As the poet Murial Rukeyser said, 'The universe is not made of
atoms, it is made of stories'. Stories are one of the great forces
of the universe; they can pull us together or drive us apart; they
make us laugh, or cry, or lean in spellbound; they give us values
to believe in and reasons for being. They help us make sense of the
world and find our place in it. The really good stories we make our
own, add a little bit of ourselves, and pass on.
I work for a company whose role is to tell stories to consumers
on behalf of clients; stories that communicate what our client's
product is or does, about who they are, and about how they behave
as a company. Consumers are vital to the shaping of these stories
for they make the private sector work through businesses and
brands. And it's critically important to accept that the nature of
these stories is changing, as is the context of storytelling
itself.
The global information revolution is creating a new culture of
radical transparency, and a new meritocracy.
Let's start with a story
A couple of years ago, an American retailer called ABC Home
Furnishings allowed two Harvard University researchers to conduct
an experiment on two sets of towels in one of their stores. One set
carried a label with the logo 'Fair and Square' and the message:
'These towels have been made under fair labour conditions, in a
safe and healthy working environment which is free of
discrimination and where management has committed to respecting the
rights and dignity of labour.' The other set of towels had no
label. Over five months, researchers monitored what happened when
they mixed things up, by switching the label and raising prices.
They found that not only did sales increase significantly on towels
bearing the Fair and Square label, but they also increased each
time the price was raised.
That was just an experiment, but it illuminates a couple of
important truths: people are willing to pay more for products and
brands produced by companies with higher ethical standards; and, at
price parity, they'll choose brands with the higher ethical
standards.
Levels of consumer engagement
I work with some of the largest consumer- oriented businesses in
the world. For these guys, the consumer is boss. Unless they are in
tune with the changing needs and desires of their consumers, they
will go out of business. It's my job to stay in touch with what
consumers are thinking and feeling, and to help these companies
better communicate with consumers, with the ultimate aim of selling
more product and making bigger profits. One thing upon which we all
agree is that consumers are increasingly looking to do business
with companies that are, in some way, ethically, environmentally
and socially responsible. People are worried about the fundamental
challenges facing our planet and, increasingly, they want the
things they buy to reflect their concerns.
You only have to walk down a high street in the United States or
the United Kingdom to see the result of consumer demand for
ethically produced goods. You can buy fair trade coffee at a
premium price in Starbucks. You can buy clothes from American
Apparel safe in the knowledge that they've been made in the United
States and workers were treated well. Or you can buy Green &
Black's chocolate and indulge your conscience as well as your taste
buds. Even Wal-Mart, for many the face of unbridled capitalism, now
uses the strapline 'Save Money. Live Better' and has regular
product offers under the headlines 'Save money. Save Energy. Save
The Environment'.
Consumers aren't poring over company reports or looking to pick
holes in their processes and practices but, more than ever before,
they are aware that their own buying decisions have consequences.
Some are highly informed; most simply want to somehow 'make a
difference'.
In a study completed in June this year, The Henley Centre (a
global consumer research consultancy) identified different groups
of consumers with different levels of engagement - Pioneers,
Adopters, Strugglers, Confused, Inert and Cynics. Pioneers are
making real changes to their lives and are very careful when they
buy something to ensure that it meets an ethical and environmental
standard. Adopters are getting there. Strugglers know what they're
supposed to do, but aren't always doing it. As for the Confused -
well, they're just confused.
As you can see from the table, the people who really engage with
these issues and are changing their behaviour - Pioneers and
Adopters - account for somewhere between 30% and 40% of the
population of these countries. Interestingly, China has a higher
proportion of these than the United Kingdom or the United States.
Once you add in the other groups who at least have some motivation
to consume ethically, then you're looking at a majority of
consumers. Henley expects the Pioneer and Adopter segments to grow
over the next few years.
Even the confused among us are willing to make a difference if
someone shows us how. The United Kingdom retailer Marks &
Spencer conducted a large-scale survey last year to investigate the
relationship between customers' attitude to green issues and what
they bought. They found that only about 10% of customers were
really committed to the cause of green consumption. About a quarter
weren't interested at all. But - in similar findings to Henley -
the rest were in the middle: keen to be green as long as they
didn't have to make much of an effort to do so.
Marks & Spencer sees this as a huge business opportunity:
75% of their customers care about environmental issues to some
degree, and many of them want to be educated and shown how they can
make a difference without changing their lives completely. Marks
& Spencer want to be the brand that helps them do that.
