Enric Bernal
Co-founder and partner, Pinea3
enric.bernal@pinea3.com

The Journal of the Medinge Group, vol. 5, no. 1, 2011

PEOPLE CONTINUE TO ASK: ‘Will the economic crisis be going away anytime soon?’ Well, I hope not. I hope it will stay with us a bit longer until we all learn the lessons that we have to learn from it. Recently, I heard a radio commentator on a radio programme saying something like: ‘We have to take measures so that if a similar crisis comes to us again in the future, we will be prepared’. While many of us might be saying things like this, there is something fundamentally wrong in the way this person was talking. The so-called ‘crisis’ did not suddenly arrive without warning; the crisis is the system’s reaction to previous actions. Actions made by all of us, not by any evil third-party entity. As active contributors we need to assume our share of personal and collective responsibility.
   In periods of crisis people tend to look for strong leaders with clear answers and decisions; people who appear to know where we ought to be headed. But, significant problems like the ones we face today are not simple enough for any one person to solve. We need leaders who raise questions as well as, and perhaps even more than, providing answers. We need leaders who will challenge us to face problems in order to learn and grow from them. To make progress in solving the current set of problems requires more than just leaders who provide answers from on high, but also leaders who help us change our attitudes, behaviours, and values. This is a different concept of leadership that will also affect the correlated social contract because we need to redefine our civic life and the meaning of citizenship. We need to bring this renewed consciousness into our organizations.
   The topic of this article is conscious leadership and when I use the term leadership I am not only referring to the organization’s highest ranks; but to everyone, at every level. Leadership should be made available to all those who want to empower themselves to act as agents of transformation because we can all be leaders whether as a leader of a team, a division, a family or in our own lives.
   Today’s issues need a more conscious leadership that develops a more holistic approach to organizational issues. Elevating the level of organizational responsibility is the best way to improve an organization’s prosperity and performance and in this article I propose a clear, three-step methodology for doing so.¹

Is leadership a value-free concept?
Perhaps we think of leadership as being value-free and there are many scholars who will side with this connotation, since this perspective lends itself more easily to analytic reasoning and empirical examination. However, the concept of leadership itself carries with it implicit norms and values. We cannot say that we both desperately need new leadership while also proclaiming that leadership is value-free. Ronald Heifetz argues in his book, Leadership without Easy Answers,² that all the leadership theories developed over the past 80 years have their hidden values and this is so whether we talk about trait, behavioural, or situational theories of leadership. Further, recent supposedly value-fee, theories such as the transformational, charismatic, and authentic leadership theories, also all have implicit values within them.
   Conscious leadership explicitly implies that core values and principles should be part of the construct of leadership and as such it should be a focus for future leadership research. While there is not a universal set of core values and principles that everyone can agree with, the concept of conscious leadership assumes that leadership cares about the organization’s economic well-being as much as it cares about its social implications (internally and externally), and the environmental impact of its business and practices. This triple-bottom-line concept is a good starting-point for identifying an organization’s core values regarding both its economic well-being and the social and environmental implications of its activities. The United Nations has bravely proposed measuring companies against a triple bottom line—economically, socially, and environmentally.³ These measures are known as the ‘3 Ps’: Profit, People, Planet.
   This article postulates that the most successful 21st-century organizations will be those which consciously embrace the triple bottom line and hold themselves and their teams, accountable to its values and principles.
   If leadership has not been operating as a value-free process, then how did we end up in such a globally chaotic state during the past few years? The answer is this is much more a crisis of values than one of economics and ‘the crisis’ will continue until we change our behaviours. We have to modify our value set and incorporate new values into the ways that we approach business as a whole.
   Twentieth-century success meant making as much money as we could, as fast as possible so that we could retire early and then supposedly enjoy life. This is an old paradigm, through which the corporate world promoted consumption at all costs in order to meet the expectations of analyst–investor quarterly results. However, there is another way. There is a way of understanding life and business which redefines the term success by putting short-term gains into perspective with more balanced longer-term returns together and sustainable prosperity, The term prosperity should not be restricted to economics as it was in the old paradigm; prosperity should also be defined in social and environmental terms. We need to leave behind excessive consumerism and its attendant ills and instead connect to a new era of recycling and alternative energies.
   In the 20th century, our concern with people was how they fit within a set of job descriptions, instead of jobs that might fit people’s needs. We promoted competitive advantage by off-shoring and low-cost manufacturing instead of promoting Fair Trade and accounting for bottom-of-the-pyramid considerations. In the last century, we embraced rationality in management. We forgot to include emotions, intuition, love and spirituality in management concepts and this leaves us now in to find their place in 21st-century management practices. To succeed in the 21st century, we will need to develop a more harmonic approach of cooperating and co-existing in the world, and accept higher levels of personal and organizational responsibility. Lastly, we will need to empower ourselves and our organizations to behave with a higher value set than we did in the last century. What we need is more conscious leadership.

Where is my profit?
Some organizations continue to look, first and foremost, for profit in economic terms and although some momentum remains in this approach, with each passing day these sources of profit will disappear. Customers in the new era will not legitimize companies that only focus on increasing their profit without showing social and environmental respect.
   Some organizations still look for a “magic pill” to solve all their problems, as if they were fighting evil viruses. These organizations don’t see themselves as part of the problem and even less as part of its causes. They just want their normality back while they blame just about everyone else—the banks, the government, high employee turnover, competitors, or maybe even the low cost of foreign manufacturing. I have even heard some organizations turn to blaming their customers. All that I can do is wish these organizations good luck in their fight against imagined evil viruses.
   Companies that insist on finding their sources of revenue the old way will continue to experience the symptoms of the “crisis” as if it was a disease of the “old species”. They operate in a two-dimensional world: the pursuit of profit against an axis of time. What is missing for these organizations is the axis of consciousness. New sources of prosperity—triple-bottom-line prosperity—can only be attained by organizations that elevate their level of consciousness to a higher position. The alternative of taking such a path is to accept the decline of the organization. For those who accept the idea of needing to embrace a higher consciousness, what to do then? How should organizational leaders proceed and what are the next steps to raising the level of consciousness of the organization?

Living organizations
Before discussing what to do to reach higher levels of prosperity, it is important to establish a common concept and language to illustrate the path forward. As such, organizations can be thought of as living organisms⁴ with a life cycle in which they are born, develop, mature, and eventually die. Most Fortune 500-type companies don’t last longer than 50 years, as they are not able to adapt to the changing environment. This analogy of considering organizations to be living entities has been successfully used by others. A prominent example is Arie de Geus with his best seller, The Living Company,⁵ in which he proposed the keys to managing for a long and prosperous organizational life. De Gues identified four critical characteristics for organizational longevity, one of them being the company’s sensitivity to their environment in order to be able to learn and adapt.
   When we accept the concept of living organizations, then by extension we can speak of an organizational state of health. At any given time, an organization can be in a different state, which can dramatically affect their performance. Like a human body, when an organization is ill or wounded, it does not perform at its maximum potential. An organization that is interested in achieving higher levels of prosperity will first need to be in a healthy state. From this point of view, all organizations need to embrace a healing process of some sort. Who today would dare to say, ‘My organization is as healthy as it could possibly be. We are performing to the maximum of our capabilities’? As with the human body, organizational health—good or bad—is a continuous process. It is not something that is done once and then forgotten. Health should be promoted for the entirety of an organization’s life.
   Why do we talk of healing instead of curing? Healing refers to inside-out actions which lead to living a healthy life and it has very little to do with the removal of symptoms. Healing is a systemic approach that encompasses every aspect of the being. Healing is about harmonic alignment, wellness, and wholeness. On the other hand, curing is a much more utilized western term and refers to using external actions to fix the internal problems. In other words, the magic pill that is sought to fix our problems while this often means merely addressing the symptoms and not the fundamental causes.
   Typically, people enter the health care system when indications of illness can no longer be ignored. They tend to look for a cure for a specific issue when it arises, rather than maintaining good health through regular exercise, eating a healthy diet and other actions that contribute to our overall state of wellbeing. Similarly, organizations will only react when the symptoms of under-performance are too painful to ignore. In response, CEOs will be replaced, factories will be closed, and major restructuring will be implemented. Instead, what are the equivalent wellbeing exercises for organizations? How does an organization eat a healthy diet and practice yoga?
   The reality is that there are a number of actions that an organization can put in place to embrace a healing process and work towards prosperity. These actions address the four key elements of a living organization’s being: physical, mental, emotional, and spiritual. For example, a company should balance the pursuit of financial health (physical), with the development of efficient decision-making processes (mental), with the harmony of people’s personal interests (emotional), and with the respect to the community (spiritual).
   The process of healing and steering the organization towards a healthier and more prosperous state is a transformational journey that happens in stages. At each turn, we elevate the level of consciousness a notch higher. Organizations are not likely to make a quantum leap from a low to a high state of consciousness. Like the human body, the organizational system evolves by attaining these stages of health. Donald Epstein proposes in The 12 Stages of Healing⁶ that there are 12 stages of consciousness that a person must go through in order to heal to their maximum potential. Similarly, an organization’s ability to heal is directly proportional to its ability to ascend a spiral of consciousness. Each strand of this spiral represents a crisis and, yet, growth is not possible without it. As in human life, suffering is needed to learn and grow. If we want to reach higher levels of health and prosperity in our organizations, we will have to embrace crises and take them as opportunities to learn, grow and transform.

In search of prosperity
The first step towards a higher level of consciousness is not outwardly focused. Looking for and caring for customers, and the environment, will be a definite outcome of the process, still it must start with an inward look. This is why prosperity cannot be purchased; it has to be lived and experienced. Organizations have to first develop an awareness of their own state of health. What is working and giving energy currently to the organizational system, and what is not? As self-awareness is the key to taking the first step in any leadership development programme, so, too, the organization’s governance needs to analyse and understand the different parts of its being.

• Are the values, the mission and the purpose of our organization well founded?
• How do we make decisions?
• How well do we cooperate between divisions and departments?
• Is our vision inspirational and shared?
• How do we express our truths to the market?
• Is the organization’s foundational moment giving or taking energy from our current operation?
• How are emotions lived in the organization?

   As an organization begins to answer these and other important questions, it will become aware of potential blockage points to higher levels of performance and success. As in a personal development programme, higher levels of organizational consciousness will inevitably bring us to choose certain areas to be worked on and developed further. Therefore, the very first step towards prosperity is for the governance body to increase its awareness of how their organization is run, where the energy flows smoothly, and where it does not. This crucial first step provides a self-diagnosis of organizational performance in terms of energy.
   The second step towards prosperity consists of developing the organization’s capabilities and commitment for change. This process starts by assuming that we have some degree of influence over what happens to us and that we accept our share of responsibility for the situation, even if it is minor. There will always be excuses for us to avoid taking responsibility and while it is fair to say that we are not always in control of what happens elsewhere in the world; still, the question is: do we really not have any influence over other events? For those of us tempted to say, ‘No,’ I would ask you if there was anything that you might do to that could worsen a situation? If the answer is ‘Yes’—there are ways of making things worse—this implies that we do have a certain amount of influence. We are empowered. This necessary self-empowerment will help us to look for solutions instead of focusing on blaming external factors and others.
   During this phase the organization’s governance body needs to identify and empower a group of key senior and middle management individuals, to embrace the change at hand and to play the role of internal transformation agents. Organizational change is about modifying behaviours, which implies the modification of values and beliefs. Without a shift in vales and beliefs, organizational change programmes are often unsuccessful. Many of us have seen or lived through organizational change initiatives and know that without a group of empowered transformation agents from within, the changes will not stick. How many agents of change are required to create the critical mass needed to shift the balance? The answer obviously depends on the scope of change, the size of the organization, and the timing or resources we are willing to invest.
   The third step towards prosperity is to provide a catalyst and to facilitate a sustainable transformation of this living organization. With an accurate diagnosis and after having empowered our core team of advocates for change, we can advance and focus more specifically on all the necessary alterations for truly transforming and healing our organization. The length of this phase depends on the organization’s current state of health, as well as how much change is desired. This is potentially a long phase as organizational change is not something achieved in a few weeks, nor can transformational change simply be purchased. This deeper focus is an experience that the organization has to undergo in the first person., There are no short cuts to transforming an organization, changing corporate culture, improving inter-personal cooperation, or to establishing a sustainable business model that is respectful of the environment and social needs.
   In summary, the transformation journey towards healthier organizational states and higher levels of prosperity happens in spirals where at each turn the organization is becoming healthier. Organizational healing can be achieved through:

• developing organizational self-awareness about its own state of health;
• empowering a group of internal transformation agents that will enforce the change objectives throughout the organization;
• spreading the change plan and rolling-out the necessary workshops in order to reach the critical mass necessary for change to occur.

