This is the second year that Admap have held the contest, and I’m slightly ashamed to say that it is also the second year I’ve geared myself up to write an essay to submit only to declare myself “TOO BUSY” or perhaps declare some other state of emergency preventing me from turning what is often reams of notes in my notebook prepared well in advance of the deadline into a fully fledged, coherent and persuasive argument re the topic at hand nearer or indeed at the deadline.
If I’m honest, last year it was the ongoing work involved in the IPA Diploma, this year, it was the delightful absence the IPA Diploma (and all the associated freedoms that come along with not studying whilst working full time).
Having seen the list of shortlisted essays alongside early feedback from the luminaries chosen to judge the prize, it was with a heavy heart, one weighed down with both guilt at my laziness and regret at an opportunity missed, that I went back to my early notes to see whether there was actually anything decent in there. What follows is a sort of digest and review of those ideas, yet not necessarily in a formal cohesive style that an essay would require. A sort of cut up answer in the style of David Shields’ fantastic Reality Hunger.
This year, the essay challenged entrants to answer the following question: Can brands maximise profit and be a force for good?
The question itself is not as easy to answer it first may appear, this is for two reasons. Firstly, how should we define a force for good? Secondly, is the notion of a brand, at least in regards to this question, poorly defined?
Let’s start with the second point, if only for the reason that relatively, this feels like an easier question to answer. Although having said that, the definition of a brand is actually quite a hard thing to pin down. My mum ( a lady with no formal training in marketing or advertising) astutely describes them as “the reason you pay more”. My favourite is Paul Feldwick’s – that “a brand is a collection of perceptions in the mind of the consumer”.
Mark Earls, as quoted by Willsh in his recent presentation based loosely on the notion of fracking, suggests that we may be “careless in the way we use the word ‘brand’… when we mean company, product, service, idea, strategic advertising”. It would seem to me, that actually what this question is asking is whether companies, or more broadly business, can maximise profit and be a force for good, not brands. You could argue that I’m being a pedant, but I think this is an important distinction as i’ll later demonstrate.
The second part then, how should we define a force for good? The answer to this question lies perhaps not in the question itself as it did above, but perhaps who you ask. If you asked most people, the notion of a business doing ‘good’ would conjure ideas of charitable work, of sourcing materials responsibly, of treating suppliers as equals. Corporations behaving as good socially responsible citizens.
But, it is not necessarily clean cut. The Economist, in a special report on CSR, argues that businessmen are in the business of making money, and that as long as they do this within the letter of the law, that is ‘ethical’ enough. That, CSR, in some or indeed most instances is a failed exercise in appearing good, which does more harm than anything else. That by bringing jobs to areas, and stimulating local economies, the act of business – or more specifically the act of making a profit – is inherently good. The economist Milton Friedman echoes the magazine’s point of view suggesting “there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception”.
It is the role of government, not business to legislate as to what ethical behaviour should entail. Logically, this feels correct, but morally it’s pretty abhorrent if I’m honest. Tax evasion, a recent and still hot topic is a good example. Google, Facebook, Starbucks et al are not doing anything illegal in avoiding corporation tax, they are working within the confines of the rules set by government, but does that make them right? This looks at the notion of ‘good’ or ‘bad’ business in classical, dictionary defined terms.
There is of course another way to look at being ‘good’. Could you argue that an advertiser such as Dove, does good in the way it seeks to represent women through such initiatives as ‘The Campaign for Real Beauty’? Socially this is arguably a good deed, but it is utterly removed from the way Unilever conducts it’s business (this is not an accusation that Unilever is an unethical company) – marketing is a construct, fictional even – once again the distinction or difference between business and brand becomes apparent (yet more of this later)
The other key part of this question relates to maximising profits. Roger Martin, writing in the Harvard Business Review, suggests that a speech given by Jack Welch, the CEO of GE in 1981 marked the beginning of a ‘profits first’ movement in business with TSR (or Total Shareholder Return) being the measure of this. The shareholder return movement is quite strange upon closer examination – as Martin highlights, it would be easy to assume that chasing profit for shareholders would be the best way to deliver these returns, but in fact it is not. Companies which have sought to increase consumer value (the first time i’ve mentioned them in this post, which is odd) actually do better. Shareholder return hasn’t really worked in creating profits.
This is also interesting when you consider what is happening in the investment world.
Since Jack Welch’s speech we’ve seen significant shifts in the financial sector. There are fewer private investors, and instead we’ve seen the rise of institutional investing, the rise of hedgefunds, and more importantly (and dangerously) for the shareholder value movement we’ve seen the rise of Algorithmic trading. A piece in the Telegraph last year showed that the average shareholding is now only 22 seconds. That is phenomenal.
It is also scary, for at least two reasons. Firstly, because it potentially means that not even shareholders believe in businesses ability to deliver profits in the long term. Secondly, it means that shareholder focussed businesses, which were already ‘short-termist’, are having to become even more focussed on shorter and shorter term results.
Investors are no longer interested so much in macro business strategy and results, but micro trends and movements in share price, by leveraging huge portfolios and buying and selling based on tiny shifts in cost they make profit.
Meanwhile, brands – the bit that lives inside the brain of the consumers, is becoming more valuable to markets and investors. Jon Gerzema and Ed Lebar, in their book The Brand Bubble, show that intangible assets such as brands have gone from accounting for 20% of the S+P index in 1980 to 70% in 2007.
At the same time, the salience and trust score of the same brands is weakening.
The people who legitimise the intangible value businesses possess are losing faith in the idea of brands.
So, how to generate profit then. Roger Martin suggests that a focus on consumer value, ultimately delivers shareholder value. That a focus on the end customer, ultimately provides the thing everyone is after anyway.
We cannot optimise two opposing metrics at the same time. Perhaps, this is at the heart of the question we’re being asked.
Maybe brands can’t maximise profits AND be a force for good, but perhaps they can maximise profits by being a force for good.
Another article from the HBR, backs this up. It suggests that businesses which have a consumer centric mission at their heart – a purpose which drives everything they do – out perform the market in financial returns by a ratio of 9 to 1.
Simon Sinek says that we should start with “why?”. That people buy why we make something, not what we make.
David Hieatt makes jeans so he could put a town back to work, doing what they were best at.
The elephant in the room though is the consumer, the people who buy the products and give life to the brands businesses own.
Ultimately, do they care if a company is a force for good or not?
In utilities, or categories where people feel trapped – banking or energy for instance, then yes, arguably being a force for good is important.
In fashion or retail, less so, people want cool shit, and dont care how they get it.
Care that child labour put together your Nike sneakers? That people work in poor conditions to let you have an iPhone?
As long as you have a strong brand, people will turn a blind eye to these problems.
Perhaps then, the problem is not one of dubious virtue, but of dubious branding – the better the brand, the less important ethical behaviour is and the more slack people are willing to cut you. JUST KEEP ON MAKING COOL SHIT, AND MARKET IT IN COOL WAYS.
At was at this point, that I started to feel depressed. What a sad conclusion I had come to; that the majority of the population are driven not by morals, but by something more base – consumer goods.
I found it best not to think about these things any longer. Maybe my crisis before submitting the essay was not one of time, but one of conscience, that i’d be painting people in a bad light. I hope i’m wrong, that the queue tomorrow for latte’s near the tube station will be somehow shorter, that people will ask questions before they upgrade their phone.
Or maybe, they’ll just think, I’d like more of that stuff please.