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.

Stanley Moss
DiGanZi
diganzi@gmail.com

In the canon of English-language writings on brands and brand management, few documents possess the stature of the legendary McElroy Memorandum known as “Brand Man”. Authored in 1931 by a a 27-year old Proctor & Gamble promotions executive, it inserted into the practice of brand-building seven directives which shaped our perception of brand’s purpose and function in the ecology of the marketplace. This single manifesto created the modern Brand Manager. For more than seven decades its enduring words were regarded with a reverence like that for the Holy Grail, and perpetrated a set of attitudes which beg to be re-examined in the face of brand world today. McElroy is at heart a strategic marketing document. It prescribed dynamic relationships be instituted within teams, and dictated a rigid hierarchical schema for the organization. Its application helped P&G separate brand managers into parallel teams, with each team competing internally with other brands in the company’s portfolio. Teams were mandated to market their own products to the sales force.

While the youthful Neil McElroy understood a brand to represent a cold-hearted economic entity, such a narrow presumption no longer holds exclusively true. The McElroy memo was simply the first step in codifying brands as instruments of an evolving, organic process. The memo limits its focus to fast-moving consumer goods (FMCG), those rapidly-produced products with short shelf lives, which need to be sold in large quantities in order to be profitable; in this particular category new-product creation factors mightily, competition is uppermost in everyone’s mind, and only good performance guarantees brand survival. Business schools, take heed. If McElroy is the foundation for all brands of the future, then we are in for rough waters. That’s because brands are no longer simply tools of marketing departments, or receptacles which hold psychological levers for creating demand and moving product. The equation has upended. Marketing today is a fraction of the brand equation.

We now understand brands to be deeper, broader, more dimensional entities than ever before. But a look at the memo shows why brands became the distorted commercial entities which later came back to haunt Brand Men, and why the discipline engages in such soul-searching, especially in Post-Globalization world.

McElroy’s point 1 shows us clearly where his priorities stand: he directs his Brand Men to take careful heed of units shipped. In the hierarchy of formalization we are dealing with a classic bean-counter mentality. It’s a short-term, simplistic directive which assesses quantity moved as of primary importance. It implies that sheer numbers dictate the highest imperative for brand evaluation. Nothing else takes precedence. There is no future, only an opportunistic present.

Point 2 instructs the Brand Men to examine carefully where brand development is heavy and “progressive”, an interesting and provocative term, especially taken in its historical context. In 1931 “progressive” might have inferred Communist leanings; today the term smacks of fringe cases at the periphery of political movements, possible techno-libertarians advocating secession from the union, free love and anarchy. McElroy asserts that numerical growth is the highest objective, that Brand Men should apply successful treatment to comparable territories. Today’s brand specialist focuses on greater sensitivity to local culture, and pays more attention to local need before overlaying some proven marketing strategy simply because it has worked to sell product elsewhere.

In point 3, McElroy gives five sub-directives for underperforming brands, what he refers to as “light” brand development. He charges his team to study past advertising and promotional history, then evaluate it in the context of the local territory both on supply and consumer sides. Find out the trouble, he writes mysteriously, employing a vast euphemism. Once the weakness has been uncovered, he counsels, make a plan. It’s a statement of pure brute economics, with managers warned to be certain that money budgeted will produce results. Abide by the corporate hierarchy, he goes on, clear it with the District Manager, get buy-in on the local level. In other words, tell your local manager what to do in his own back yard and tell him how to do it. Get him to agree. Next up: hype the sales force, keep them hammering the territory. Write everything down, document, evaluate, assess. In no place does McElroy ask, Is this product needed, redundant, obsolete? Does somebody else make a better one? Do consumers really want it? What consequences does its consumption carry? In 1931 fewer channels of mass media existed for oversight, there was no conception of a problem with disposability and waste, few corporations thought about notions of community, and the term sustainability would not be coined for 40 years. Listen up, brand managers: the world has changed.

