Don't just focus on paying off technical debt, brand debt could be far more fatal.

While AI helps brands reach more customers, it is also accelerating the erosion of brand trust. Every mistake and every inconsistent experience accumulates "brand debt". Enterprises do not need to eradicate all sources of liabilities, but they must clarify the links where liabilities accumulate and resolve them in a timely manner before they undermine trust and hinder growth.

Companies that have achieved success in the AI field are building higher-quality products and stronger brands. The reason is that they have realized in advance a major problem that many competitors have not yet noticed: brand debt.

Most managers are familiar with technical debt: the hidden cost accumulated over time when enterprises make short-term technical decisions to speed up progress. The formation logic of brand debt is very similar. When an enterprise's products, customer experience, policies or communication rhetoric gradually disconnect from consumer expectations, brand debt begins to accumulate.

Small corners cut, scattered product launches, pricing decisions that prioritize short-term profits, or inconsistent experiences may seem insignificant when viewed in isolation. But over time, they will erode trust, weaken relevance and disintegrate loyalty. AI will greatly accelerate the accumulation of these costs.

Nowadays, consumers increasingly interact with brands through AI-powered products, recommendation algorithms, customer service systems and digital platforms. These systems determine what consumers see, what services they receive, and whether each interaction is practical, credible and consistent in experience. Once AI generates hallucinations, misinterprets scenarios, or brings a cold and rigid experience, the negative impact is often not limited to a single communication.

Before enterprises have time to respond, AI will amplify such mistakes to tens of thousands or even millions of customer interactions. A single bad interaction may quickly destroy trust; continuous poor experience will further intensify conflicts, reduce customer loyalty, cut repurchase rates, weaken pricing power, and increase customer acquisition costs. In the AI-driven market environment, brand debt has become an operational hidden danger that enterprises can no longer ignore.

To explore whether brand debt can predict enterprise business performance, we selected 60 enterprises from two major industries - the sportswear industry and the hotel accommodation industry to carry out an internal benchmark study, with 2022 as the unified benchmark year. We raised a simple question: Are enterprises with lower brand debt levels more likely to outperform their peers in the subsequent 1 year and 3 years?

We evaluate each enterprise's brand debt from four major dimensions: Culture, Customer, Credibility, Consistency. This evaluation is based on public information, including corporate announcements, news reports, analyst comments and public sentiment indicators. Then we compare the subsequent revenue growth rate of each enterprise with the industry average level.

The correlation between the two is very significant. Enterprises with the lowest level of brand debt have a significantly higher probability of outperforming their peers in the industry during the two observation periods. In the sportswear industry, enterprises with the lowest level of brand debt are 2.4 times more likely to achieve a higher growth rate than the industry average after 1 year; this probability reaches 3.2 times after 3 years. In the hotel accommodation industry, such enterprises are 4.1 times more likely to outperform their peers after 1 year and 3.7 times after 3 years.

Research shows that brand debt can effectively measure whether an enterprise has the brand appeal and user trust required for growth. If enterprises want to efficiently manage and control brand debt, they need to first locate the links where debt is generated, sort out the underlying causes, and take the initiative to solve them before their performance is damaged.

The rest of this article will discuss five ways leading enterprises including Bose control brand debt: regarding brand debt as a strategic early warning signal, locating the types of debt that cause damage, governing brands with risk management ideas, making automation systems fit the original intention of the brand, and relying on brand tonality to achieve business expansion. Before that, we first analyze the three reasons why AI accelerates the formation of brand debt.

Why AI Accelerates Brand Debt

AI not only changes the operation mode of enterprises, but also reshapes the way consumers experience brands. In the past, subtle experience deviations that would only affect a small number of customers can now spread to tens of thousands of user interactions in just a few hours.

At present, the public's trust in enterprises continues to decline, and the younger generation of consumers has lower brand loyalty than previous groups. While AI helps enterprises create more in-demand and personalized experiences, it also amplifies various inconsistent experience problems and continuously erodes consumer trust.

