David Butler, vice president of innovation and entrepreneurship at The Coca-Cola Company and author of Design to Grow, How Coca-Cola Learned to Combine Scale and Agility (and How You Can Too) speaks to The New Economy about how other brands can leverage their growth to achieve stronger brand equity.

Historical highs are being set in the tech-sector for billion dollar valuations such as Apple and Elon Musk’s Tesla. But are these stocks overvalued, potentially hurting companies over the long-term? David Butler, Coca-Cola’s Vice President of Innovation and Entrepreneurship shares his thoughts. Thanks for joining me today.

The New Economy: First, let’s talk about Elon Musk, he’s got a company he says is one day going to be $700bn. Right now, it’s reported to be worth $25bn, much of that is apparently due to the batteries. How much of his brand equity is because of the batteries, SpaceX, or Elon Musk?

David Butler: Well my opinion is Elon Musk plays a big role. VCs, companies, strategic partners, always invest in the founder team, and obviously he has quite a great reputation and traction. So I think part of it is his own personal brand, but then I also think that in this case Tesla is so nimble that they could actually do away with the car and focus on the batter, to your point, and that might be how they reach the trillion dollar mark at some point.

But yeah, I think that’s what’s different around Tesla, for instance, than Apple. Apple is at this point a large established company, whereas Tesla is still in hypergrowth mode, so they actually may be able to be more nimble in fact than Apple.

The New Economy: Tesla has that momentum, everyone’s paying attention to Elon Musk these days, but how much of what he’s saying is overconfidence, and could he potentially alienate the average shareholder?

David Butler: Yes there’s always that risk or that opportunity, but I think you have to look at the track record and base your evaluation or your thinking on the track record. In his case, he’s actually been able to deliver a lot on what he’s promised.

The New Economy:  Now you say in your book: “For shareholders, billion-dollar brands are not only highly lucrative, but a very tangible sign of a company’s innovation capability and culture.” Now, can repositioning a company really be the way to reach that billion dollar mark?

David Butler: I wouldn’t say repositioning but I would say that any billion dollar company has to have a great product. Products answer problems that people have, so finding a solution to a big problem that a lot of people have is always the opportunity.

The New Economy:  People in the space field, many of them very intelligent, but what separates Elon Musk from them in many ways is he’s highly ambitious, and very much is confident in the brand and what he has to offer the world. But we were talking about the potential for alienation. More importantly, how does a company, any company, really begin to value itself? It’s so hard to take the intangible and make it tangible.

David Butler: The people who are interested in valuations are the investors, and so the investors look at metrics of the company, metrics of growth, things like revenue, users, and also the size of the market. So in this, and Elon’s case, a huge marker and so far a lot of traction as far as users and revenue. So he has, again, a great track record to make these visionary statements around.

The New Economy: In our head, Elon is both our friends right? But more importantly, do you think he got it right, saying that the company could one day be at Apple proportions.

David Butler: Perhaps, I mean it’s speculation for now, but I think that there’s a great leader there and a great plan, and we’ll see.

The New Economy: How would you advise a company that is perhaps considering, as you said in your book, to rebrand itself, how does it begin to pivot and build that new brand equity?

David Butler: Two things really, one is to look at the assets that the company has. So the brands that people, the knowledge inside, the relationships, and think about how they could leverage those assets in new and different ways.

Second, be open to, in fact, whole new business models. You mentioned this before, but highly disruptive business models, Uber-like business models, so on-demand platforms, these are new business models that didn’t exist or weren’t used frankly until recently.
So looking at the assets that a company as and then leveraging new business models is an opportunity for every large company looking to change.

The New Economy: Does a company need to have an innovation director at the helm to be able to get to that next level?

David Butler: I don’t know that they need a person called an innovation anything, but you need to have that vision and that focus, and so any company, if you have that vision and that focus, you can move forward.