An answer for Adam: Looking at the bigger picture

Each fortnight, Naked’s Adam Ferrier poses a question to the industry. This week, in a piece that first appeared in Encore, he ponders good corporate citizenship.Adam Ferrier

I have three related questions for you this issue. I was in a meeting the other day and remarked that because of ‘transparency’, social media, and general people empowerment, many new successful brands have a socio-capitalistic business model at the heart of their business. This allows these businesses to chase unfettered growth as, in general, the more money they make, the more money they give.

My first question this week is a) was I talking shit (drinking brand x, y and z’s Cool-Aid) or do many more businesses now indeed have a heart?

And if the businesses now doing well do have a heart – then my second question is are we heading for (in the distant future) a democracy with a more socialist leaning economy? I find it almost hysterical the hysteria that still reverberates around the word ‘socialism’. However, park this for a moment and think about the dynamics of organisations self regulating around more caring principles. If the trend continues, will we find ourselves with an entire economy that is not founded in self interest alone?

And finally, c) could this phenomenon be enough to one day reverse the trend of the ever-increasing disparity of wealth in this country?

Adam Ferrier is a consumer psychologist and the founder of Naked Communications.

 

Encore Issue 15This story first appeared in the weekly edition of Encore available for iPad and Android tablets. Visit encore.com.au for a preview of the app or click below to download.

Comments


  1. reevesy
    27 May 13
    9:24 am

  2. Interesting – i was listening to Neil Blumenthal of Warby Parker over the weekend. There model is social at heart with a pair of glasses going to those who dont have them for every pair sold.

    In terms of the heir achy of messages their business promoted though consumers find this social conscious to be the last most important thing behind; fashion (looks good on me), Price, and Quality… then its the social pay-off.

    In Warby Parkers case they actually se the business up to solve both problems equally, but its interesting to see how low a priority it is for their consumers.

  3. Jon Bradshaw
    27 May 13
    12:22 pm

  4. Adam,

    It’s a good question. One I’ve been thinking about a lot. It harks back to something we discussed a while ago. Do brands with a sense of purpose have a better chance of success than those based on the classic insight / benefit model?

    I mostly think that, because of the increasing amounts of transparency available through the inter webs, brands with a sense of purpose beyond profit have a greater chance of success. I don’t think that purpose has to be a genuine social good. RedBull’s pursuit of a life lived to full isn’t any form of socialism, but it is an amazing brand driver. Dove’s Campaign for Real Beauty, is purposeful, but hardly charitable.

    Those brands that pick a purpose that is genuinely making a contribution to society, in theory therefore may have even greater impact beyond just being clearer about why they exist. Doing real good may add even more to their appeal. I like it, but then I would I am a bleeding heart liberal, once aptly described by a Creative Director, who shall remain nameless, as a cashed up Hippy. It may leave a great many people un-moved. Fascists are consumers too!

    There’s a few bear traps along the way I reckon…

    Your brand and your category create real constraints about whether you can or cannot claim a higher purpose. Saving the planet, one ‘Finish rinse aid’ tablet or Rich Tea biscuit at a time isn’t going to cut it. I think the classic, ‘what’s the insight, therefore what is the brand benefit’ approach is still valid for many categories.

    It still needs to be rooted in human truth (an uber insight?) and brand truth. Or it won’t be believed and it won’t motivate. In that sense its not really different.

    I don’t think you can have both when it comes to execution. Either you are driven by purpose, or you are a product that meets a need. At a communications and behaviour change level trying to be both will just confuse. Brand consistency trumps all, always.

    I think its better if the brand actually does something, rather than just throws money at problems.

    Its got to be core. The purpose and the commerce have to overlap. I think the buy me and I’ll donate $X to cause Y is OK (sort of) as along as; a. Cause Y is clearly deeply related to the brand and category, and b. Donate $X is an ongoing commitment not a promotion. I think water companies that donate to ‘water for life’, resonate better than ones that donate to breast cancer. I’m not sure if the data would back that assertion up.

    I don’t think any of the corporate charitable funds (think Sony Foundation) are any real good at helping the marketing. It’s too side-lined, not core. (Not that they aren’t a good thing! SF do some real good. Being a good thing and being good marketing aren’t the same!).

    In summary, I think its a good new tool in the armoury. I think brands that genuinely connect a higher purpose with the pursuit of profit will do better in the long term. If that can be real societal good, even better.

    Like all things the only real power comes if the brand, company and its faceless, homogeneous shareholders, truly, truly commit. Aye there’s the rub.

  5. Simon
    27 May 13
    1:44 pm

  6. The champion of doing it right and highlighting how to create a profitable business with a ‘true conscience’ is Ricardo Semler from Semco with a decentralised participatory management structure.