Point 4 pins total responsibility on the Brand Manager for the concise communications connected to his brands. This presumes that anything the organization cares to say about product is apt. There is no reference to accurately reflecting product claims, or any consideration of ethical underpinnings. As long as what is said works, it is permitted.

Point 5 addresses the manufacturer’s expenditure at point-of-purchase, quantifying marketing effectiveness at the retail level. We see no recognition of the universe of stakeholder communities which are touched by a product’s existence. Today we acknowledge that advertising adds to mass sensory overload, a form of pollution in an overcrowded environment. McElroy believes if you put the message in front of the consumer, it will be consumed. This is the fundamental corruption of traditional advertising writ large.

Packaging is addressed, but only superficially, in point 6. The Manager is counseled to experiment with and recommend wrapper revisions. We are again firmly in the terrain of marketing, insisting that the package jump off the shelf, differentiated from its competitors, ramping up the claims, doing anything necessary to grab the impulse-driven buying decision. Not a lot of ethics here, and certainly not abiding by Massimo Vignelli’s famous dictum that “the best packages are invisible.”

By point 7, McElroy is back into his corporate ivory tower, advising his Brand Men to see District Managers a number of times a year to discuss any “faults in promotion.” Here is the crux of the unreality: as long as promotion is correctly tweaked, the brand becomes invulnerable. All hinges on the success of promotion, the product lives in a universe independent of any considerations except its own self-interest. Is it any wonder, with subtext like this, that society drifted into a delusional and mindless consumption-driven consciousness?

History is an odd and elastic commodity, which lurches ahead, but mostly plods along, and we have had seventy years of McElroy’s calculating marketing strategies laying claim to the brand. While McElroy is frozen in time, a kind of Peter Pan of brand theory, brand has grown up around the memo. Brands are our silent partners, devices which deliver inspiration, carry promises, help us create our own identities, and stand as symbols for who we are and what we believe. It’s no longer a case of simply selling more units than your competitors. The challenge for Brand Men today is to reflect an understanding of a bigger world out there than one driven by unenlightened self-interest and short-term profits, and that the time is now to focus on truth-telling, to advocate for the greater good, and to always consider the deeper ethical implications of our commercial conduct.

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.

Patrick Harris
thoughtengine
patrick@thoughtengine.co.uk

PDF version

Abstract
This paper considers the importance of employees in the process of building customer experience. The paper states that internal investment is rewarded with consistent, quality customer exchanges. Emphasis is first placed on the positioning of brand management within an organization, and its linkage to strategy. Second, the tools of identity and guiding principles are introduced. These tools are used to activate staff by inviting their engagement and by asking them to review the brand from a personal perspective. Identity encourages employees to interpret corporate identity and apply it to their unique situation and skill set. Guiding principles serve as a platform to nurture desired behaviours in the organization. Together, these two tools better prepare staff to respond to customers. Brand values are presented as the currency to measure the worth of exchanges between organizations and their customers. The paper concludes by presenting a case study of the mobile operator, Orange, during the period 1994–2003.

Introduction
Branding is about people. People build brands. People buy brands. The relationship, at first glance, is a simple one—build a good brand and others will buy it. At the heart of this relationship, however, is another group of people, that of the employees. It is the employees who enact the attributes of the brand and whose actions ultimately foster customer experience—whether good or bad. Staff actions should reinforce the promises a brand makes to its customers. If wisely conducted, this reinforcement breeds more success in terms of sales, awareness and loyalty. Employees have the formidable task of demonstrating the brand by the actions they take. The adage actions speak louder than words is a truth that holds firm in the process of building successful brands.

However, many organizations fall short of representing the brands they espouse. Sometimes, this disconnection is due to uncommon circumstances. These include sudden market shifts that are external to the organization. Internal changes—like the loss of a key figurehead or an organizational merger—are also examples where a disconnection, between the brand attributes and employee actions, can be present. These examples, and others like them, provide resilience tests for brands. The question is, can effective internal brand management help to overcome these difficult periods? Further, can an ongoing internal brand management process help to preserve a healthy relationship between employee actions and customer experiences?