   Conscious leadership is about challenging the status quo to face the problems in order to learn and grow from them. It is about bringing transformation into organizations that otherwise will be outperformed by their competition. It is also about elevating the level of consciousness to the standards of our century. Doing so will benefit not only organizations but also the greater world and our own individual societies.

Notes
   1. E. Bernal, J. Cos and X. Tarré: Pinea3, Living Organizations, at www.pinea3.com.
   2. R. Heifetz: Leadership without Easy Answers. Cambridge, Mass.: Harvard University Press 1994.
   3. Sustainability: from Principle to Practice. München: Göthe-Institut, at www.goethe.de/ges/umw/dos/nac/den/en3106180.html.
   4. E. Bernal, J. Cos and X. Tarré, op. cit.
   5. A. de Geus: The Living Company. Boston: Harvard Business School Press 2002.
   6. D. Epstein: The 12 Stages of Healing: a Network Approach to Wholeness. Novato, Calif.: Amber–Allen Publishing and New World Publishing 1994.

Dr Nicholas Ind
Partner, Equilibrium
nind@equilibriumconsulting.com

The Journal of the Medinge Group, vol. 5, no. 1, 2011

WHILE CORPORATE SOCIAL RESPONSIBILITY IS a widely used and well-understood term, conscientious brands is not. Its origins lie with the Medinge Group, which since 2004 has given its annual Brands with a Conscience awards. The Medinge Group argues that a brand with a conscience has the following attributes.

• It has a visible conscience.
• It apologizes when things go wrong.
• It invests time and energy in relationship building.
• It promotes the value of caring for one another.
• It acknowledges that we are all fundamentally equal.
• It’s visibly accountable for all its actions.
• It takes risks in line with its values.

The attributes were not defined through research, but rather were derived from discussion among members of the Group.
   In thinking about brands as conscientious, one important association to emphasize is that of services dominant logic.¹ Here we can argue that it is the connectedness of consumers and other stakeholders with the brand owner that creates the brand. A brand may be managed by an organization, but its meaning is formed out of the purchase, usage and dialogue that the organization and stakeholders engage in. This view is relational and suggests a model of inseparability between the one who offers and one who consumes. It shifts the idea of brand building from transactions to relationships: ’because a service-centred view is participatory and dynamic, service provision is maximized through an iterative learning process on the part of both the enterprise and the consumer.’² The importance of this change of perspective is not only due to the dominance of service industries in OECD (Organization for Economic Co-operation and Development) countries³, but also to a reinterpretation of the process of exchange. Vargo and Lusch argue that everything, whether tangible or intangible, is a service. This distinction also serves to emphasize that increasingly brand owners cede control of their brands to consumers. As people use brands, discuss them with others, form communities of interest and interact online with companies, so the influence of the brand owner diminishes. Now a brand is created in a conversational space where the organization and the individual meet.
   The word conscientious also brings specific associations with it. It is a word that we normally apply to individuals and it suggests attributes such as hard-working, thorough and attentive. It conveys the idea that someone is aware of the needs of those around them. If we connect the word to brand, the implication is that the brand owner is capable of understanding and meeting the needs of diverse stakeholders; of extending sympathy and creating value for all.⁴ As Rorty notes,⁵ the moral imagination, which is essential to an ethical perspective, occurs when people are willing to move beyond the possibilties dictated by precedent and empathize with others. This is a view that is distinct from approaches that stress a narrow focus to creating value and recognizes instead the interconnectedness of all those that touch or are touched by an organization.
   This is becoming increasingly important as the size and influence of organizations and their impact on more aspects of people’s lives grows. Indeed, we can argue that the role of the organization has changed: ‘companies have to recognize their accountability not only to shareholders, but to all audiences and to society as a whole.’⁶ This is a point that Freeman⁷ makes when he writes that the stakeholder view is an ethical requirement for companies and that the linkage of different stakeholders requires a balanced approach. In their 2007 book Freeman, Harrison and Wicks⁸ note that the the primary aspect of corporations is cooperation. They suggest that the business organization should be a vehicle ‘by which stakeholders are engaged in a joint and cooperative enterprise of creating value for each other.’⁹

The attributes of ‘Conscientious Brands’
If we can argue that a conscientious brand is one that is cogniscent of, and tries to meet, the needs of all its stakeholders, what might this mean in terms of attributes? Building on the Medinge list, we would argue that there are three core attributes that are necessary for a brand to be seen as conscientious: a committed and inclusive approach, the ability to think long-term and a willingness to keep promises.
   One important omission from the core attributes however should be noted: altruism, which can be defined as an unselfish regard for the well-being of others. We encounter a problem here of who ‘others’ might be, but if we argue that ‘others’ encompasses stakeholders external to the organization, altruism creates a problem of imbalance. For as well as achieving the well-being of others, brands must be able to deliver well-being for themselves and those inside the organization. Altruism could consign a brand to destructive decisions. In its place we might argue that brands should have a selfish regard for themselves and for the well-being of others.

A committed and inclusive approach
A facet of conscientious brands is that Corporate Social Responsibility (CSR) is not seen as a marketing tool or a department or a process that orbits far away from the corporate sun, but is integrated into the fabric of the organization. The greater the orientation towards a communications-based approach, the stronger the tendency for CSR to be seen as superficial. In fact, telling consumers about CSR through traditional media such as advertising increases the risk of provoking scepticism.¹⁰ However, there are examples such as the Norwegian sportswear brand Stormberg,¹¹ the Dutch Fair Trade pioneer Max Havelaar, the Swiss Bank, Pictet et Cie and the Bangladeshi telecoms operator Grameen Phone, that are stakeholder-focused and make CSR a part of everyday practice.
   For example, Pictet et Cie, which was founded in 1805, has a focus on sustainable development and encourages the maximum investment in sustainable areas for a given risk. The bank manages a Water fund, which was launched in 2000, and has become the world’s largest of its kind, with over €4 billion in assets; and a Clean Energy fund. The company has also establishe the Prix Pictet—the world’s first international prize dedicated to photography and sustainability—mandated to encourage the use and power of photography to communicate vital messages to a global audience. Pictet et Cie understands that business is not somehow separate from the world, but is very much part of it and must demonstrate a broad commitment to stakeholders and to society at large.
   Hewlett-Packard (HP) also exemplifies this in the way it works with other companies, governments and NGOs to improve the health, education and infrastructure in developing markets, because its long-term growth depends on new consumers. Anholt writes of HP and others, that ‘they (big companies) need consumers who are wealthy enough to buy their products, have enough free time to enjoy them, are educated enough to consume advertising messages and evaluate products and brands, and live in countries where there is the liberty to make money and spend it.’¹²

Long-term thinking
Key to the cited examples is the prevalence of long-term thinking, which runs counter to the sometimes short-term view of shareholders. Acting conscientiously means rejecting expediency for principle, temporary advantage for long-term gain. Grameen Phone didn’t look a good business prospect in the late 1990s in a country suffering from high levels of corruption, political uncertainty and poor infrastructure. But new distribution methods were established, low-cost pricing plans introduced and innovative and socially valuable services, such as HealthLine and Community Information Centres, established. Today, Grameen Phone has 23 million subscribers (February 2010) and is the most desired company to work for in Bangladesh.
   At Anglo-Dutch fast moving consumer goods company, Unilever, reducing environmental impacts while improving performance is the core vision and it means taking a longer-term view and tackling short-termism head on. In 2009, CEO, Paul Polman, in an attempt to move the focus away from short-term returns, stopped providing earnings guidance to investors. Seeing his mandate as more concerned with long-term success, he also railed against hedge funds, arguing, ‘they are not people who are there in the long-term interests of the company.’
   One implication of shareholder short-termism might be that it is easier for privately owned companies to act conscientiously. While Freeman et al¹³ argue for the mutual interest of different stakeholders, the power of shareholders in publicly quoted companies whose primary motivation is in above average returns can run into conflict with other stakeholders. In privately owned companies such as Pictet et Cie, Max Havelaar, Stormberg and also US outdoor brand, Patagonia, it is the long-term shared vision of owners and managers that drives decision-making.

Keeping promises
There has been a shift in emphasis in brand-building, from making promises to keeping them;¹⁴ from communication to people. This represents a turning away from traditional advertising and a focus on direct interaction. Indeed, some organizations are moving branding entirely away from communications and towards connecting strategy, culture and a wider stakeholder involvement. They recognize that branding is a process that is too important to be left just to the marketing or communications department. These organizations have understood that brand building is a participative process involving the whole organization and is the responsibility of all employees.¹⁵
   This suggests the importance of widespread employee engagement with the organization’s brand ideology—the set of ideas that define what the organization is, how it does things and what its aspirations are. The better individuals identify and internalize the ideology, the greater the likelihood of its delivery in the experiences that connect the organization and its stakeholders.
   As an example of this consider the software company, Mozilla. This is example of an organization that lives up to its stated mission of promoting openness, innovation and opportunity on the web. It is a non-profit organization that grew out of Netscape and is involved in building communities of people that both help create and use their products such as the web browser, Firefox, an email client, Thunderbird, and a global community of innovators, Drumbeat. Mozilla employs a core group of people (around 300) that develop software, manage process and market the products, but since the start of the company, much of the development of products has been due to the enthusiasm and involvement of customers who have become volunteers.
   In the early days of Mozilla, when it was up against a very dominant competitor in the form of Microsoft, there weren’t enough resources internally. As many software developers identified with the ideology of keeping the web open and accessible to all, they gave up their spare time to develop products they themselves would like to use. It was also an opportunity to work with smart people and solve difficult problems. Of course, Mozilla could have closed their doors to these would-be helpers, but it would have shown up that the principle of openness was just a veneer. Asa Dotzler of Mozilla says, ‘by 2004, the majority of the code had been written by Netscape employees, but there were many hundreds of volunteers who played a substantial role in writing code including important features. For instance the first implementation of tabbed browsing was a volunteer written code. Our first implementation of pop-up blocking and session restore when you crash, and lots of other key features were developed by volunteers.’
   By 2010, more than 12,000 free community-generated add-ons had been implemented. Mozilla has encouraged outsiders to help evolve the project. The idea of improving the internet experience for people everywhere led to one volunteer choosing to pioneer disability access because he felt passionately about it, while volunteers around the world seized on the opportunity to preserve the integrity of their languages, by translating content. When Mozilla launches a new version of Firefox, it is delivered in 75-plus languages simultaneously (2010). As long as the initiatives align with the Mozilla ideology, the organization chooses to make it easier for people to do what they wanted with the brand. A similar philosophy has also been adopted for marketing the Mozilla brand whereby a community of marketing professionals and enthusiast consumers helped to construct and implement a marketing campaign, even to the extent of donating money to run a launch campaign for Firefox.

Challenges to the concept
The concept of conscientious brands and the blocks on which it is built can be challenged from different angles. First, the stakeholder perspective has been challenged by Frooman¹⁶ in particular for being too company-centric. While he recognizes the impact of Freeman’s 1984 book, he also judges that in his ‘hub-and-spoke conceptualization, relationships are dyadic, independent of one another, viewed largely from the firm’s vantage point, and defined in terms of actor attributes.’
   Certainly traditional models of organization-stakeholder interaction have emphasized the organization as doing things to, and communicating at, stakeholders. In a more networked world where interactions are fluid and organizations are more porous and transparent, it has become clear that the connections between stakeholders has become more complex and the locus of control has shifted away from the organization. This has become evident during uprisings in North Africa and riots in the UK (2011) as brands such as Facebook, Blackberry, Vodafone and Twitter have been used to facilitate civil unrest. As a consequence, these brands have been criticized by governments. Yet the point should be made here that it is citizens who are defining how these brands are used (whether it be for good or for bad) in ways that were never conceived of by the brand owners.
   Alternatively, Martin¹⁷ (2010) is critical of much management thinking because it lacks a sufficient customer orientation. He describes the stages of modern capitalism, from Berle and Means’ The Modern Corporation and Private Property,¹⁸ which signified the emergence of managerial capitalism to Jensen and Meckling’s Theory of the Firm,¹⁹ which signified a shift to shareholder capitalism. Jensen and Meckling’s emphasis on maximizing shareholder value has since become a standard of modern management and argues quite explicitly for the pre-eminence of the shareholder. Martin’s critique is that the focus on shareholders hasn’t done anything for shareholder returns: ‘there’s no sign that shareholders benefited more when their interests were put first and foremost.’ Shareholder capitalism has also made organizations dysfunctional, in that it also downplays the interdependence of their audiences. As several studies have shown, involved and engaged employees are important contributors to customer satisfaction which in turn leads to enhanced performance.²⁰ Similarly, having a positive reputation among influential people and organizations helps a business to achieve its broader goals. Where we might diverge from Martin is in his solution to shareholder capitalism. His argument is that the new orientation should be customer capitalism and he cites two key examples of organizations who have exemplary long-term performance and live up to their rhetoric: Johnson & Johnson and P&G. They are interesting choices and they certainly give prominence in their corporate statements to consumers, but the important thing is that they stress the intertwining of stakeholders. Johnson & Johnson’s credo is both long-lived and well known and connects doctors, nurses, patients, parents, children, communities and stockholders. P&G’s Principles state: ‘We will provide branded products and services of superior quality and value that improve the lives of the world’s consumers. As a result consumers will reward us with leadership sales, profit and value creation, allowing our people, our shareholders and the communities in which we live and work to prosper.’