Impact of economic downturn
There's no doubt that growing ethical trade is going to be
challenging in the short term, with economic pressures mounting. A
recent study by Duke University's Fuqua School of Business suggests
that Chief Marketing Officers are less concerned with cause-related
issues now than a year ago, and there's a feeling that green
product credentials are more 'nice to have' than essential. There
certainly seems to have been a quietening of conversation around
environmental or sustainability themes. For example, these themes
have more than halved in Wal-Mart's press releases in the 12 months
to September 2008.
Given the economic turmoil, it might seem naive to argue that
consumer attitudes towards ethical products are a powerful force in
our economies. Will people still be concerned about the environment
when they're worried about balancing their monthly budget? Will
companies still think it's as important to pursue good ethical
practices when their profits are being squeezed?
I believe they will. This trend towards ethical consumption is
not a bubble about to burst. It's not cyclical or cynical. It
represents a deep and enduring change in the way consumers buy and
companies sell. As you can see from the Henley table, to some
extent people have made ethical shopping something they don't
compromise on. And what underlies this deep-rooted change is the
new global culture of transparency.
The culture of transparency
Business people reading about the towel experiment might decide
that, to increase sales and profitability, all they have to do is
slap on a suitable label. That might work for a few weeks or months
but if it's not true and you get found out, the consequences would
be disastrous. That label will only enable you to charge a higher
price if it's telling a true story about your business.
Authenticity and integrity are highly prized in the new
communications order. The truth is, companies and marketers have
never been the ones to determine brand perception, something that
has always been in the hands of the public; or, more accurately,
their hearts and minds. And now, what's in their hearts and minds
is on the record for all to see.
If you search for Coke 'products' on Google you will find
480,000 results; Coke 'employees' more than 2 million and Coke
'environment' almost 3 million. People are interested in a
company's overall conduct. All this information is freely available
and being organized and presented in new, digitally enlightened
ways.
More than ever before, companies today have to be honest and
candid about what they do. Most consumers in the developed world
and many in the developing world can capture, distribute and seek
out information (in the form of pictures, words or video) in a way
that is historically unprecedented. If a company relies on child
labour to make its product, sooner or later there will be a photo
of a child in one of its factories posted online. It will be passed
around social networks, and the company will be publicly shamed. I
call this 'radical transparency', but for digital natives and the
next generation, it's something of a birthright.
Every business has to get used to being open about its sourcing
methods, its production processes, its employment policies, and its
products. They have to open up to consumers, because if they don't,
consumers will open them up and it will hurt. Countless brands -
Nike, Apple and Dell among them - have felt the wrath of this
expressive consumer culture.
But this world of radical transparency shouldn't sound like bad
news for businesses, like a threat we have to defend ourselves
against. I believe it's the opposite, in fact. A culture of
transparency is not only good for society, but also a good thing
for businesses.
Why? Partly because it forces us to be honest, and - just like
your mother told you - in the end, honesty pays. It's also an
invitation to share more, and more interesting, stories with
consumers. And if those stories are good enough, consumers will
enjoy sharing them with each other, and adding a little bit of
themselves into the account.
The most successful companies have always told great stories. In
the past those stories have usually been about products and brand,
but now we're telling stories about the whole company. The culture
of transparency opens up whole areas of a business to consumers -
and the smartest companies will be right out there in front,
telling their own stories about what's going on inside their
business.
They will also be finding ways of getting people to share these
stories with one another. In today's world, what your friend tells
you is more influential than what you read in a newspaper or see in
an ad. We're beyond the information age and into the recommendation
age.
If you're going to create stories about your company and how it
does business, you want them to be shared as widely as possible.
And that means making them entertaining: people only pass on stuff
if it's interesting.
Consider one of my clients, Ford, for example - a massive,
monolithic company that has traditionally been somewhat slow to
change but is now adapting to this new culture of transparency. It
has been experiencing fierce competition and very tough times. In
the age of transparency, that story is not confined to the business
pages.
The culture of transparency abhors a vacuum. If you're not
telling stories about your company, other people's stories about
your company will fill the void. Every day there was a new rumour
about Ford's financial health. Consumers all over America knew that
Ford wasn't performing well, and that made them wonder about the
performance of Ford's cars.
Instead of carrying on as normal, doing only traditional
advertising, and pretending everything was OK, Ford decided to
'lift up the bonnet'; to show consumers what was going inside their
business, on their own terms, rather than let stories leak out.