This paper discusses the importance of inward facing brand management. Emphasis is given to the positioning of brand management and its relationship to organizational strategy. Separately, the tools of Identity and Guiding Principles are presented as a means of serving the employee effort to enact the brand attributes. Finally, a case study involving the mobile telephone company, Orange, is introduced for illustrative review.

1. An inward perspective
It was in his seminal paper of 1937, that Ronald Coase prescribed the basic reasoning of a firm.¹ He described the importance of building and maintaining relationships as the very essence of a firm:

A firm, therefore, consists of the system of relationships which comes into existence when the direction of resources is dependent on an entrepreneur.

If consistency of brand experience is sought, this definition suggests the need for a balanced focus of nurturing and serving internal and external relationships. Yet in many brand management efforts, resources are usually dedicated to constructing an outward image of the brand. Advertising, packaging and sponsorship are traditional examples. It is commonly accepted that internal characteristics are transferred to the external environment via the employees of the organization. Further, this transferral may be unintended if left unchecked. This point implies a need to manage, or at least positively influence, the identity that is transferred outwardly—in order to maintain consistency and overall control. Thus, the internal workings of a firm should form an integral part of brand management. Brands today must represent a company’s history, future vision and its outward appearance—as well as the internal representation of the organization. Why then do organizations give little attention to internal brand management?

1.1 The right level
Inward-facing brand management must be considered at the appropriate level if it is to succeed. Brand management when considered as a periphery exercise of a marketing subset, is destined to perform poorly. Brand today is a key element of every transaction the organization engages in and as such should be strategically incorporated into internal activities. Brands do far more than label products or companies. Brands today can:

• change market dynamics;
• span across entire markets and enter new markets; and
• heavily influence industry business models.

Google, Amazon and Napster are examples of brands that have significantly changed the dynamics of entire markets. Virgin, Marlboro and Caterpillar are good illustrations of brands that can span industries or enter new industries. Finally, MySpace and Blackberry are brands of influence that have stimulated enormous changes to business models in their respective markets.

Despite this shift in the influence of brands, intelligent dialogue between brand mangers and the strategic elements of the firm is often lacking. In reality, management of the brand must feature in all that the company undertakes, internally and externally. Brand must be prevalent in strategy, training, objective-setting, working style, facilities and much more. Ind, when discussing the concept of living the brand, argues that brands come to life when internal and external boundaries are blurred.² Most importantly, brand management must also be well integrated into the activities of the organization if it is to deliver quality customer experiences.

But the phrase living the brand does not necessarily express the integration of brand at a strategic level of the organization. Organizations that unite strategy and brand possess cohesive workforces that demonstrate sound direction, incorporate a recognizable approach and present a high quality, consistent customer experience. Ind’s phrase can be extended for organizations that provide a strategic and integrated focus of brand management—being the strategy and living the brand.

1.2 What they do, not what they say
Internal branding should concentrate more on context rather than content. It should focus on why an activity occurs, more than the brand compliance of the activity itself.

A hypothetical example of branding the company canteen is helpful as an illustration. In this circumstance, it is not the branded colour of the crockery or the ability to reinforce company messages on the walls that is critical. Rather, emphasis should be on the behaviours exhibited when serving or receiving food, and on the atmosphere that is conveyed by staff. Behaviours are visible evidence of the brand’s capacity to influence. Too often it is the focus on tangible items that get the bulk of the attention—ensuring that the content meets stringent brand guidelines—while overlooking the contextual settings and behaviours of the people involved.

The relationship between employees and customers is—or at least should be—genuine, two-way and sincere. What is displayed externally is chiefly a reflection of the activities of he internal organization. For this reason, inward brand management should not be limited to providing training material for customer-facing staff only. Instead it should be the creed by which the whole organization elects to live and breathe. Internal activities should always underpin the customer experience sought. Thus, brand management efforts must be focused inside the organization as much as, and possibly more than, they are externally. The key is to provide staff with appropriate tools, allowing them to be the strategy and live the brand.