A new approach
’Corporate brands are hugely influential on society and can either be part of the problem in fuelling excessive and high-impact consumption or part of the solution in driving consumers towards sustainable living.’
—Dax Lovegrove, Head of Business & Industry Relations, WWF UK

The central problem for the concept of conscientious brands is that one of the requirements for the organization is encouraging consumption, while a conscientious brand should be aiming to limit or shift consumption to ensure it is sustainable. As the philosopher Slavoj Zizek observes, you only have freedom to the extent that you make the right choices, which means: ‘you are free to do anything, as long as it involves shopping.’²¹
   Yet, there are some signs of resistance to the Zizek view in the emergence of the idea of voluntary simplicity. ‘Voluntary simplifiers’ describes a category of people who have made the conscious decision to reduce their consumption levels and find meaning through reducing their spend on products and services and spending more time on activities that generate meaning for them. This group is anti-consumerist and ideologically motivated.²² The size of this audience is difficult to estimate, but it is suggested that in the US there are some 60 million people who fit into the category.²³ These are still consuming individuals, but they are, in their eyes at least, consuming responsibly within self-defined boundaries. Kozinets has argued persuasively in his analysis of the Burning Man Festival that it is impossible to escape the market²⁴—except temporarily. Consumerism is all pervasive. Yet the emergence of voluntary simplifiers demonstrates that the ‘less is more’ mantra has a significant number of adherents.

Conclusion
Branding is changing. It is moving away from a focus on products and consumers to a services-dominant logic that weighs up and tries to balance the needs to all stakeholders in an increasingly transparent and fluid dialogue. What’s important for marketers and brand owners is to see this change not as a threat but as an enormous opportunity for brands to make a positive difference to the world. Brands can respond to the stated desire of consumers and citizens to live responsibly (even if there is a gap between stated intent and actions)²⁵ by using the tools of branding to change people’s behaviour so that it becomes more sustainable. This extends the role of brand owners beyond simply marketing products to helping people become more ethical. As Devinney, Auger and Eckhardt²⁶ argue, ethically oriented consumption requires consumers to become knowledgeable participants so that they can become more socially conscious in their purchasing and consumption. This will require organizations to move beyond their tendency to short-termism and their overt orientation on shareholder returns. Instead there will be a requirement to focus on the real needs of people and to engage with them in a services-dominant approach that recognizes the importance of participation and dialogue.

Notes
   1. S. L. Vargo and R. F. Lusch: ‘Evolving to a New Dominant Logic for Marketing’, Journal of Marketing, vol. 68, no. 1, 2004, pp. 1-17.
   2. Ibid., at p. 12.
   3. Thirty-four countries that are members of the forum that is committed to democracy and the market economy.
   4. D. Hume: A Treatise of Human Nature. London: Penguin 1969.
   5. R. Rorty: ‘Is Philosophy Relevant to Applied Ethics?’ Business Ethics Quarterly, vol. 16, no. 3, 2006, pp. 369-380.
   6. N. Ind (ed.): Beyond Branding: How the New Values of Transparency and Integrity Are Changing the World of Brands. London: Kogan Page 2003.
   7. R. E. Freeman: Strategic Management: a Stakeholder Approach. Boston: Pitman 1984.
   8. R. E. Freeman, J. S. Harrison and A. C. Wick: Managing for Stakeholders: Survival, Reputation and Success. New Haven: Yale University Press 2007.
   9. Ibid., at p. 6.
   10. A. M. Sjovall and A. C. Talk: ‘From Actions to Impressions: Cognitive Attribution Theory and the Formation of Corporate Reputation’, Corporate Reputation Review, vol. 7, no. 3, 2004, pp. 269-81.
   11. L. E. Olsen and A. Peretz: ‘Conscientious Brand Criteria: a Framework and a Case Example from the Clothing Industry’, Journal of Brand Management vol. 18, no. 9, 2011, pp. 639-49.
   12. S. Anholt: Brand New Justice: the Upside of Global Branding. Oxford: Butterworth-Heinemann 2003, at p. 160.
   13. R. E. Freeman, J. S. Harrison and A. C. Wick, op. cit.
   14. R. J. Brodie, M. S. Glyn, and V. Little: ‘The service brand and the service-dominant logic: missing fundamental premise or theneed for stronger theory?’ Marketing Theory, vol. 6, no. 3, 2009, pp. 363-79.
   15. N. Ind and M. Schultz: ‘Brand Building, Beyond Marketing’, Strategy & Business, July 2010.
   16. J. Frooman: ‘Stakeholder Influence Strategies’, Academy of Management Review, vol. 24, no. 2, 1999, pp. 191-205.
   17. R. Martin: ‘The Age of Customer Capitalism’, Harvard Business Review, vol. 88, nos. 1-2, 2010, pp. 58-65.
   18. A. Berle and G. Means: The Modern Corporation and Private Property. Piscataway, NJ: Transaction Publishers 1932.
   19. M. Jensen and W. Meckling: ‘Theory of the Firm: Managerial Behaviour, Agency Costs, and Ownership Structure’, Journal of Financial Economics, vol. 3, no. 4, 1976, pp. 305-60.
   20. A. Rucci, S. Kirn and R. Quinn: ‘The Employee-Customer-Profits Chain at Sears’, Harvard Business Review, vol. 76, no. 1, 1998, pp. 82-97; M. G. Patterson, M. A. West, R. Lawthom and S. Nickell: Impact of People Management Practices on Business Performance. London: the Institute of Personnel and Development 1997; D. Maister: Practice What You Preach: What Managers Must Do to Create a High Performance Culture. New York: Free Press 2001.
   21. S. Böhm and C. de Cock: ‘Liberalist Fantasies: Zizek and the Impossibility of the Open Society’, Organization, vol. 14, no. 6, 2007, pp. 815-36; S. Zizek: Violence: Six Sideways Reflections. London: Profile Books 2008.
   22. F. M. Belz and K. Peattie: Sustainability Marketing: A Global Perspective. West Sussex: John Wiley & Sons 2009; C. J. Oates, S. McDonald, P. Alevizou, K. Hwang and W. Young: ‘Marketing Sustainability: Use of Information Sources and Degrees of Voluntary Simplicity’, Journal of Marketing Communication, vol. 14, no. 5, 2008, pp. 351-65.
   23. J. A. Sandlin, and C. S. Walther: ‘Complicated Simplicity: Moral Identity Formation and Social Movement Learning in the Voluntary Simplicity Movement’, Adult Education Quarterly, vol. 59, 2009, pp. 298-317.
   24. R. V. Kozinets: ‘Can Consumers Escape the Market? Emancipatory Illuminations from Burning Man’, The Journal of Consumer Research, vol. 29, no. 1, 2002, pp. 20-38.
   25. Young et al. notes an estimated 30 per cent of consumers indicate concern about environmental issues but only around 5 per cent translate this concern into action. W. Young, K. Hwang, S. McDonald and C. J. Oates: ‘Sustainable Consumption: Green Consumer Behaviour When Purchasing Products’, Sustainable Development Journal, vol. 18, no. 1, 2010, pp. 20-31.
   26. T. Devinney, P. Auger and G. M. Eckhardt: ‘Values vs. Value’, Strategy & Business, no. 62, spring 2011.

The article is a version of a paper published in the Journal of Brand Management (2011).

Ava Maria Hakim
IBM Global Solutions
hakimava@us.ibm.com

The Journal of the Medinge Group, vol. 5, no. 1, 2011

THE TRULY CONSCIENTIOUS BRAND cannot exist in a society based on consumerism. The challenge lies in the sociology of capitalism and a system which has created an environment of producers and consumers that support each other in an ongoing cycle of eco-terror and innovation decadence. Patterns of consumption and the animal spirits driving today’s prevailing economic systems have to change in order to go beyond corporate social responsibility (CSR) and the ethical capitalism that remain closely connected with the profit-responsibility of the corporation to its stakeholders. Positive change has to strike at the core of the problem—the model itself. By doing so, the opportunity exists to develop a sustainable economic and social model versus a model that, by its very nature, has more negative impact than the positive impact created from its “sustainability” efforts.
   The model would have at its core the following five concepts:

• Mass production = mass destruction
• Innovation should be mindful, not landfill
• Measure long term use value
• Quality is a craft
• Consumer needs are basic

Brand management plays a significant role in influencing and affecting consumer behaviour. Changing consumer behaviours and production philosophies, while expanding control of strategic brand direction, will determine the speed at which a socially responsible and environmentally friendly economic model will be developed.

Sustainability is parallel to the horizon
In a line diagram of production, sustainability is the horizontal baseline. This represents the essence of sustainability—the ability to endure the forces that act upon it. It also represents the goal—equilibrium of production with the resources needed to produce. In today’s consumption-based society, demand is increasing the distance from the ‘production’ line to the ‘sustainability’ baseline. As production increases, so does waste and the depletion of resources. This has a multiplying effect with more waste potentially impacting future resources and thereby negating any positive results from other pro-environment initiatives. In Figure 1, nothing is moving toward the ‘sustainability’ baseline. This is the production model of consumerism. Sell more, produce more, use more—in any order you like. Sustainable development defined as ‘that which meets the needs of the present without compromising the ability of future generations to meet their own needs’¹ is not possible in this model. As long as development forces an increasing depletion of resources and continued growth rate of waste, “sustainable development” is in fact an oxymoron.²

Figure 1: Impact of a consumption-based model

   Ethical capitalism and CSR initiatives attempt to change the direction of these lines by injecting innovation. But in most cases the innovation can only impact the angle of the lines. For example, eco-efficient design may decrease the angle of the waste and resource line, but because production continues at the same or increasing rate (fuelled by consumers connecting to sustainability) the impact remains incremental. Similarly the use of renewable resources may decrease the rate of depletion of resources, but without a change in production numbers, the direction remains the same. Rarely is there an impact to the production line because by its nature, capitalism is about production and growth. The consumer becomes both the target and source of this destructive desire for growth.

Concept 1: Mass production = mass destruction
As long as the focus is on producing more stuff for more consumers, the ‘waste’ and ‘resource’ lines move away from sustainability. To move closer to the ‘sustainability’ baseline, both the ‘waste’ and ‘resource’ lines need to change direction—waste needs to be removed and resources need to be used at a rate less than or equal to the natural rate of replenishment.
   ‘Researchers have compared humans’ annual demand for resources with the area of land needed to generate the required resources and absorb the wastes … They calculated that in 1961 human demand for resources was about 70 percent of Earth’s ability to regenerate; by the 1980s demand had grown to equal the annual supply of resources, and by the end of the 1990s it exceeded by 20 percent Earth’s capacity to sustain consumption. “It takes the biosphere, therefore, at least a year and three months to renew what humanity uses in a single year”, so that humanity is now eating its capital, Earth’s natural capital.’³ Buddhist Monk Thich Nhat Hanh uses a powerful metaphor—the Sutra on the Son’s Flesh—to illustrate the outcome of maintaining current consumption patterns.⁴ The moral of the Sutra is that in effect we will be eating the flesh of our children if we do not make changes now to safeguard their future through more mindful consumption.
   To create more goods for more consumers, mass resources are taken from one location, often shipped to another location for development and then sent to distribution points for consumer masses around the world. Waste is created throughout the cycle not just at the end of the product’s life.
   To reduce waste, the amount of goods produced needs to be reduced and changes need to be made in how things are produced. Innovation and quality concepts need to be applied beyond mere product design to eco-efficient production systems—or “eco-systems” of production quality. In these “eco-systems” of production, waste is ultimately recycled into the “natural resource” and quality drives the need for fewer replacements and long-term use value (Anderson, Sarah et al 2004; Wessels, Tom 2006).⁵ Figure 2 illustrates the impact of innovation and quality to production reduction—narrowing the gap between waste and resources.

