to prosperity. Pratt’s “39 tips” occasionally overlap and intersect. But that quibble aside, BooksInShort believes Pratt’s approach has utility and validity. Like it or not, austerity is here to stay. Get used to it.

Take-Aways

  • The old ways of doing business don’t work anymore.
  • Difficult economic circumstances can present rare opportunities.
  • Leaders should make tough decisions – especially in troubled times.
  • Cultivate employees who strengthen your organization; get rid of those who weaken it.
  • In trying to save money, never cheat your customers. You may lose them forever.
  • Austere times call for aggressive promotion. Increase your marketing and advertising.
  • Nothing is more important to your business than its reputation. Guard it with your life.
  • Change makes most people uncomfortable, but it’s a fact of life in the age of austerity.
  • Don’t take your suppliers for granted. Develop a mutually beneficial relationship.
  • Eliminate the possibility of unpleasant surprises. Identify your vulnerabilities and have a plan for worst-case scenarios.

Summary

A New Way of Doing Business

There’s no use looking wistfully through your rearview mirror – the global financial crisis that took hold in 2008 has created fundamental changes. The fall of giants such as Lehman Brothers represents the crumbling of corporate pillars once thought indestructible. The factors that traumatized the economy include skyrocketing personal and institutional debt, the mortgage meltdown, bankruptcies, foreclosures and unemployment.

“The old period of plenty is dead. A sustained era of austerity is upon us.”

Prosperity has given way to austerity. The old way of doing business no longer is viable. From the corporate CEO to the owner of the neighborhood grocery store, businesspeople have become more deliberate and conservative. Everyone scrutinizes the bottom line. Though economic recovery is likely, things never will return to the way they were, so smart businesspeople must recognize the opportunity to devise a new philosophy and embrace change.

A Mandate for Change

Most people fear change, especially when they’ve been operating a certain way for a long time. A big gap yawns between recognizing the need for change and actually executing it. During the era of prosperity, the focus was on growth and market dominance. Affected by “gorging on cheap debt,” many businesses became enamored with expansion and ignored critical operational components such as cash flow, profit and customer service. Businesses now must alter their mindset and recognize the importance of these basic elements. While change can be uncomfortable, maintaining the status quo in this day and age may be disastrous. Holding on to old beliefs and philosophies amounts to living in a fantasy world.

Look for Opportunity

Austerity means “doing more with less.” Employees are willing to work for less and to sacrifice benefits for job security. Lenders have toughened their standards. Money is tight. Consumers carefully weigh every purchase. Economic uncertainty makes everyone more cautious. Nevertheless, businesses must be able to recognize opportunities. Bold action often pays huge dividends. A company that sinks money into advertising when its competitors are retreating, for instance, could emerge as a big winner. Remember that Google, Burger King and FedEx were born during difficult times.

There’s No I in Team

Don’t deny reality. Admit that your business is struggling and needs to regroup. Don’t wallow in despair. Maintain your optimism and remember that others depend on your leadership. Deal honestly with your employees, keep the lines of communication open and don’t be afraid to admit that you don’t have all the answers. The age of austerity requires cooperation from everyone in your organization. Managers must transmit the vision of the top executives. To present a united front, your employees must put aside petty differences and work together, now more than ever.

Time to Excel

Even in good times, managers and employees will say they are overwhelmed and don’t have enough time to tend to their responsibilities. Nowadays, those who “plead time poverty” are setting themselves up for failure. They are creating built-in excuses and admitting that they can’t cope. In the age of austerity, the most valuable employees are those who relish challenges and adopt a “can do” attitude. Instead of complaining about lack of time, they focus on their tasks and do the best they can without moaning and groaning. Obsessing about the past and fretting about the future are exercises in futility. All you have is the present, so make the best of it.

Character Counts

The new austerity casts your organization’s personnel in a new light. Your “musketeers” will enthusiastically embrace challenges and make the necessary sacrifices. Your “mercenaries” will do no more than what is expected of them and will resist your attempts to create a productive work environment. Operating with a reduced workforce and budget, you cannot afford employees who scoff at camaraderie, unity or team spirit. In tough times, leaders must act decisively. Objectively assess your employees, taking into account not only their skills but also their attitudes. Letting people go is never easy, especially in a poor job market, but good leaders are expected to make unpopular decisions. Besides, you owe it to the good employees who remain. Your chances for success increase when you cut your losses and invest in the right people.

Pick and Choose Wisely

Re-examine your hiring process. Make sure that job candidates have the required credentials and experience. Interview them carefully. Administer psychological testing to gauge their compatibility with your firm. Be diligent about checking references, and seek recommendations. With so many people out of work, the talent pool is larger and deeper. Don’t make rash decisions. The wrong hire can cost you dearly.

Handle with Care

In your determination to build the best team, you risk overlooking the individual needs of your workers. How you handle your employees depends on their personalities, strengths and weaknesses. The same verbal reprimand that motivates one person could easily devastate another. Be sensitive and respectful. Give your people the opportunity and time to succeed. Don’t waste everyone’s precious minutes with meaningless staff meetings. Do your business and get out; save the sports and political discussions for lunch. Keep your meetings to a half hour or less.