Now here's the thing. The more stories you share with consumers,
and the better those stories are, the more interested they become
in you, the better relationship they have with you, and the more
likely they are to buy your products. It's early days yet with Ford
but they believe this innovation in storytelling is helping them
turn their business around. It's just one example of how the
culture of transparency is an opportunity for businesses.
It means that companies have to open up about the way they do
business. Consumers are showing a willingness to pay more for
ethical products so the companies that have great stories to tell
about their social responsibility, and who tell those stories well,
have a great future.
Creative capitalism
Being a socially responsible business is not the same as being a
charity, or being charitable. It's not about giving a percentage of
your profits away, admirable though that is. It's about how you
earn those profits in the first place. Perhaps the most famous
example of this is the company founded more than 30 years ago by
Anita Roddick, The Body Shop, which made good corporate citizenship
one of the central pillars of its business model. The Body Shop
went on to be bought by L'Oreal for $1.32 billion.
In a world where many people are concerned about their carbon
emissions, Toyota created the world's first hybrid-engine car, the
Prius. It took a long view on this technology and chose to be a
pioneer. The Prius now makes Toyota a lot of money, but also
provides a great story about its business and brand.
And now a story that brings to mind Alexander Graham Bell's
enthusiasm after he invented the telephone and is reported to have
said, 'It is my firm belief that the day will come when there will
be a telephone in every town in America.' In 2000, when Vodafone
bought a large stake in a Kenyan cell-phone company, it figured the
market would max out at 400,000 users. Today that company,
Safaricom, has more than 10 million.
The company achieved this by finding creative ways to serve
low-income Kenyans, by charging them by the second rather than the
minute. Safaricom is making a profit, and a difference. Farmers use
their cell phones to find the best prices in nearby markets. As a
rule, for every 10% increase in mobile phone penetration, there's a
1% rise in GDP.
The clothing manufacturer Patagonia stopped making its
best-selling range because it involved pesticides that were bad for
the environment. But it turned out to be good for the business and
great for the brand. As its CEO says, 'Every time I've done the
right thing for the environment I've made money.' General Electric
created a programme called ecomagination, a big push to invest in
green technology and to sell more products with better
environmental performance. It is making big investments and expects
a big return: $25 billion by 2010. It's turning out to be great for
the business and for the GE brand. GE isn't doing this because it's
philanthropic; it's moving in the direction its consumers are
pushing it, using the increased concerns about the environment as a
spur to create new revenue streams.
There's a lot of debate over what Bill Gates means when he talks
about 'creative capitalism'. To me it's the culture of transparency
and the desire of our consumers for ethical consumption that are
spurring creativity in the business community. They make us think
of new products and new services that can meet these consumer
demands; that are good for society and that make money. They give
us more stories to tell.
Those companies that see this new era as an opportunity to make
money from the changing demands of their consumers, and to tell
more and more powerful stories about themselves - about how they
behave internally, about where they source their raw materials,
about what goes into their products - will be the ones that
prosper.
Advantage for developing countries
Companies in emerging economies have the biggest opportunity of
all. Consumers across the world, and especially in developed
economies, are more eager than ever to hear stories about the
companies that sell them things, and our interest is being
stimulated by the global medium of the Internet. We love stories
about the foreign, the exotic. And we're willing to pay more for
them. Most global brands are actually very local and have a strong
sense of provenance. Nike is very American, Ikea very Swedish, and
Chanel could only be French. Where you're from is a great way of
talking about who you are, de-commoditizing sectors and persuading
people to pay a premium price.
Businesses can also be branded more locally. Think about how
Jack Daniel's has turned its hometown of Lynchburg, Tennessee, into
a global landmark. Sometimes this sense of geographical belonging
can be explicitly written into the name, and even legislated for,
as in the case of Parma ham, Merino wool, and French champagne.
If businesses can be branded around countries, countries can
also be branded around businesses and industries: The Swiss became
famous for their watches, cheese and chocolate, America for its
entertainment industry, Germany for its engineering and so on.
Way back in 1917, J. Walter Thompson (founder of the JWT
advertising agency) said, 'Somewhere in your product, or in your
business, there is a "difference", an idea that can be developed
into a story so big, so vital and so compelling to your public as
to isolate your product from its competitors, and make your public
think of it as distinctly a different kind of product.'
Businesses in developing countries have the best stories to
tell. Stories like where mineral water is sourced or how employees
interact might seem banal to the people in those businesses, but
they're fascinating to the rest of us. Examine how your own company
does business, colour it with local customs, and you're sure to
come up with stories the rest of the world will find interesting.