Figure 2: Impact of reduction in production

Muji, a Japanese retail company that sells a variety of household and consumer goods, was established in 1980 with the idea of ‘completely eliminating wastefulness … It started with careful selection of materials, streamlined processes and simplified packaging. The concept of rationalizing products by totally eliminating wastefulness, and at the same time making them more attractive, is at the heart of traditional Japanese æsthetics’.⁶ The company looked to add quality with a no-label philosophy. They design things based on simple functionality–‘not a fancy towel, but a useful towel. Socks with right angles like feet. Beautifully simple bicycles.’ The Muji design process resists technology and prototypes are produced with paper rather than computers, so as not to encourage unnecessary detail. The manufacturing process is determined on the basis of the consumer’s use of the product, which in turn is a design priority. Finishes, lines and forms are minimized for manufacturing ease. They maintain continuous and open communication with customers through the Quality Products for Everyday Life Research Center—a ‘laboratory’ where they have dialogue with customers to determine what ‘will suffice’. Muji does little or no advertising, gaining recognition purely from word of mouth, and quality of product.

Concept 2: Innovation should be mindful, not landfill
The current nature of innovation is iterative, rapid, and for competition’s sake. In an economic system where greater profit and continued growth is the goal, innovation becomes a source of survival and the means for “beating” the competition. This type of innovation creates an innovation decadence that spews products for the sake of creating something “new” rather than creating something useful or something needed. It produces an array of choices that are essentially the same with minor differences in features designed to appeal to the consumer looking for the latest thing or “lifestyle enhancer”.
   Take a look at the number of bottled water drinks. Carbonated water, sparkling water, spring water, filtered watered, water with flavour, and even water with vitamins (for those who prefer not to get their vitamins through proper nutrition). The water comes in big bottles, little bottles, plastic bottles, squirt bottles. The Container Recycling Institute reports that ‘Americans buy an estimated 34·6 billion single-serving (1 litre or less) plastic water bottles each year. Almost eight out of ten end up in a landfill or incinerator. Hundreds of millions end up as litter on roads and beaches or in streams and other waterways. Taxpayers pay hundreds millions of dollars each year in disposal and litter cleanup costs. That’s 877 bottles wasted every second’.⁷ Yet more than one of the water companies claims to be socially responsible with a sustainability focus.
   Furthermore, innovation focused on product differentiation not only stresses out the natural environment with unnecessary resource usage and waste, but it also causes societal stress as consumers, and labourers struggle to “keep up” with the latest technological advancements.⁸ Innovation in a sustainable model needs to be directed beyond the walls of the corporate cash register and the marketing department. It needs to address the entire product life cycle and focus on the resources not only to create but also to dispose of the product. If innovation ends up in landfill or on roads and beaches, it is not innovation—it is rubbish. Sustainable development requires innovation to define a process that changes production to reduce waste and maintain natural resources.
   Apple, Inc., ranked as the top most innovative company in 2011 by Fast Company,⁹ has an environmental approach that begins at the design stage and provides a comprehensive “cradle-to-grave” approach including a full Life Cycle Assessment. Apple tracks the environmental impact of each product by measuring greenhouse gas emissions for its facilities, the manufacturing process, product packaging, transportation, and customer usage of its products. An environmental report is provided for all products they currently ship. Their recycling programme ‘begins in the design stage, when we create compact, efficient products that require less material to produce. The materials we do use—including arsenic-free glass, high-grade aluminium, and strong polycarbonate—are highly valuable to recyclers, who can reclaim them for use in new products’.¹⁰ These practices enable Apple to drive greater efficiency and develop products that have less impact on the environment.
   Riversimple, a UK-based transport provider with the goal ‘to eliminate the environmental impact of personal transport’ is applying business model innovation to change an entire industry. Riversimple has applied what they are calling ‘whole system design’ to develop a completely new approach to auto manufacturing. This approach looks at the entire system (of business) and optimizes the whole versus focusing on one single subsystem.¹¹
   Today, auto manufacturing is based on a model that generates revenue by “selling more products”. Design and technology are used to sell more products and sell more products more often. By not defining their business as auto manufacturing, the Riversimple model looks to sell mobility as a service—shifting the auto manufacturing model mentality of “sell more products to make more money” to “generate revenue from less product”. The interest of the mobility provider becomes the efficiency, longevity and quality of the vehicle in order to optimize the revenue from each vehicle versus optimizing product sales. Like Muji, Riversimple looks to accomplish their goals via a collaborative innovation environment that is open to the world of designers and engineers.¹²

Concept 3: Measure long-term use value
The real measure of the value of an innovation, or product should be in the long-term life time use value—not share or transactional economic value. Our society of consumerism continually wants and buys the latest, throwing away the “old”. But in an environment of rapid innovation, old becomes younger and younger. Consider the life span of a cellphone—two to five years at the maximum? Nearly 2 billion cell phones were sold in 2007, double the sales number in 2000.¹³ Including the handset, battery and adapter, each represents about one pound of waste that needs to be managed.¹⁴ Add to that all the accessories, whose lifespan is even shorter and it becomes apparent that recycling efforts will have to increase significantly in order to be at all effective. According to Environmental Protection Agency reports, the amount of recycling is increasing, yet the actual percent of what is recycled has remained constant because consumption continues to grow at an ever increasing rate.¹⁵
   By designing for long-term use value rather than short-term profitability, the rate of waste production slows along with the need to produce more and more of the same basic thing. It also means creating a product that is built to last and bringing to market those innovations that make a significant difference—a difference that is worth the overall impact it has across its life time. Wouldn’t it be better to have a cellphone designed with the same principles as a fine Swiss watch? And rather than throwing them away every two years, we pass them along to the next generation who actually longs to use it.
   IWC Schaffhausen has been engineering master timepieces since 1868. The company was founded in Schaffhausen, Switzerland to take advantage of the skilled craftsmen, low wages and location. From the beginning, IWC used invention and innovation to design according to the founder’s ultimate mission: ‘simple but perfect, absolutely reliable mechanical watches for everyday use’. The company began keeping detailed records for every watch that has left the factory since 1885. Since 1885, details of the calibre, materials used and cases have been entered into the records. In the case of later models, the company claims that its service department has the parts and is capable of repairing and maintaining watches from every era since IWC’s foundation in 1868.¹⁶
   Today, IWC is still in Schaffhausen with a few hundred employees. Their timepieces are still produced to the quality goals set at inception with many of its models sought by collectors. Quality, treasured products—products likely to never occupy a landfill.

Concept 4: Quality is a craft
Schumpeter states in Capitalism, Socialism and Democracy that capitalism forced out the artisan and craftsman. ‘The world of the artisan was destroyed primarily by the automatic effects of the competition that came from the capitalist entrepreneur’.¹⁷ Gone with the artisan and craftsman is the passion for producing individual items of quality and moreover, gone is the connection of the producer to the final product. With the assembly line and the “factory” concept (applied even in service organizations today) workers have become more and more disconnected from the final product and from the actual consumer of the product. Rather than one person putting their name on the product and holding accountability, there are now sales organizations that sell, factories that produce, and a whole host of directors driven by their own agendas. In very few cases do sales work in the factory or vice versa. The factory worker has no connection or accountability to the consumer. After all, if there is a problem, the consumer will call the help desk in a low-cost country and be assisted by someone who is “scripted” and has no impact on the design or production of the product. And all sales wants to do is sell. How authentic is that? Yet you will find that many corporations utilizing these practices are also branding themselves as socially responsible.
   In the proposed model, the craftsman is brought back into the picture with the sole responsibility to add more “soul”—to bring back a passion for quality. Quality—not quantity—is the key to sustainability. IWC is one example of the true value of quality. But this also requires that consumers understand the value of quality and change their compulsive buying behaviour. Conscientious brands need to influence conscientious consumption.

Concept 5: Consumer needs are basic
According to Jeffrey Sachs in The End of Poverty: Economic Possibilities of Our Time, ‘the extreme poor and the poor make up about 40 percent of humanity’.¹⁸ He continues, ‘The gulf between today’s rich and poor countries is … a new phenomenon, a yawning gap that opened during the period of modern economic growth … Today’s vast income inequalities illuminate two centuries of highly uneven patterns of economic growth.’ He goes on to explain that this discrepancy is due to the ability of some regions to achieve unprecedented ‘long-term increases in total production’ with technological innovation being the main force behind this achievement.¹⁹ But, at what cost?
   Numerous studies and indices show that human development and satisfaction do not continue to grow with personal expenditures or Gross Domestic Product (GDP).²⁰ ‘Despite high and sustained levels of economic growth in the West over a period of 50 years—growth that has seen average real incomes increase several times over—the mass of people are no more satisfied with their lives now that they were then’.²¹ The Genuine Progress Indicator (GPI), a measure that looks at human development and welfare of a nation in relation to economic progress shows that in fact the ‘well-being’ of Americans has declined even though GDP has increased. Similarly, the Happy Planet Index (HPI) which measures the relative efficiency with which nations convert the planet’s natural resources into long and happy lives for their citizens²² shows a negative correlation between GDP and the changes in HPI. The Index supports the view that ‘Over-consumption in rich countries represents one of the key barriers to sustainable well-being worldwide’.²³
   So although growth is needed to provide 40 per cent of humanity to a standard of living that ensures survival, there appears to be a point where growth no longer provides positive benefits. ‘Growth not only fails to make people contented; it destroys many of the things that do. Growth fosters empty consumerism, degrades the natural environment, weakens social cohesion and corrodes character’.²⁴ This occurs because once basic needs are satisfied, the market and promoters of growth convince us that we need more—more to demonstrate that we are accomplished, that we live a certain lifestyle and that we have meaningful, progressive lives. But meaning does not come from manufactured objects of identity. Moreover, this consumption-based model is not sustainable. It does not positively impact our behaviours, our sense of well-being or the well-being of our society and the planet. Even as global consumption expands without precedence, consumers basic needs are not being met—sanitation, water, food, and happiness.
   The United Nations Millennium Development Goals to cut poverty in half by 2015 are certainly noble. But if the thought is to progress billions of people along the path of the current “high-income”, consumption based countries, the plan is strongly faulted. It has been stated that ‘if everyone in the world were to consume as much as the average consumer in the rich countries we would require four planets the size of earth’.²⁵ Without a change in the culture of capitalism itself, without the development of a more conscientious consumer and society as a whole, the dream of ending poverty may be achievable but totally unsustainable. Such progress will be void of what people really want—happiness.

