The old Marxist cliche doesn't work anymore! Marketingweb, August, 2006

If all the workers of South Africa withdrew their labour, production would grind to a halt. If the bosses stayed away, the work would continue uninterrupted. Their absence would not be noticed. That, in summary, is how labour affairs writer, Terry Bell, started an article recently in The Star Business Report. His point is that businesses cannot do without the workers but management is a necessary evil to make sure the workers get paid.

That is a socialistic view that has little relevance in a modern capitalist economy. What Mr Bell misses is that if the workers stay away, production might be halted temporarily, but there will be a business to come back to. The bosses might not be missed for a day or so or even a week, but much longer than that and the business would collapse: no one would be out selling and bringing in the orders.

The worst aspect of the three month security workers’ strike was not the impact it had on the businesses from whom they withheld their labour, but the violence inflicted on non-striking guards. When the strike finished most of the businesses were still operating: they had not collapsed and the workers - those who were not arrested for vicious crimes - could resume their employment.

I am not trying to defend the low wages that some of these companies pay people who do a thankless and dangerous job. Workers should be paid a living wage and what they earn should reflect the responsibility that they carry. But the Marxist view that bosses are greedy plutocrats, who devote their lives to increasing their wealth on the backs of sweating labour, is illusory.

Terry Bell fails to make his point but succeeds in making another, albeit unintentionally. Workers cannot do without managers who plan ahead, innovate new products and services and find and keep customers. That is the essence of business. It is what management is employed to do.

More specifically it is what marketing managers are employed to do. And yet that is the one department that often appears to be dispensable. When the squeeze for profit is on, it is the marketing cost that is chopped. What would happen if the marketers went on strike? Would it be like the proverbial one handed clap which nobody would notice?

Think of the answer this way. Businesses are about brands; brands with which the company’s customers can associate their preferences. If the brand is sufficiently well liked it will be bought frequently; if it fails to meet its promise, it will be dumped. This applies as much to Anglo American as it does to Five Roses tea. If Anglo lets down the customers who buy its mined products they will find another provider of metal. The preference is attached to the Anglo brand just as a tea drinker will specify their favourite brand of tea. Workers are employed to bring the metal to the surface and to produce the tea leaves. Marketers make sure there is a demand for the metal and the tea.

I think there is a better way to explain this phenomenon.

Brands are assets just like property and machines. Accountants define assets in a way that fits perfectly any explanation of what marketers do. In Accounting 1, they learn that an asset is a resource, controlled by an enterprise, from which future economic benefits will flow to the enterprise. In other words an asset is something that generates income for the company that owns it; which is precisely what a brand is.

The resource is the legally protected registered trademark that underpins all brands. Marketers give the resource value by finding and keeping customers: a growing body of people who will buy the brand and make it their preferred choice. The costs associated with achieving that aim are the investment the company makes in building the asset.

When entrepreneurs start businesses all they have is a resource. Their success (or failure) depends entirely on finding and keeping customers who will provide the resource with its future economic benefits. If a group of workers pitched up at an empty building and waited to produce something they would, to misuse another proverb, be like the tree falling in a forest with no one there to hear it; their presence would not be noticed and they certainly would not be paid at the end of the week.

Clichés from the old cloth cap days of egalitarian idealism fall on unreceptive ears today. They had little meaning then and they will not gain substance at any time in the future. What neo-unionists have to understand is that it is no longer a worker versus the bosses struggle. It is not, to invoke yet another saying, a chicken or egg choice. The chicken definitely comes first because it is the business innovator that lays the egg that provides the worker with employment. What is beyond argument is that in a modern economy you have to have a lot of chickens and they have to lay a lot of eggs.