No Cheating Allowed

In trying to save money, many businesses commit a cardinal sin by giving their customers less value. The sandwich rolls are smaller, the ice cream cartons hold less than a half gallon and the package contains fewer pieces of candy. Maybe you’ll get lucky, and nobody will notice. But problems arise when consumers realize they’re paying the same prices for less. Customers who suspect dishonesty will stop trusting you and take their business elsewhere – probably for good. Providing value helps you retain customers just when you need them most.

Stay Aggressive

Adopt an aggressive sales philosophy. Of course, selling is more difficult when people have less money to spend. You have to make more calls and work harder to set up more appointments, but lamenting the current state of affairs will not help. Try focusing on improving the relationships you’ve already established. Help solve problems with good customer service. Make sure clients speak to a real person on the phone. Be polite and respectful. Finding solutions for consumers can earn you a lifetime of loyalty.

Stand Out from the Crowd

In tough times, you may need to reduce discretionary spending. Never put marketing and advertising into that category. To the contrary, smart businesses increase their marketing efforts when everyone else scales back. Recognize the wonderful opportunities that can emerge if your competitors retreat. Intelligent marketing means identifying your target customers and learning what they need and want. Hit the streets. Send out questionnaires. Study your data and observe buying behaviors. Instead of running scared, boldly move forward – the sooner the better.

Watch Out in the Fast Lane

You’d be foolish to underestimate the power and influence of the Internet. Virtually everyone has a website; customers expect you to have an online presence. Still, you easily can become obsessed with tracking the latest technological advances and making sure you don’t fall too far behind the competition. You don’t have to waste time and resources developing thousands of followers on Twitter just because everybody else does. The Internet is your tool, not your master. Stay within your comfort zone and remember that your customers are the only people to whom you are accountable. Make sure you can find each other in cyberspace, and everything will be fine.

Guard Your Reputation

In the age of austerity, your reputation is arguably your most valuable commodity. Protect it with your life. Actively monitor your business practices so you can continue to provide the goods and services that enabled you to build your loyal customer base. Everyone in your organization, from the top down, must commit to professionalism. One negative interaction with a client can cancel out 10 positive encounters. To strengthen your reputation, decide what you want to be and how you will project that image. Then follow through.

Cut Corners Carefully

In tough times, many businesspeople have a knee-jerk reaction: to cut spending indiscriminately. Saving money becomes an obsession, but stifling growth creates a false sense of security. Instead, reduce your costs intelligently. Try to negotiate lower rates with your office supplier. Look to eliminate waste. Do you leave lights on after everyone has left? Does the air conditioning or heat operate over the weekend? Do your employees shut down their computers at the end of the day? Do you really need bottled water in the break room? Maybe you can squeeze another year or two from the lunchroom refrigerator. Perhaps the cleaning crew can come in four nights instead of five. But don’t use cheaper materials for your products or compromise on customer service. Be careful about cost-cutting measures that might backfire and demoralize your employees. Scale back the holiday party, but don’t eliminate it. And remember, free coffee is always a worthy investment in employee morale.

Watch the Money

Know exactly how and where your money is spent. In the early 1900s, Italian economist Vilfredo Pareto observed that 80% of wealth comes from 20% of the population. Over the years, business experts have come to accept the validity of Pareto’s formula. Thus, 20% of your employees and 20% of your customers provide the majority of value. Your job is to identify both sets.

Supply and Demand

Never underestimate the importance of your “supply chain.” Businesses often take their suppliers for granted and have no backup plans in case of an emergency. While striving to maximize a mutually beneficial relationship with your suppliers, remain aware of your options in the marketplace. Keep the lines of communication open. Sure, suppliers want your business, but they also want to be treated like your partners. Investigate new ways in which your suppliers might help you. The more you communicate, the greater your chances of negotiating better prices and terms.

Surprise, Surprise

Complacency is easy, particularly when things are going well. The current economic crisis has demonstrated that disaster could be right around the corner for everyone. Planning for every scenario is impossible, of course, but you must do all you can to limit your exposure to surprises. Don’t allow cockeyed optimism to obscure your view of reality. This is the ideal time to sit down and contemplate all the possible eventualities that could have a negative impact on your organization. Could you overcome the loss of your biggest customer? What if the bank reduced your line of credit? How would you deal with a sudden price increase from your primary supplier or the defection of your best employee?

“It’s good to talk, but it’s better to work.”

You’ll sleep a lot better knowing where you stand and the areas in which you are either strongest or most vulnerable. The rules of business have changed in the age of austerity. Keep your eyes on the road and your hands on the wheel. Trust in your abilities and move bravely ahead.

About the Author

Alex Pratt is an entrepreneur and director of Serious Brands in England. He has advised several governments on business, competition and innovation.

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