First, AI systems increasingly dominate customer experiences. Recommendation engines, pricing algorithms, customer service tools, and personalized systems determine what consumers see, how they are served, and whether the interaction process is thoughtful, fair and consistent. Every design decision of such systems will become part of the brand experience.

Second, digital platforms make operational decisions fully visible to the public. Service fees, service failures, obscure rules, and partner mistakes were mostly difficult for the outside world to detect in the past; now consumers can quickly discover, make horizontal comparisons, and share online, and the whole process often only takes a few minutes.

Third, many enterprises have overly complex organizational structures and it is difficult to provide a unified brand experience. Decisions related to products, technology, customer service, cooperation and AI are often made independently, and organizational barriers lead to various experience fragmentations, with consumers ultimately bearing the consequences.

Therefore, the core problem that managers need to recognize is not whether the enterprise has brand debt - almost all enterprises have it. The really critical question is: where the debt continues to accumulate, what cost it brings to the business, and what measures can minimize the debt.

Four Types of Debt

To control brand debt, managers first need to locate where the debt breeds. We found that the vast majority of problems can be classified into four categories, abbreviated as "Four Cs":

Culture debt

Culture debt arises when the brand image disconnects from the ever-changing consumer expectations and social values. For example, when the general public is facing widespread economic pressure, if a brand continues to convey a promotional tone of abundance and optimism, it will easily appear out of touch with reality and lack empathy.

Customer debt

Customer debt continues to accumulate when products, services or experiences can no longer deliver differentiated value. High-end brands are particularly vulnerable: when consumers gradually expect innovative functions such as AI empowerment, brands that lag behind in innovation will easily fall into a disadvantageous position.

Credibility debt

When enterprises act inconsistently with their words, credibility debt will arise. Management decisions, pricing strategies, and governance defects will all damage the promises made by enterprises on issues such as privacy protection, sustainable development, and diversity and inclusion, and weaken public trust.

Consistency debt

Consistency debt occurs when consumers perceive completely different brand appearances in different products, channels, platforms or AI-driven interaction scenarios. Chaotic propaganda calibers, fragmented service experiences, and AI outputs that deviate from brand tonality will make enterprises give people a fragmented and unreliable impression.

The four types of debt are often intertwined. When an enterprise is deeply trapped in one type of brand debt, it often gives rise to another type of debt at the same time. Brand debt does not only belong to the marketing department, it spreads across the entire chain of products, technology, human resources, operations, systems and cooperation.

This also explains why chief marketing officers now increasingly need to be responsible for many results that they cannot fully control: trust loss caused by policies, experience discontinuities caused by outdated systems, reputation risks brought by automation, etc.

Five Methods to Control Brand Debt

The goal of control is not to completely eliminate brand debt. Similar to technical debt, if some trade-offs can create greater long-term value, they are worthwhile. The real risk is: making constant compromises without realizing the corresponding operating costs.

Combining research and customer service practices, we have summarized five paths for leading enterprises to control brand debt. This set of methods can help managers locate the source of brand debt, prioritize problems, and avoid subtle experience deviations from evolving into systematic shortcomings.

1. Regard brand debt as a strategic early warning signal

Brand debt is often the first obvious symptom of problems in the deep-seated mechanisms of an enterprise. It reflects that various decisions of the enterprise at the levels of growth, customer experience and operational governance are gradually eroding trust and brand appeal. Managers should elevate it to a group-level issue, promote cross-departmental collaboration, and establish a clear responsibility mechanism.

Bose's practice is a typical case. In 2020, when Bose closed its global offline direct stores, it faced more than just distribution difficulties. For a long time, offline stores were channels for consumers to intuitively experience high-quality sound quality. After the stores were closed, Bose would easily fall into the situation of competing only by price, user reviews and search rankings, losing the product experience barrier.

CEO Lila Snyder responded by strengthening brand governance: appointing Jim Mollica, the company's first global chief marketing officer, to centralize brand management authority and clarify the decision-making rights and responsibilities of the product, digital business, retail cooperation and marketing sectors. This structure helped Bose adapt to the trend of passenger flow shifting from offline stores to online, and continuously deliver a unified brand experience.

