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Though the recent announcement from the Business Roundtable may not have provided specifics on how the group plans to follow through on its promise to shift focus from shareholders to stakeholders, it’s a good indicator that businesses are beginning to listen to what consumers have been telling them (through spending habits and social media) for the past several years.
“We have elected officials in this country and abroad who are not tackling fundamental issues. Now brands are stepping in to tackle fundamental issues. And consumers will align toward these brands. Consumers want change,” says brand strategist and author of The Purpose Advantage, Jeff Fromm.
Now companies are faced with the challenge of proving to consumers that they are authentically issue-focused. How are purpose-driven organizations doing this today?
Go Beyond the Research
“The classic mistake is to do the research, come up with a purpose strategy and start advertising or communicating it before you've earned the right to do so,” says From. He names the Gillette and Toxic Masculinity backlash as a classic example.
Fromm says that, even though Gillette’s research on masculinity may have been spot on, “the brand had no authority in history that would allow them to do that and so purpose-washing is what happens. And there's a nasty backlash when a brand goes out and starts communicating ahead of action. Purpose is a noun but metaphorically it's got to be a verb.”
The brand has to do before it says. Fromm points out that razor companies are guilty of charging a “pink tax” (the extra amount women are charged for certain products or services).
“It's not that their strategy was wrong. If they had laid a foundation to change, and communicated that foundation properly internally, and taken action externally, and then, after they had laid that foundation, go forward. If you're Nike or you're Ben & Jerry's and you've got a foundation you could enter the conversation right away, and not have to prove that you belong.”
Listen to Employees, Not Only Customers
“Strong brands usually have insights into their employment culture, and the consumer or customer culture. How engaged are your employees? How passionate are they? And same with your customers. And today's savvy consumer can tell. When the brand is strong they're willing to pay a small premium for that brand, and when it's weak they’re going to trade down to the less expensive alternative.”
Don’t Be Afraid to Pivot
One of the strongest purpose-driven brands on the planet, Patagonia, redefined their purpose last year. According to Fromm, they shifted from “we need to do no harm" to "we need to protect and defend the environment".
“My sense is they realized that we built this great brand on a purpose years ago, and the world has changed, and the environment has changed and, if we're going to stay ahead, we're going to have to evaluate this, like we would evaluate our products, and our operations, and our technology and everything else in a business.”
Communicate the Purpose Advantage
“There is a financial strategic health issue embedded in this conversation,” says Fromm. “The financial professionals have a seat at the table.”
“By doing good we actually do better financially. So the purpose advantage fits into the financial model. That's point one. Point two, a lot of the work on purpose strategy is really supply-chain-operations oriented . Meaning it's not just about coming out with a message but it's can you deliver a message? Which means build a financial model that works. It has to be affordable to consumers. I mean if I have the perfect purpose-driven brand that consumers don't want to pay at that price point then you've got the wrong financial model. So you have to do the rigorous analysis of looking at the strategy and pressure testing it against the financial side of it.”
Get Everyone Involved
“I would tell you when we're doing this work, we do it with cross-functional teams. And the ideal cross-functional teams include the marketing leader, somebody from operations, and somebody from finance, and media. They’ve got to work together to model this all out. It's got to work for everybody. If it doesn't work for shareholders, it won't work. And if it doesn't work for society, it won't work. So it's got to be a balance. And that, ultimately, is the Business Roundtable's point of view.”