The role of brand management
To develop the “truly conscientious” brand will require an expansion of brand management’s influence on production, development and areas of innovation. Without some ability to influence the development of products and services, brand management is not managing the brand but simply creating marketing messaging.
   Brand management plays a significant role in influencing consumer behaviour and brand managers have a key role in helping to eliminate those things that drive excessive consumption and social and environmental destruction. Consumption in itself is not a bad thing. Rather it is the increasing rate of consumption by a relatively small part of the global population that puts strain on the environment and forces consumption patterns on others that are not sustainable. Eliminating shallow marketing messaging and “lifestyle” advertising is the first step toward positive change and influencing the development of a conscientious consumer—one that demands quality, eco-efficient products with long-term use value—from all the products that they purchase. The same type of creativity that is applied to developing identities and campaigns needs to be applied to developing products that eliminate wastefulness. The goal is more with less. More meaning, less stuff. More quality, less waste.
   Change has to occur in production and consumption. Corporate social responsibility initiatives typically only address the symptoms and in some cases drive further increases in the rate of production, waste and consumption inequalities. Brand management has the ability to influence both production and consumption, but to do so brand management will also need to change. Brand management has to become the catalyst for sustainable development and an activist for the conscientious consumer. In developing countries, there is great opportunity to create models for sustainable development from which conscientious brands can arise naturally. In developed countries this change will be more challenging but the implications are great. Models to address these challenges deserve further investigation and immediate thought.
   ‘When we’re able to get out of the shell of our small self and see that we are interrelated with everyone and everything, we see that each of our acts affects the whole of humankind, the whole cosmos … Mindful consumption brings about health and healing, for ourselves and our planet.’²⁶

Notes
   1. Our Common Future: Report of the World Commission on Environment and Development. Oxford: Oxford University Press 1987, p. 54. Viewed November 2010, http://www.un-documents.net/ocf-02.htm#I.
   2. S. Harding: Animate Earth: Science, Intuition and Gaia. White River Junction, Vermont: Chelsea Green Publishing Co. 2006; S. L. Hart: Capitalism at the Crossroads: Aligning Business, Earth, and Humanity, 2nd ed. Upper Saddle River, NJ: Wharton School Publishing 2007.
   3. C. Hamilton: Growth Fetish. London: Pluto Press 2004.
   4. T. N. Hanh: The World We Have: a Buddhist Approach to Peace and Ecology. Berkeley, Calif.: Parallax Press 2008.
   5. S. Anderson, et al: Alternatives to Economic Globalization: a Better World Is Possible. San Francisco: Berrett–Koehler Publishers, Inc. 2004; T. Wessels: The Myth of Progress: Toward a Sustainable Future. Lebanon, NH: University Press of New England 2006.
   6. ‘Back to Our Origins, Into the Future’, Muji Global 2010, http://www.muji.com/message/. Viewed November 2010.
   7. ‘Bottled Water’, Container Recycling Institute 2010, http://www.container-recycling.org/issues/bottledwater.htm. Viewed November 2010.
   8. D. Harvey: The Enigma of Capital and the Crises of Capitalism. New York: Oxford University Press.
   9. ‘Most Innovative Companies 2011’, Fast Company, no. 153, March 2011, http://www.fastcompany.com/magazine/153. Viewed March 2011.
   10. ‘Apple and the Environment’, Apple Inc. 2010, http://www.apple.com/environment/. Viewed November 2010.
   11. ‘About us’, Riversimple LLP 2010, http://www.riversimple.com/Content.aspx?type=7&mode=menu&key=136c7243-2378-407e-96cf-750d15de37a8. Viewed November 2010.
   12. Ibid.
   13. Electronics Waste Management in the United States. Washington, DC: Office of Solid Waste, US Environmental Protection Agency 2008, EPA530-R-08-009, p. 11, http://www.epa.gov/osw/conserve/materials/ecycling/docs/app-1.pdf. Viewed November 2010.
   14. B. K. M. Fishbein: Waste in the Wireless World: the Challenge of Cell Phones. New York: Inform, Inc. 2002, p. 23.
   15. Fact Sheet: Management of Electronic Waste in the US. Washington, DC: US Environmental Protection Agency 2008, EPA530-F-08-014, p. 8, http://www.epa.gov/osw/conserve/materials/ecycling/manage.htm. Viewed November 2010.
   16. ‘About IWC’, International Watch Company 2010, http://www.iwc.com/history/. Viewed November 2010.
   17. J. A. Schumpeter: Capitalism, Socialism and Democracy. London: George Allen & Unwin 1976.
   18. J. D. Sachs: The End of Poverty: Economic Possibilities of Our Time. New York: Penguin Books 2005, p. 19.
   19. Ibid., at pp. 28–31.
   20. C. Hamilton, op. cit., at pp. 54–61; S. Harding, op. cit.; J. G. Speth: The Bridge at the Edge of the World: Capitalism, the Environment and Crossing from Crisis to Sustainability. Yale, Conn.: Yale University Press 2008.
   21. C. Hamilton, op. cit., at p. 3.
   22. ‘About the Happy Planet Index’, Happy Planet Index 2·0, 2009, http://www.happyplanetindex.org/learn/. Viewed November 2010.
   23. S. Abdallah, S. Thompson, M. Michaelson, and N. Steuer: The Happy Planet Index 2.0: Why Good Lives Don’t Have to Cost the Earth. London: New Economics Foundation 2009.
   24. C. Hamilton, op. cit.
   25. C. Hamilton, op. cit., at p. 174.
   26. T. N. Hanh, op. cit., at p. 27.

THE EMERGENCE of Corporate Social Responsibility (CSR) has been both rapid and significant. Twenty years ago it was a subject of marginal interest to businesses, but now every organization of any size has a policy on CSR. The growth of CSR is a reflection of the continuing (although sometimes resisted) move to a stakeholder view of capitalism. Some well established businesses had long practiced this philosophy based on an understanding of the inter-connectedness of all their stakeholders; that social well-being, engaged employees, satisfied customers and suitably rewarded investors were inextricably linked. However, for many, CSR has been seen as more utilitarian: a sticking plaster that could heal a company’s reputation and improve its appeal. The challenge here is that in such organizations, CSR is a peripheral activity rather than core to business thinking.

Getting to the core
Organizations often see CSR as a tool to improve the legislative climate, enhance media attitudes and inspire current and potential employees. As a consequence, business television and newspapers are awash with advertising that makes claims for the social virtues and long-term perspectives of corporate brands. Yet most of the activities, while laudable in themselves, remain superficial. Scratch the surface and you find that CSR does not run very deep. When it comes to facing up to dilemmas about doing the right or the expedient thing, there is a temptation to take the easier option and satisfy the short-term needs of shareholders.
   Lorna Tilbian, Executive Director of the London-based bank Numis stresses that reputation-building is about being principled and having a long-term perspective—both of which are subject to pressures. She says, ‘Short-termism influences the managers of the company to cut corners to keep performing on a quarterly basis. The only test that really matters is the test of time.’
   For a business to really commit to CSR, it has to be truly integrated into strategic thinking. This seems to be easier for organizations which are not publicly owned. For example, the privately owned, outdoor sports clothing business, Patagonia, has a long-term perspective and a mission statement that says, ‘to use business to inspire and implement solutions to the environmental crisis.’ The ideal implied here has led the company to move out of businesses that it believes are environmentally damaging, to provide customers with a lifetime guarantee (on the basis it’s better to keep the product you have rather than buy a new one), to provide full traceability on all its products, to develop new materials that are recycled and recyclable and to support actively environmental causes. At Patagonia environmentalism is not an add-on—it permeates everything the company does and says.
   When the whole organization (and its customers) is engaged in adhering to a principle, then it creates a focus for decision-making and moves idea about CSR to the core. At Patagonia there is no CSR department as such, although there are individuals specifically concerned with looking at CSR based issues, rather every person from the receptionist (who developed a frisbee from recycled materials) to the designers (who are driven by environmentalism) delivers on the mission day-in, day-out. It’s part of the reason that Fortune magazine labelled Patagonia the coolest company on the planet.
   Similarly, the Dutch financial services’ group, Rabobank, which has 60,000 employees and 9·6 million customers, has long adhered to policies that are designed to connect it to all its stakeholders. This is not surprising given that it is a cooperative bank that is owned by its members. The continuous dialogue the bank enjoys with its customers and other stakeholders helps ensure it delivers on broader social needs as well as meeting its performance goals. As a symbol of this closeness and the integration of its audiences, anyone who is approved by the bank can visit its new headquarters and wander freely throughout the building.
   Both Rabobank and Patagonia are adept at balancing and integrating different stakeholder needs, but you have to search harder for publicly quoted businesses that deliver on this score. The requirement to deliver ever-increasing returns to shareholders tends to hinder a full-blooded commitment to CSR. We might, for example, look at the Norwegian oil company, Statoil, and its approach to extracting oil from the sands of Northern Alberta in Canada (a contentious issue) and argue that they have been socially responsible in consulting with communities and using sound extraction methods, but we could also counter that true social responsibility would argue against being there in the first place and avoiding the environmental damage.
   One business that has been trying to tackle the dilemma of competing interests, head-on, is Unilever. Last year, CEO Paul Polman stopped providing earnings guidance to investors, in an attempt to move the focus away from short-term returns. Seeing his mandate as more concerned with long term success, he also railed against hedge funds, when he said, ‘They would sell their grandmother if they could make money. They are not people who are there in the long-term interests of the company.’
   Unilever has been integrating its approach to sustainability across its brand portfolio, focusing on renewable resources (such that all the palm oil it sources will be from renewable supplies by 2015) and thinking about the implications not only of the act of purchase but also the use of product.
   Unilever has 400 brands that are used 2 billion times a day around the planet, with about 70 per cent of the greenhouse gas imprint occurring during use. Encouraging sensible and environmentally responsible use of products, therefore, can have a big impact. As Santiago Gowland, VP of Brand & Global Corporate Responsibility, argues, ‘Marketers, with their expertise in innovation and behaviour change, can, and should, be making a significant contribution towards societal goals by enabling consumers to make more conscious choices and encouraging people to adopt conscientious consumption habits.’

Conscientious brands
At the Medinge Group, our annual awards, known as Brands with a Conscience tries to uncover and reward organizations that have integrated corporate responsibility into the core of their thinking: brands such as One Water, that exist to give all their profits away to water projects in Africa, the Swiss private bank, Pictet et Cie that demonstrates a long term perspective and a commitment to environmentalism and Merci, the Paris-based lifestyle retailer whose very existence is based on the idea of improving the lives of people in Madagascar. These brands are all genuinely people-focused and reap benefits in terms of highly motivated employees, committed customers and supportive communities. The interesting challenge is to see whether more businesses (especially larger organizations that can have a significant impact) can fully integrate CSR and become truly conscientious.

Summary: In January 2011, the Medinge Group’s annual Brands with a Conscience (BWAC) awards will be announced for their eighth consecutive year. The awards, created by a Stockholm-based international think-tank on branding, single out exceptional organizations and individuals for distinction in humanistic branding. What does this term represent? What are the awards, how were they created, how are they decided, who has won in the past and how can they be viewed in retrospect? This paper assesses the BWAC initiative, its evolution and possible significance.

OVER THE PAST 20 YEARS, we have lived through a generation of disillusion with organizations and the brands they represent. Criticized in works like No Logo by Naomi Klein, corporations were handed blame for all of the world’s ills, and brands demonized as sinister and insidious forces bent on the destruction of society. There has even been the suggestion that brands contribute to an irreconcilable east–west divide. A great dialogue grew out of these accusations, challenging the idea that financial gain was the only driver for defining an organization’s success or merit. It was out of this dialogue that the Medinge Group was founded in 2000, when a group of interdisciplinary brand professionals came together to debate, foster and articulate ideas of what they called humanistic branding. The group asserted that brands had the potential to do well by doing good, that ethical behaviour needed to become a cornerstone of corporate governance. The group’s annual Brands with a Conscience awards were created out of this extended conversation. Over a period of seven consecutive years (2004–10) companies large and small, known and invisible, young and old, drawn from all categories, have been singled out for distinction as recipients of Brands with a Conscience awards. There is no monetary prize attached to the awards, though winners are permitted to use the BWAC logo in their own communications. But an array of categories, sizes and nationalities can be seen, even in a short list of names drawn from past winners: Grameen Phone, BP, IKEA, Toyota Prius, Sanrio, Pictet et Cie., Slow Food Movement, Innocent, Happy Computers, Alibaba, architect Paolo Soleri, Virgin Fuels.
   The Medinge Group initiated the BWAC awards concept in 2003, intending to recognize brands whose conduct demonstrated humanistic values, and to call attention to or to encourage them. The first nominations were made via group-wide emails. Lively internet-borne debate followed. In making their nominations, members were asked to evaluate from brands’:

• reputation and self-representation;
• history;
• direct experience a member might have with the brand nominated;
• media presence of the brand;
• and an assessment of the organization’s expressed values of sustainability.

   Over the years the system of nominations and judging has evolved into a formalized automated process which today employs on-line nominating and voting, while preserving the collegial internal debate in the run-up to the final balloting. The voting is a closed process, and only members of the group may nominate, discuss and vote.
   From August until October, Medinge Group members post their nominations. Members carry out their own due diligence to support their nominations. Once the nominations are posted debate begins among the membership. Medinge members consider six elemental criteria on any nomination:

• leadership: how committed is management to brand and its cause? Does the leadership team live out the values of the brand?;
• authenticity: how well articulated is the brand visually and experientially? How evident is its ethical programme, and the degree to which it is sincere?;
• humanity: how evident are the human implications of the brand? How motivated is the brand’s humanity? How visible is the brand’s conscience?;
• community: how heavily does the brand invest in relationship-building? How deep an advocate is the brand for "caring for one another"?;
• accountability: is the brand visibly accountable for its actions? Does the brand apologize when things go wrong?;
• belief: does the brand take risks in line with its beliefs? Does the brand acknowledge that we are all equal?