In the process of transforming self-operated stores to e-commerce and third-party platforms, the enterprise regards brand debt as an operational problem rather than a pure marketing problem. This move effectively reduces the four types of debt of culture, customer, credibility and consistency, and maintains the high-end positioning that supports brand differentiation in the long run.

2. Locate the types of debt that cause damage

Different brand problems have different causes, and the solutions are also different. Strategies to deal with culture debt cannot be directly applied to customer debt, credibility debt or consistency debt. Before taking action, managers must accurately identify the source of the debt.

The biggest risk Bose faced at that time was customer debt and consistency debt. The high-end audio track is becoming increasingly crowded, and consumers can easily compare products horizontally in online malls dominated by giants such as Apple, Sony and Samsung, and products that once had unique advantages are no longer outstanding.

In response, Bose jumped out of the positioning of simply competing for sound quality. When launching products such as Ultra Open Earbuds, it expanded scenarios through cooperation with fashion, lifestyle and creators, and continuously enhanced brand appeal while maintaining its high-end positioning.

3. Govern brands with a risk management model

To control brand debt, excellent marketing alone is far from enough. Enterprises need clear decision-making authority, unified standards, and division of responsibilities across all business lines. Brand-related considerations should be integrated into various decisions such as product R&D, business cooperation, automation layout, acquisition and customer experience in advance, rather than remedied after the event.

When Bose transformed to e-commerce and third-party retail channels, this brand governance structure played a key role. Centralized brand management ensures that product operations, visual image, product narration and digital experience remain unified across all customer touchpoints. As the distribution channels change, the brand core always remains clearly identifiable.

4. Make automation systems fit the original intention of the brand

Nowadays, consumers often first contact the brand through digital systems before seeing advertisements. Search results, recommendation engines, e-commerce interfaces and customer service tools jointly shape the brand image in the public's mind.

Managers need to regularly evaluate the actual operation effect of the system. Once algorithms and operational decisions create an experience that contradicts the brand positioning, brand debt will begin to accumulate.

When Bose accelerated the layout of direct e-commerce, the online digital experience took over the functions of the original offline stores. The enterprise devoted itself to developing richer product narratives, clear expression of usage scenarios, and continuously outputting content that consolidates high-end positioning, ensuring that the online digital experience can convey the brand traits that consumers expect.

5. Expand business based on the core of the brand

Nowadays, business growth increasingly relies on digital platforms, AI content distribution and adjacent category expansion. However, expansion should strengthen consumers' existing brand perception, rather than excessively stretch the brand boundary and cause positioning ambiguity.

Bose follows this principle: expand to adjacent high-end audio categories while upgrading online brand expression. The enterprise does not blindly chase sales scale, but continuously consolidate the core promise of "excellent sound quality" by improving e-commerce experience, clear product positioning and brand narrative that fits the popular culture. As the scale of online business expands, the automation system amplifies the brand advantages instead of diluting the brand value.

Under deliberate control, brand debt can be transformed into a competitive advantage. Enterprises do not need to eradicate all sources of liabilities, but they must clarify the links where liabilities accumulate and deal with them in time before they undermine trust and hinder growth.

AI will further amplify this challenge. More and more customer interactions are dominated by algorithms, platforms and intelligent systems, and every operational decision is essentially a brand decision. The enterprises that ultimately stand out will manage brand debt with a rigorous system, just as they manage financial risks and technical risks.

Keywords: #Brand

Sean Lyons, Ndidi Oteh, Joshua Bellin | Text

Sean Lyons is Managing Director of Accenture's Creative, Brand & Customer Experience division. Ndidi Oteh is Lead of Innovation Transformation Partnership for Accenture's Creative, Brand & Customer Experience division. Joshua Bellin is Chief Director of Accenture Research.

Zhou Qiang | Editor

This article is from the WeChat official account "Harvard Business Review" (ID: hbrchinese), author: HBR-China, published with authorization from 36Kr.