And be assured the rest of the world is listening.
If a company doesn't have a good story about social
responsibility to tell, make one up. That's not to suggest telling
a lie - because that won't work - but create an initiative that is
good for business, has a socially responsible dimension, and
creates a great story - like General Electric, Patagonia and
Vodafone did.
Schools of thought
Perhaps, even after reading this far, you're still wondering why
businesses should even bother thinking about this stuff. Shouldn't
we just stick to what we know about - making money? Economist
Milton Friedman thought so, as did generations of free-market
economists who figured that as long as a business abides by the
law, asking it to worry about anything else is a dangerous mistake.
But recently a different view has come to the fore. It's embodied
by John Mackey, founder and CEO of Whole Foods, the American chain
of organic grocers that prides itself on the highest ethical and
environmental standards. Mackey knows a thing or two about
generating profits for shareholders. In conversation with Friedman
himself, Mackey proposed that an enlightened corporation should
create value for all its stakeholders (including customers,
employees, suppliers, and the community) and not just investors.
'Each of those groups,' he explained, 'will define the purpose of
the business in terms of its own needs and desires, and each
perspective is valid and legitimate.'
In my field, we're always asking our clients to think about the
benefit of whatever it is that they're selling, not just the
product. A professor of marketing once reminded his students that
people don't want a quarter-inch drill; they want quarter-inch
holes. Whatever you're selling, you have to get the product right
before anything else - and businesses have to ensure that they
generate profits.
But making money isn't an end in itself; it's the means. The
ultimate benefit of a business is always bound up with the society
in which it exists. It's the thing that gets us out of bed in the
morning: the quest for reputation, respect, meaningful work,
education and health care, providing better tools, giving people
jobs they like and so on.
Different business people will frame that benefit in different
ways depending on what they do and what they care about. The way
I've framed it is the way I feel about it. I do what I do because I
want to generate more interesting, more compelling stories for
people to hear and share and discuss. The fact that consumers are
demanding higher ethical standards is a huge creative spur for many
businesses. It drives us to create and communicate more and better
stories about what we're doing for the communities we work with and
the planet we live on.
Sustainability is about meeting the needs of the present
generation without compromising the ability of future generations
to meet their needs. And here, in an organically grown, fair trade
nutshell, is my point.
The spectacular events of the past several weeks in financial
markets and, more broadly, in the global economy will continue to
have far reaching effects on consumer behaviour. It may be that
concerns with ethical business practice and the environment take a
back seat for many people in the short term. But these issues are
very real, pressing and will not be resolved by themselves. My view
is that the key themes of this paper hold true, global reccession
or not.
Consumers will find their own balance between values and 'value'
in their buying decisions. The combined forces of humanity and
technology make increasing levels of business transparency an
inevitability. Doing good has been and will continue to be good for
business.
And finally, the power of storytelling, that has held true for
thousands of years, will remain true through a downturn. How these
factors are woven together in stories entertaining, informative and
useful enough to be shared will be a key driver of progress.
Beware: The perils of greenwashing
The practise of 'greenwashing' - where a brand or business markets
itself to be more environmentally responsible than it actually is -
benefits no one and hurts us all. The company risks its reputation
while consumers get increasingly confused and cynical, and the
environment itself is ultimately the loser.
There is certainly advantage to be had in promoting the
environmental and ethical qualities of your product in clear and
engaging ways, but exaggerating your claims will undermine your
credibility. Australia's Total Environment Centre recently
published advice on how to get green marketing and communications
right, and suggests the following guidelines:
G:Genuine claims - If you use
terms like 'green', 'carbon neutral', 'eco-friendly', 'natural', or
'recycled' to describe your product, be clear about how you can
justify the claim.
R:Realistic portrayals - Don't
get carried away with the use of evocative imagery, colour or
music. Make sure that portrayals are realistic and factually sound
and don't get swept up by green aspiration unsupported by
achievement.
E:Ecological and environmental
savvy - Get informed about the terminology and relevant
concepts (e.g. ecological refers to living organisms and their
inter-relationships in ecosystems specifically, while environmental
goes much wider to describe external conditions and surroundings
including human society and economy and applies to the full life
cycle of products).
E:Energy and emissions
performance - Understand that energy use and greenhouse
gas emissions are critical to climate change, the defining
environmental issue of the 21st century. Be careful with climate
and energy claims, especially ill-defined terms like 'carbon
neutral'.
N:No tricks, no spin, no
gimmicks - Cheap gimmicks and puffery have no place in
bona fide green marketing.