   Following the nomination and debate phase, around November 1, a ballot is sent to all members of the think-tank and voting occurs. Members are also given the opportunity to abstain. There are normally 40 to 50 nominees and only seven or eight winners. The first week in December BWAC winners are announced to the membership. In the first week of January the winners are made public through a PR campaign. In the first week of February the Brands with a Conscience certificates are presented at a ceremony during the annual Medinge Group meeting in Paris. In 2006 the group added a unique category commendation, the Colin Morley Award, recognizing exceptional achievement by an individual or non-governmental organization. Colin, a member of the Medinge Group, died in the London Underground bombings on July 7, 2005. The award commemorates his visionary work in humanistic branding. So far the winners of the Colin Morley Award have been Shakespeare’s Globe, Star Schools, Paul Newman and Muna Abusulayman.
   Though the awards are granted by a group of 20 international brand professionals—mostly white, mostly European and mostly male—the variety of BWAC winners over the years has shown a commendable range in size, visibility, location, and segmentation. A small collective in rural Nepal was named in the same list as a huge British multinational petroleum company in 2006. A tea producer in Sri Lanka appeared as a winner in the same year as an American carpet manufacturer. The BWAC awards tend to contextualize historically what the climate of business was at the time they are given. 2009’s awards had several winners focused on issues of water. Twenty ten’s awards lauded two financial institutions in an era of criticism against that segment of business. The same year both an Indian and a Chinese company appeared in the winners’ list, acknowledging the world’s largest emerging markets. The Brands with a Conscience awards are extended not only to acknowledge results, but may be given for the promise they carry, with attention paid to the potential for change they can influence. Virgin Fuels was encouraged in 2007 for their innovative model on alternative energy. Fetzer Vineyards received an award in 2008 in recognition of their sustainable wine-making programmes. BP was lauded for their green reidentification and renewables’ policy in 2006. Yet in some instances the award has been granted in spite of other mitigating factors, such as in the case of IKEA, who were recognized in 2007 for their strong anti-corruption stance in Russia, while no mention was made of their promotion of consumerism or destruction of forests in the manufacture of their products.
   In any altruistic endeavour there is bound to be blowback, and the Brands with a Conscience awards are no exception. Medinge’s 2006 award to Toyota Prius did not anticipate the massive recall of this particular model in 2010, nor the Chairman’s public apology for subjecting its customers to such a massive safety issue; the brand is still in recovery. BP has been a succession of bad-news stories which demonstrate how it has gone nowhere near ‘Beyond Petroleum’. In the year following Whole Foods’ BWAC award it was revealed that the chairman had been manipulating his own stock price and savaging his competition with pseudonymous weblog posts. Virgin Fuels never came close to its own promises on green policy. Kiva was forced to admit that it could not verify disposition of funds dispersed in microlending as it represented on its website. Freeplay Energy introduced a line of visionary alternative energy products but showed catastrophic financial management.
   The Brands with a Conscience awards have also showcased brands whose humanistic qualities endure. Grameen Phone’s founder, Mohammed Younis received a Nobel Prize in 2009 for his innovative work in microfinance for developing economies. Holland’s Chocolonely stands as a brilliant and inventive example of ethical branding, which brought to the forefront issues of slavery and the production of chocolate. Innocent continues to make the world a better place through its recycling initiatives and its abiding relationships with local producers. Happy Computers is consistently named as one of the top workplaces in the UK, with its solid values and productive community work a testament to humanistic vision. Patagonia remains a brand true to its stated values in a conflicted market-place. The American actor–philanthropist Paul Newman posthumously retains his distinction as the most generous man on earth on a per-capita basis, having given away over $240 million to worthy causes during his lifetime.
   Today the speed of information factors in the creation and destruction of brands. A reputation can be built over a century and ruined overnight. The yearly interval for naming these awards could be a fail-safe for their validity. It is the hope of the Brands with a Conscience initiative that organizations which understand humanistic and ethical principles will thrive, and that these annual awards can celebrate their potential and urge their emulation. The Medinge Group’s work continues, questioning the way that brands are built, what they stand for, how they affect the world we live in. Until humans achieve perfection and the world transforms into a utopia the Brands with a Conscience awards will retain a unique relevance.

Special thanks to Patrick Harris, Nicholas Ind, Ian Ryder and Jack Yan for invaluable help in the preparation of this article.

Thomas Gad
Chairman, The Medinge Group
Founder, Brandflight
thomas.gad@brandflight.com

Stanley Moss
CEO, The Medinge Group
Founder, Diganzi
diganzi@gmail.com

When Scandinavians read news about global warning, it somehow does not feel like news to them. It is more like a repetition of something they have heard and feared for years. A long-standing awareness that environmental protection of unique natural resources was necessary has been under discussion at home for decades. They understood the threats, the consequences of pollution and the price to be paid for damaging the richness and variety in flora and fauna. They knew this in turn would severely change the climatic conditions on earth. How did they know this? Because it was a part of their education at elementary schools in Scandinavia for the last 20 years.

Energy saving in this region has a long history as well. During cold winters, when electricity produced in local clean-water generated power stations was insufficient to cover the demand for electric heating, Scandinavians were forced to buy power often from dirty coal-fuelled power stations in eastern Europe. Events like these were a part of their upbringing and it created a deep-rooted understanding of the issues and consequences. Sustainability has never has been such a dramatic story as it now is in world media. Scandinavians find it rather boring, a presumption they probably share with the Germans. After all, the influential German Green Party was established 1985 and Scandinavia has had its own green parties and powerful political factions for as long as people can remember. Thus, last year’s environmental warnings did not really shake anyone up. People simply shrugged their shoulders and said, it had to happen some day in the face of all the reports about global warming. In essence it was old news to them.

What impresses branding professionals is how powerful the concept brand, ‘Climate Change’, has become and how quickly it developed. Another surprise: how strong the personal brand ‘Al Gore’ has got, certainly more potent than if he had simply become another president of the USA. It does demonstrate to Scandinavians the abiding importance of the USA in world opinion-making. Scandinavians have the conviction that this time climate warnings may finally be for real. There is hope that at least it leads to global action.

Inaction by the rest of the world was precisely the problem previously. Nordic citizens felt alone in their vanguard interest about sustainability issues, ahead of their time. It was they and the Germans and possibly the Californians (with smog-stricken Los Angeles) who concepted the first models of responsible thinking. This perhaps sprung out of the New Age movement, which also emerged in Sweden. Nobody else seemed to take it seriously. Swedes later felt sceptical towards the USA for not signing the Kyoto protocol, an erosion of trust over the inability globally to decrease carbon dioxide emissions. After all, the biggest and most consuming nation in the world had turned its back on the crisis after contributing so significantly to its creation.

Sweden’s responsible environmental consciousness is largely political and grew up in combination with the social-democratic tradition and the idea of a welfare state. Government always takes responsibility in setting the rules for social issues. This may explain one reason for the world’s highest rate of income taxation. In Sweden, this so-called Swedish model has lately been under attack, and the new non-socialist government has it on the agenda to adjust the model, so as not to wreck it all together.

There is still a widespread consensus across all political parties about the fundamental principle of governmental responsibility. This consensus about collective responsibility naturally translates over to Scandinavian brands. Scandinavian companies are good at following the rules. At the same time these are nations with small domestic markets and who need to export to survive. They have always been aware of global competition. Scandinavian industries have complained that the social responsibility they have borne has been excessively one-sided, and that it has made Scandinavian products more expensive. This causes Scandinavian jobs to be threatened. Yet, as there are few changes in the policies, so Scandinavian industry has long been compelled to accommodate the expenses of social and environmental responsibility in its operations and costs.

The Nordic paper industry, a world leader, has manufacturers like SCA and Metsä-Tissue and strong European consumer brands like Lambi, Libero, Libresse, Serla and Katrin. These brands are good examples of companies who not only adjusted to the sustainability rules, but developed environmental policies far beyond what the regulations required. They invested in new technologies to turn dirty production into a cleaner one, for minimal impact on nature.

The strong global sustainability trend has led into more self-critical discussion. Industry and government ask: are the brands and businesses in Scandinavia more progressive than the brands in the rest of the world, or have they lost their competitive advantage? Global attitudes move quickly now. Scandinavian brands feel threatened on their own ideological home turf.

Veckans Affärer, the biggest weekly business magazine in Sweden, published its second yearly “green” issue in 2007. The big question posed concerned national sustainability leadership. They asked: who is leading? The magazine editors concluded that there is a “wait-and-see” attitude in Sweden and in Scandinavia at present. What does the widespread global alarm require companies and brands to do more than they are already doing? And how deep will be government’s role in this new climate? The government in Sweden for the first time in more than a decade leans non-socialist and more liberal, a new political landscape. What exactly will this government do, how much will it regulate, and how much responsibility will it delegate to industry?

Scandinavian brands historically regarded green issues as a way to get PR and nurture better image domestically, but the message was not promoted abroad. Companies felt the public out there did not care that much. Now the situation is different. Most serious companies and brands in Europe have some kind of visible sustainability strategy. Green issues have moved from an “extra” to something “included”. Companies and brands are subjected to greater scrutiny over the reality of their sustainable credentials.

Experts today acknowledge how much more difficult it is to stand out using sustainability as a branding tool. The question is now more one of accountability; what do the companies behind the brands actually do, not simply intend to do?

Today, companies feel a pressure to demonstrate anything, and it can often turn into something resembling a bad joke. When Air France desperately offers a ‘carbon footprint calculator’ prominently on their website home page, so that you can calculate the carbon footprint of your flight with the airline, little can be done with that information. All airlines confront the consequence of a basically dirty technology and no real light at the end of the tunnel.

For a large polluter like an airline, every reduction is a positive one and proper action demonstrates the sustainability of your brand. A good example of this hands-on Scandinavian approach, a kind of imperative to impress the national audience, is Scandinavian Airlines’ (SAS) very successful Green-Landings programme. Advanced communication and coordination between aircraft navigation computers and the computers in the air traffic control system have been developed. This yields the capability to calculate the most environmentally friendly flight path. SAS has already performed over 1,000 green landings, and every landing saves 100 kg of fuel and 200 kg of carbon dioxide. SAS knows that once all its planes systematically participate in the programme carbon dioxide emissions will reduce by 90,000 tons per year, equalling emissions from 20,000 cars driving 15,000 km yearly on average. SAS, after three near-to-crash incidents, is resolutely selling off an entire ?eet of Bombardier de Havilland DASH-7 aircraft, costing the company an estimated €250 million and damaged credit ratings. This is being done to preserve SAS brand equity, for which responsibility, reliability and safety are key values.

Another Swedish brand, H&M, has taken a leading position in sustainability issues and earned a degree of acclaim for it nationally and internationally. The company operates in 28 countries and has more than 60,000 employees all working to the same philosophy: to bring the customer fashion and quality at the best price. The brand is now one of the most identifiable, visible and valuable of Scandinavian marks. H&M has leveraged its brand equity from cheap clothing into fashion brand by co-branding with famous designers like Karl Lagerfeld, Stella McCartney, Victor & Rolf and Roberto Cavalli. Alongside its commercial success, this company demonstrates solid principles of entrepreneurship and a strong sustainability positioning, all the more dif?cult in a business where unnecessary over-consumption, cost-shaving, and issues of ethical production will be the inevitable accusations. H&M has grown into one of the most demanding fashion producers in the world, through determined sustainability policy, hard work, and not just sweet talk.

Today the company stands as a benchmark for the industry. H&M’s active code of conduct encourages compliance with local labour law, statutory pay and working hours, the right to organize and bargain collectively, a ban on child labour, a ban on discrimination, a ban on forced labour, health and safety in the workplace, and compliance with local environmental legislation. All suppliers are monitored by independent auditors. H&M is such a major buyer that this ripple effect has been felt throughout the entire supply side, especially in China. Status as an H&M supplier has become a crucial demand when negotiating production contracts and prices with these suppliers.

Many discussions occur about how to engage the alarming global warming scenario. Scandinavia has a social tradition which encourages state-initiated consensus between politicians and industry, with a reliance on entrepreneurial creativity. This got a boost during the dot-com boom, when mobile phone development, largely achieved by Nordic engineers, resulted in the establishment of world-leading brands Ericsson and Nokia.

Sustainability is not exclusively concerned with environmental questions, but also with issues of public health. Traditional Swedish controls on alcohol, a severe anti-drug policy, high taxes and state-shop-monopoly contradicts the reality that the state owns one of the most high-profile Swedish brands, Absolut Swedish Country Vodka. This brand first began to gain international prominence in New York at the time when Russian vodkas were banned, a response to the Soviet invasion in Afghanistan. The ban came to include the Canadian brand Smirnoff for the simple crime of having a Russian name, thus driving more vodka-drinkers to alternative labels. Propelled by a rise in the global demand for clear spirits, its popularity in gay culture, trendy bars, with the art community, by clever artistic advertising and a clean, almost-medical design, Absolut came to personify the Swedish attributes of purity and political and environmental cleanliness, represented by a bottle. The current Swedish government has put Absolut up for sale, and all the world’s spirit conglomerates are lining up to bid. Some nationalistic Swedish investors would prefer to keep this iconic national brand Swedish.