    Youtube his 20 minute interview with ABCs Kerry O’Brien in 2011 (goes for almost 20 minutes).

    The man is a a true inspiration and his organisation is a great foundation and insight into the future of business. The beauty is that he has had the courage to put his ideals into practice with his own business.

    In 1982 Semco turned over $4 million, $35 million in 1994 and over $212 million in 2003.

    Its a healthy foundation of a business model for a positive and healthy society.

    The way this answers your questions is that this model can encourage a collaborative way of thinking in an entire society, promoting positive behaviours and removing what Semler describes as a ‘militant’ way of thinking that has been adopted by the business community.

    Semler admits that his model had run into flaws that it needed to be rectified, but the point is that he radically changed a business by challenging the norm in a positive way and it has proven successful.

  7. Jim
    27 May 13
    5:34 pm

  8. a) Not entirely

    b) I think more businesses are thinking about ‘having a heart’ for a few reasons:
    1. Radical transparency – the reasons you mentioned.
    2. Radical proliferation of choice – brands now very literally compete in a global marketplace, and are judged accordingly (see Aus retail getting punished on a few fronts).
    3. Cultural pendulum has swung back towards caring after the corporate depantsing of the GFC caused everyone to declare there are more important things than money.
    4. Critical mass of people achieving a threshold of wealth beyond which having more doesn’t make them happier. (impossible to separate from #3?)
    5. Everyone realizes CSR as a corporate division removed from the source of business doesn’t make sense and could potentially be at odds with its cause.
    6. Michael E. Porter wrote something about it.

    c) I don’t think so. We’ll probably end up with corporations supporting a range of issues that are commercially palatable, “brand builder causes”, and neglect of some serious societal issues that only government can address. Does it mean that corporations can lighten the load on government? They can, should, and already do. A few of them could pay some more taxes though.

    I certainly hope that purpose becomes the main driver of choice within consumer markets. In business (& life) everyone just copies each other, so hopefully there’s enough conscience driven success to set of a chain reaction. But I think this is a long way off, for two reasons:
    1. Minority of consumers are demanding it, or as reevesy said, it’s low on the reason to buy list.
    2. Markets are still dominated by limited liability companies. It’s hard to enforce a vision when your only measure of success is delivering value to fragmented anonymous shareholders often represented by other large institutions.

    Agree with Simon on Ricardo Semler. See also Yvon Chouinard at Patagonia. Two great examples of men with vision, and ability to engage their employees to execute it, but importantly maintain majority ownership.

  9. I McHunt
    28 May 13
    10:40 am

  10. I’m a cynic who believes that this trend will only continue as long as companies perceive that ‘having a heart’ benefits their bottom line and staff retention. Five years ago they were all about sustainability and greening themselves. They have now moved on to ’cause marketing’ until the next big thing comes along. Hope I’m wrong.

  11. attackofthe50ftwoman
    28 May 13
    5:38 pm

  12. As long as the bottom line and shareholder interests guide P&L’s then there no such thing as ‘socio-capitalistic’ business model, sounds like an oxymoron some marketing dude made up…. I think it’s radically optimistic to entertain the notion that businesses ‘caring’ can reverse wealth disparaties here or anywhere. You can’t get more caring than charities and its widely acknowledged that even they spend more cash on marketing and mangement then on the actual cause they support. Finally even if it were possible, then it’s not a decision that resides with businesses alone- we would need an economic and social policy that supports and drives this kind of change. But the simple reason why businesses can’t be caring is this: it’s people,not businesses, that have heart and have the power to create change through caring so if we really want businesses to be more caring maybe we need a good ‘ol fashion revolution!

  13. Simon
    29 May 13
    11:48 am

  14. Cheers for that Jim, I will have to check out Yvon Chouinard at Patagonia. My business partner got me onto Ricardo Semler a while back and I am always happy to learn more in how to be as forward thinking as possible as a business and bucking the negative trends where possible.

    Yesterday at CeBit I met a business owner who refreshingly has a good approach with his employees.

    @ I McHunt, I tend to skeptical as well. The motivation should not be about realising that you will lose profits and changing when you ‘need to’ but rather should be an ethos or belief that CEOs/business owners have always held and push because they know its the right thing to do….unfortunately there are very few leaders that behave in this way that we can look up to and the norm is a very short term and individualistic and aggressively competitive approach

    I hope that the next leaders, Gen X, can really lead the way in making a change for the better.

  15. missmac
    29 May 13
    12:35 pm

  16. hey mumbrella
    where is the comment from attackofthe50ftwoman?
    i saw it briefly yesterday and wanted to respond….
    moderation gone a bit crazy eh???