IKEA was rewarded last year by the international branding think-tank Medinge Group with one of their yearly Brands with a Conscience awards. The award referenced IKEA’s anti-corruption stance, speci?cally citing its business in Russia, where 300 invited guests for the launch of a new Moscow store were unceremoniously turned away from the celebration. Official permits had not been delivered, owing to IKEA’s refusal to pay bribes to the authorities. In Sweden, IKEA’s homeland, the company is considered to be a sustainability leader among Scandinavian brands (together with H&M and Volvo). IKEA’s strict environmental policy aligns closely with founder Ingvar Kamprad’s sparse and lean management principle—no waste in the economics of the business, environmentally or with energy. IKEA took the initiative to promote low-energy products and is today the leading distributor of low-energy light bulbs. ‘Good design for everyone’ is one of the founding principles and the attitude generally is very democratic and Fair Trade-oriented concerning suppliers, employees and customers.

With this much history in place, sustainability in Scandinavia appears equivalent to a hygienic factor, and consequently a bit boring. Once the claims have been made, actions are more important than words. Companies have discovered it is critical to communicate value beyond sustainability itself. A good example of how this works can be seen in instances where organic food and sustainability are considered in tandem. It is not enough to create the impression of responsible conscience with the consumer. One must deliver more to ensure commercial success. With organic food, the good feeling and the perception of better and more natural taste is important. Svenskt Sigill, an ingredient brand for a variety of different Sweden-produced food products, emphasized its Swedish origin and the good taste (‘Home-made’ is the slogan), with greater prominence than the fact that its line is produced to stricter sustainable standards than ordinary food.

The importance of combining sustainability values in the brand with higher product performance can be seen in the Swedish start-up EcoMarine’s ?rst non-toxic biological paint for boats. Toxic paint has long been a problem for environmentalists in Scandinavia. Boating is a uniformly popular pastime; in fact, most households in Sweden have at least one boat, sometimes several. Frequently these are rather large sailing or motor craft. All existing paints for boats are either toxic to repel growth of algæ and sea grass on the hulls, or non-toxic but lack the repelling effect. Toxic paint is forbidden, since it releases amounts of pollutants into the sensitive waters of the Baltic Sea and the otherwise pristine lakes in Sweden. Recently EcoMarine introduced a paint formulated with natural bacteria, which not only keeps algæ and vegetation off the boat hull, but also creates a slimy surface which increases performance and speed of the boat. Environmentally speaking, it decreases the amount of energy needed to drive the boat through the water.

The performance argument is always the winning one. It is a similar position to that which promotes biofuel ethanol, which increases the performance of the bio-powered car, in comparison to gasoline-fuelled engines of the same size. Saab successfully employed this concept in their brand building, until the argument lost some of its lustre when it became widely known that ethanol (although itself non-carbon dioxide-producing) requires objectionable quantities of energy and carbon dioxide emissions to produce and distribute.

The combination of good conscience and good performance is the wave of the future in Scandinavian sustainability innovation and branding. Swedbank-Robur’s highly successful fund management has shown the market-place real dedication to sustainable investments for 15 years. They consistently argued that such investments could perform very well, or at least as well as non-sustainable ones. Swedbank-Robur has proven that a combination of doing good with good financial performance is a winning proposition. Proofs like these of a successful balance between the opposing sides of the sustainability discussion will always make a huge impression on performance and consensus-seeking Scandinavians

This paper has introduced the argument that Swedish brands have moved beyond other countries’ positions on sustainability. There are lessons to be learned here about the implications for other brands. It is clear that non-Swedish brands will follow the same trajectory, raising their awareness of challenges, solutions and consumer attitudes. Countries without the social democratic model may find it more difficult to follow Scandinavia’s lead, but with the volume of alarm raised every day in world media, and the UN’s recent report which documented the urgency of global warming awareness, velocity towards sustainable behaviour can only increase.

Somewhere out in consumer world there is an opportunity to develop an area of research which evaluates the effectiveness of how sustainability incorporates into the real fabric of organizations. This could be a sustainability orientation measure, which considers the extent to which sustainable thinking is central to decision-making. A project done in Sweden called Brand Orientation Index looked at the degree of brand orientation of 500 Swedish companies; perhaps this is the model to replicate on the course to a global sustainability orientation index? Where else but in Sweden will vanguard thought like this occur.

This paper also appeared in the Journal of Brand Management.

Ian Ryder
British Computer Society
ian.ryder@gmail.com

Microsoft Word version

If you were offered an almost cast-iron guarantee of the route to sustained competitive advantage and a wonderful reputation would you want to know about it? Well let me try to show you what I truly believe is a very simple and easy mantra that makes it possible—but only if your organization truly embraces it as an operating (brand management) practice. Let me begin by explaining something that is really important to understand first, and the reason why the title looks the way it does.

I am very lucky to be able to see quite a lot of academic work and current “think” pieces and for some reason the marketing world, or at least that part of it which purports to write and comment on “branding”, too often makes a misleading distinction between “brand” and “reputation”. The distinction most often indicating that they are independent or can be managed independently—I must address this first so that this article makes sense!

Reputation management is brand management. The only difference is that brand management covers a broader spectrum. I have searched for some time to try and find a usable and easily understood analogy to explain my thinking here, so please allow me to take you through it. Then, as we see how business strategy, derived alongside a set of vision and value statements, is inextricably linked to brand strategy we will see clearly how these impact reputation, why employees are so crucial to that reputation and where the internal and external communications linkages need to be.

I read a paper by a very well known research organization that actually damaged the “reputation” of their “brand” for me! As part of it the author argues, ‘The brand has psychological appeal; reputation appeals to the sense of social responsibility’, which is such a confused expression that if it appeared in one of the Journal of Brand Management papers I was refereeing I would be questioning the author’s understanding of the subject!

My premise is that reputation is to brand as health is to body—allowing for the fact that no analogy is perfect.

Consider: the Body
It is a collection of 6 billion genes manifested in blood, organs, bones etc. all covered up by skin and covered in many places by hair.

The “health” of that body is affected by such things as basic construction of those genes (i.e. luck of the draw actually) but seriously impacted by diet, exercise, sunlight or propensity to drugs, alcohol, tobacco, etc.

“Health” is positively impacted or negatively impacted dependent on how we treat these things and that impact, through our “health management”, will absolutely affect “the body”—it does not exist in isolation. Further, our health is the result (outcome) of the way in which we treat our body.

However, there are things that we can do as part of our “body management” that arguably don’t affect our health, at least nowhere near as directly. We need to cut our hair, manicure our nails or treat our skin with creams to prolong elasticity, youthful looks, etc. (hasn’t worked for me yet though!)

Consider: the brand
It is a collection of lots (not 6 billion!) of “things” manifested in strategies (business, financial, marketing, HR, manufacturing, etc), systems, processes, premises, partners, products, services etc, all wrapped up and “covered” in a brand promise.

In the same way we can take reputation (health) which is also affected by the basic construction (vision, values, culture, operating model) of the business brand (Body) but it is seriously impacted by the behaviour of our people, systems and processes or the way we communicate our attitudes to such things as CSR and customer management. “Reputation” is positively or negatively impacted dependent on how we treat these things and that impact, through our “reputation management”, will absolutely affect our brand—it does not exist in isolation. Our reputation is the result (outcome) of the way in which we treat our brand.

However, there are things that we can or should do as part of our “brand management” that arguably don’t affect our reputation, again, at least nowhere near as directly. We need to manage our corporate identity, trade marks and patents, ensure we have a structured brand architecture and appropriate measurement systems in place.

I know analogies are always open to attack because we can never find the perfect match, but in all my struggles to find one to try and “dispel the myth”, this is so far the best I have found and I hope it makes the relationship clear.

Let us move on then to vision and values. Making these work in any organization is a major challenge and you really should read a book called The Committed Enterprise by Professor Hugh Davidson.1 It is one of the most readable non-fiction books I have ever enjoyed and it presents the results of a very substantial research programme looking at why many organizations fail to implement their vision and values. Two particular tables highlight some keys to success or failure which include:

Failure:
1. Agree vision and values amongst a small group
2. Develop values in a vacuum
3. Keep values vague and don’t measure
4. Allow senior management to flout values
5. Communicate inconsistently
6. Micro-manage the organization brand

Success:
1. Use vision to align and unite stakeholders
2. Establish values that build competitive advantage
3. Convert values to measurable practices
4. Communicate by action, signals and repetition
5. Macro-manage the organization brand

(See the book for the complete list.)

Just this selected list provides so much rich discussion about what impacts our ability to manage our reputation. We will refer to this later to see how the links are made.

Let us consider the more commonly understood primary elements that help to build or destroy reputations. There are three main ones:

• product or service quality;
• customer experience;
• social or environmental record.

Clearly there is a very direct impact on reputation if the physical product bought is of poor quality and fails to do the task for which it was purchased. We have all bought what we think were “bargains” from unknown branded sources only to curse later when the CD didn’t play, or the handle fell off the spade, knife, wheelbarrow, etc. But we also know that even where we are buying a solid, recognized quality brand, there is a large component of “service” in the “total customer experience” associated with that brand—it is not just “service” brands that need to watch out for reputation failures from a service perspective!

Quick example: recently I was looking to replace the Philishave electric shaver that had given me good service for about 12 years—solid product brand experience. I went to several outlets looking for advice on current models and after two experiences in well known suppliers from staff that cared less about what I wanted and knew even less about the product, I was despairing. Then I was walking through Boots (a large retail chemist) and just happened to notice that they had a section containing shavers and, as I stopped to look, I was approached by a lady who asked very nicely if she could help me. To cut a long story short, this lady knew everything I needed to know about the alternatives and handled the interaction so smoothly and in an unpressured way that I bought a model far more expensive than I had originally been considering, and I went away feeling I had enjoyed buying it!

The key morals here are:

• “product” brands often also rely on service to complete the brand experience;
• “channels” are critical and need to be part of your brand management system in order to ensure a consistent, enjoyable brand experience for your customers;
• it was the individual that made the difference.

This is all very self-evident in service businesses where restaurant staff, telephone contacts with such as insurance companies, banks etc. all make good or bad service very immediate. We have all spent much time, I am sure, spreading both good and bad observations around our networks that have either enhanced or detracted from the reputation of those brands!

And so it is that employees, and indeed the wider definition of that, which includes everyone who represents our brand and helps deliver the brand experience that drives our reputation, are absolutely critical to the process. One crushing statistic that I discovered a few years ago in the Journal of Marketing found that in the list of reasons why customers defect, whilst only 9 per cent are lured away by competition, a huge 68 per cent are turned away by an attitude of indifference on the part of an employee!

This is not rocket science! A very simple rule set says:

(a) ensure your employees understand what we mean by a ‘consistent, positive brand experience’;
(b) explain why we need to manage that;
(c) help them recognise and understand their role in that;
(d) engage their commitment to fulfilling their part in the delivery of it;
(e) make the measurement of our performance in achieving it both easy to understand and a matter of public record, so we can see we need to improve, or rejoice that we are retaining delighted customers.

All of the above we now delight in calling brand engagement or embedding.

Which leads us neatly into: what are the links across the organization that contribute to our reputation? Well we have already touched on several, but probably the single most important factor is the CEO of the organization. He or she is responsible for as much as 40–55 per cent of the image and reputation of any corporate brand (depends on which survey you look at), and is also clearly the driver and owner of the company vision and values—note I didn’t say developer of those (refer back to Hugh Davidson’s key failure list).

Common situation: the CEO says: ‘We keep telling them what our vision, values and strategy are and yet I keep seeing employee surveys telling me they don’t get it—how often do they need telling?’ (N.B. this is a genuine Fortune company CEO quote.) The answer of course, is not to tell, but to listen. Listen to the voice of your customers, employees, even your suppliers and respond to that input. Your reputation is created through them and driven by every single experience (moment of truth) they have—it is also instantly changed for the worse but only gradually changed for the better.

So, again, a very short check list:

• from any level of the organization (or brand delivery owner) up to the CEO, the delivery of the brand experience must be absolutely consistent with expected values;
• the “soft”, informal networks are the most true and valuable—listen to them and act upon them;
• your systems or processes must be designed to facilitate customer service and support in line with your values
• measurement systems are crucial. Ensure they are designed to complement and not work against each other—convergent goals. ( Jack Welch, of GE fame, had a passion to create what he called a ‘boundary-less’ culture, which is even further advanced thinking than convergent measurement, but it helped turn GE into the global powerhouse of the 20th century.)

Finally, how do we use vision and values as a route to a strong reputation through alignment of internal and external communications? I refer back again to Hugh Davidson’s list which has communications as the key to either success or failure in the actualization of making vision and values work. Once more this is not difficult although there are many companies out there who try to make it so!

Internal communications
This is not the place to review the myriad tools available to serve internal communications. However, research indicated that the relationship of satisfaction with internal communications and the percentage of those who are prepared to speak highly of the company product or services is seriously connected. On a four-point scale from ‘very low’ to ‘high’, this moves from less than 20 per cent to almost 80 per cent of employees who would speak highly. The jump from the ‘medium’ satisfaction with communication to ‘High’ is staggering though—it more than doubles!

External communications
Again there is a myriad number of ways in which companies “communicate” to their various constituencies, but the key is clarity and consistency. It is no good, for example, espousing a set of values that include care for the environment and then behaving in a way that conflicts with that (one of the problems that the oil and chemical industries have struggled with). In fact, the topic of corporate social responsibility (CSR) has grown out of that very conundrum into a major field of its own. It is not difficult to understand why when you consider just a couple of frightening facts like:

• it has taken only 30 years to consume one-third of the planet’s resources that took 3·8 billion years to make;
• in the past 50 years the world has lost a quarter of its topsoil and a third of its forest cover.

The lesson is, as always, very simple. Do what you say you will do and make sure that the messages being delivered through whichever communication disciplines you have chosen for external audiences, are the same as those being driven internally through training or induction and measurement systems.

Humanity-based strategy
As we move towards the summary, I wanted to share some thinking that began with my esteemed colleagues in the Medinge Group and which resulted in my contribution to our book Beyond Branding. Based around anthropology, this thinking has developed into what I call Humanity-based Strategy (HBS).

Take a look at the four top expectations or needs as expressed by Disney employees and “guests”:

Disney’s vision and values are legendary and they define their “Total Customer Experience” in four elements:

(a) anticipation;
(b) ‘Welcome’;
(c) the Experience;
(d) ‘Goodbye’.

Whichever way you look at this very simple overview, it is quite clear that Disney is thinking about their customers and employees as human beings and for very good reason!

HBS is a very simple, but powerful, concept with just three basic tenets:

(a) people are people first;
(b) manage the reality gap;
(c) create trust and relevance.

Since man descended from the trees we have been driven by a base set of programmed behaviours that always prevail whatever social behaviours we overlay. Your customers’ (and employees’) first reaction to any situation and brand experience will always be the human one—feeling good, or feeling bad. You simply must begin to understand and learn how to manage that.

The reality gap is simply the difference between what you think you are doing to and for your customers and staff, and what you are actually doing—there is always a gap of some kind and this can either be causing you to waste revenue or profit opportunities, or allowing gaps for your competition to enter. Learn what it is and how to manage it.

The two most powerful words in the world of customers: without trust you can have no loyalty of any kind and no “advocation” other than bad press. Without relevance, in both product or service offer and timing, you will be unsuccessful with the sale.

Your vision and values should drive your building and execution of each of these three tenets.

Summary
It has not been possible to address in depth any of the items that I have touched on in this article but I hope you have some pointers to use to examine your own situations, along with some further reading.

Vision and values “fail” in organizations either because of a “flaw” in the vision or failure of the values to create any competitive advantage. However, even if these are not flawed and do lead to competitive advantage, they are executed (and that word has a very interesting double meaning!) by your people, primarily, and supported by the systems and procedures and measurements within your company. It is no good having the best website in the world, easy to navigate, user-friendly and quick, if your distribution process (owned or outsourced) lets you down—your reputation will not survive and prosper!

The last example I will use is, not surprisingly, one that has now moved into the history books as one of the most spectacular: Enron Corporation. It is not my place or intention to question what exactly were Andersen’s values that resulted in the shredding of key papers, the action that was probably more to blame for their “crash” than the questions about their basic audit processes. But it has to be said that if they had been rigorously executing a brand management system, that was linked to the business values and disallowed any such practices because of the reputational impact of failure to conform to values, then they would not have been faced with the disappearance of what was a globally powerful brand. To link back to my opening distinction, the rapidly failing reputation (health) was bringing down the brand (body).

The guarantee!
Lest I fail to do what I am now going to implore you all to do, I did promise to let you in on the six-word secret to sustained competitive advantage through a great reputation and therefore unassailable brand.

Make a promise … keep a promise!

If you just think through what living to this very simple philosophy means, first developed way back in 1987 when I was asked to define brand management, you will realize how powerful it is. A brand is a promise, and a promise is about trust. Your vision and values act as the beacon. Then, using this “mantra” as the guiding principle for the delivery of those will ensure that whatever your business, be it product- or service-based, whatever your channels of selling, support, delivery or after-sales, your incidence of poor customer comment will be so low as to ensure your high reputation is maintained.

Perhaps the last words should come from a gentleman of outstanding credentials (Nobel Award winner) who described, way back in 1937, what business was all about: ‘Fulfilling customer needs via relationships you maintain’ (Ronald Coase: Nature of the Firm).

Says it all really doesn’t it? Good luck!

Reference
H. Davidson: The Committed Enterprise: How to Make Vision and Values Work. Boston: Butterworth Heinemann 2002.

Colin Morley
Permission to republish to be sought from the family of Colin Morley c/o the Medinge Group

PDF version

Demonstrating that your brand has a conscience is becoming more and more important as the population of the developed world has more of its basic needs met and starts to look for higher values. The brands in this book demonstrate the growing importance of ethical issues with the opportunities it gives to new challengers and the need for existing brands to develop new values.

But first, ‘Hang on a minute,’ you may say. ‘How can a brand have a conscience?

‘Surely brands are just devices used by corporations to market their goods and services? A brand is not a conscious being so how can it have a conscience?‘

Yes, ‘Brands with a Conscience’ is an attention-getting headline. And it also highlights one of the roles that brands now play beyond just telling you the functional characteristics of what you are buying.

A brand can be the symbolic glue that binds a group of people together in creating and delivering value to customers. The name, colours and design of the brand come to symbolize a deeper set of shared experiences, values and beliefs that build trust between the owners, managers, employees, suppliers, customers and the wider community.

So when you find yourself traveling past a McDonald’s or Wal-mart you have a pretty good idea of what to expect if you stop and go inside as a potential customer, employee, supplier or community representative. The owners, managers, employees, suppliers and others who have created and delivered the products and services that you will experience there have a common understanding of what they are providing that enables them to act together as an embodiment of the brand.

The brand does what is implied in the word we use to describe the organization—it makes one body or corporation out of a group of people and things. So you can hold the corporation or brand to account for its actions in different times and places, even though different people may have delivered the product or service each time on behalf of the brand.

As the twentieth century went on, corporations were seen to have a single mind as well as a body. It is now commonplace to think of corporations as having a “soul”, and beyond that lies the world of the corporate “spirit”. Ken Wilber describes the evolution of human consciousness through the levels of body, mind, soul and spirit in his book A Theory of Everything. Corporations and brands are evolving through the same levels of consciousness.

Most of the brands we use every day do not seem to be very concerned with ethics or morality. They may provide features that satisfy functional needs (e.g. food, taste, vitamins) and benefits that satisfy emotional needs (sustenance, pleasure, well-being). Features and benefits are provided within an ethical or moral framework that is dictated by the economic, legal and regulatory system in force. So for example, products have to be fit for their purpose and must not make untrue claims about their performance. Few major brands or corporations seek to extend the regulatory frameworks in their industries to make production more ethical or expensive.

That was all very well during the materialistic era of mass consumption that has driven the world economy over the last 30–50 years. Over this period, most people have been unconcerned with the ethics or morality of what they were buying. The only criterion for choice has been, ‘Does this brand do what I want it to do for me?’ Does it fulfil my needs? Does it keep me alive, make me more comfortable, give me pleasure or enhance the way other people perceive me? At the lower and middle range of Maslow’s Hierarchy of Needs there are few or no questions of conscience for brands or consumers.

Consumers who think this way look for value by considering the functional and emotional benefits of the product or service quality provided, versus the price charged and any inconvenience involved.

As the population has become more affluent and better educated, many people have satisfied the basic needs of survival, pleasure and esteem of others. New questions begin to arise that relate to the goodness or badness of what people buy.

• Were these shoes produced using slave labour?
• Does this food have organic ingredients that have been fairly traded?
• Are these packaging materials recycled and/or recyclable?
• Are the employees of this company fairly rewarded for their work?
• Does this company pollute the area where it manufactures its products?

Some of these questions are intertwined with the functional features of the product for the consumer. For example, people may prefer organic foods because they believe that pesticides are bad for them, regardless of the perceived environmental benefits. And some of these questions are driven by media and pressure groups that are hungry for scandal and bad news with which to create headlines. Some governments have responded to public and media pressure by setting up tribunals and committees to review issues of corporate behaviour and governance. Corporations have in turn banded together into trade associations to lobby governments and supra-national bodies to reduce or limit the regulatory pressure on their activities.

Some major corporations have discovered that questions like these can damage or even destroy them; regardless of how healthy the bottom line was before they were asked. Sunny Delight in the UK, McDonald’s, Arthur Andersen and Nike are just a few.

However caused the interest in these questions knocks on to how people perceive themselves and takes us higher up Maslow’s Hierarchy to ‘self-esteem’ and ‘self-actualization’. When you have a choice between having your needs met ethically or unethically for the same price then there is no need to challenge your self-perception as a good person by continuing with the unethical option.

So the question, ‘Does this brand have a conscience?’ has become more and more relevant for consumers, employees and investors.

As a result we have seen brands and corporations adopt CSR or Corporate Social Responsibility as a standard of operation. By auditing environmental and ethical impacts and specifying programmes to alleviate or eliminate negative impacts, CSR has helped to create a conscience in many organizations. Investors have discovered that companies that practice CSR often perform better on the stock market because corporate scandals are avoided and the quality of management improves.

Where CSR standards have been adopted by all the companies in an industry the costs and benefits involved have been common across those industries and all the brands have demonstrated a degree of conscience.

Real Brands of Conscience, however, are those that accept the challenge of leading their industries. They accept the short-term cost sacrifices (such as more expensive ingredients and production processes) because they use the communication power of their brand values to gain a long-term benefit by appealing to the new target audience of ethical consumers. Brands of Conscience make a leap of faith that customers who today are ethically unaware or uncaring will grow to adopt the brand values and place value on the conscience of the brand.

Many brands have CSR policies that underpin their operations and do not publicize their consciences for fear of being scrutinized more closely by people looking for violations of ethical business principles. These companies believe that the benefits to their reputation of publicising their CSR policies would be outweighed by negative publicity of their violations or by the extra costs that they perceive would be needed to eliminate their violations. High-profile brands like Nike and Coca-Cola now find it very difficult to shake off the campaigns by activists who target them continuously.

http://killercoke.org/

http://www.saigon.com/~nike/

Brands of Conscience accept this challenge and communicate their policies widely so that critics can scrutinize them and they can learn further from the feedback. When they are targeted by activists they engage in dialogue and build a constructive dialogue which further changes policies and ultimately enhances the brand’s reputation.

So a brand with a conscience is explicitly making moral or ethical conduct part of its values and positioning in the marketplace. It is making an appeal to its consumers’ sense of responsibility for right and wrong.

So to what extent will consumers use ethical considerations to discriminate between brands in the future? Indeed will brands be able to satisfy the needs of the Cultural Creatives who have often rejected brands altogether and chosen the equivalent of the local farmers’ market instead of the supermarket?

Here I believe we come back to one of the major roles of brands—to make the provision of a mass product or service more efficient by gaining economies of scale. The original motor cars of choice for the Cultural Creatives were basic, reliable, high quality products like Citroën 2CVs and Volkswagen Beetles. Lean production with minimal waste and based on consumer pull is becoming mainstream thinking in many factories. Brands that enable cheaper prices while expressing ethical values will have a major competitive advantage as populations move up the spiral.

Brands that have raised ethical considerations like Body Shop and Virgin have taken business from incumbent brands that woke up too slowly. So now the race is on between the established brands that need to evolve fast, and challenger brands that can reposition the incumbents as unethical dinosaurs. Both groups can be ‘Brands with a Conscience’.