2. Identity: building understanding
Corporate identity, the persona of an organization, is widely used by companies and agencies alike. It is normally expressed in a hierarchical set of descriptive terms—from, say, vision to values—and provides guidelines for how the organization expresses itself. Corporate identity is a valuable asset of any brand manager’s toolkit.

Corporate identity is not necessarily the best tool for employees, however. A workforce is after all, a collection of people and often, a corporate identity does not adequately speak to each as an individual. Further, individuals see organizational change and shifts in corporate identity as uncomfortable and difficult to accept. Employees take these shifts personally and feel lost when another directive arrives, with a new focus, and the CEO asks for their buy-in—once again.

2.1 Activate, not automate
Inside organizations, it is not buy-in that is necessary, but momentum. Buy-in is a flawed concept that suggests 100 per cent effectiveness in the communication of an idea, 100 per cent belief in it by the listener and 100 per cent efficiency in enacting it. Momentum, however, is created by communicating the gist of an idea and afterwards, encouraging individuals to interpret it, apply it to their unique situation and then use their individual skills to address it. Momentum taps into the collective wisdom of the staff and invites their participation. Here identity is still in use, but it is not an induced corporate identity communicated from the upper echelons of the company. Instead, individual identity is developed by regularly encouraging employees to interact with the company position. This allows them to reach a greater appreciation of its meaning to them personally, or as smaller teams of people. This is how it should be. Identity, used as a tool, allows individuals to increase their overall understanding of the organization and to personally ingest its meaning. Workshops, training programmes and promotion of good dialogue are good methods to achieve this aim.

There are several benefits of the process of engendering identity. First, employees have a stronger personal sense of organizational purpose. They know what to do and why they should do it. Secondly, they are less affected by significant organizational changes that (inevitably) will occur. They take these changes less personally. Thirdly, they are better equipped to see how their role can make a difference to the company as a whole. Fourthly, a company-wide spirit of involvement and responsibility is in action. Overall, their understanding is more consistent through change and this consistency features readily in their work. They can, in effect, be the strategy.

The next step is to help staff to underpin their understanding with appropriate behaviours.

3. Guiding Principles: nurturing desired behaviour
Consistent behaviour cannot be prescribed, nor can cultures be assigned. Cultures are more amorphous than this. Consistent behaviour can be nurtured, however. By nurturing a few desired behaviours, a sought-after organizational culture is more likely to develop. This focus is served well by the concept of Guiding Principles.

Guiding Principles are not rules, because rules are typically prescriptive and describe what can and cannot be done. They are not objectives, either, as guiding principles are interpretable. They possess a high degree of flexibility, while objectives should always adhere to the SMART rule of thumb.³ Finally, guiding principles are not habits, as habits are traditionally out-of-date or unchecked actions that are routinely applied.

Instead, Guiding Principles are a small collection of memorable expressions of behaviour—about three to six in total. They describe behaviour that must be present in order to fulfil strategic and brand aims. Interestingly, guiding principles are useful regardless of changes in circumstances.

Thus, even in times of instability, guiding principles represent the inherent behaviour that individuals can turn to and depend on. Together, they underpin an organizational identity and are necessary to nurture a desired culture. A good example is the following: Everything in moderation, nothing in excess.

This phrase, when applied across a number of individuals, can have different interpretations. To some the phrase indicates the need for a steady, even approach. To others, it might mean that an extreme intake or exposure is acceptable—on occasion, but not regularly. In all cases, individuals will be able to respond in a manner that is in keeping with the desired behaviour, but which suits their situation.

Consider, too, the guiding principle of face to face. To customer-facing staff, its meaning might be very clear: be with the customer whenever possible. To back-room staff, however, it might have usefulness in terms of how they treat email or how feedback is provided to colleagues.

The power of Guiding Principles is that they can be communicated in a straightforward manner, yet their meaning is always personal to each individual and open to interpretation.

The combination of identity and guiding principles is a mobilizing force for organizations. Together, they help to form employee behaviour and to channel employee actions and decisions in desired directions. As a result, the organization becomes more adaptable in terms of the changes it faces, yet will be consistent in its response. Meanwhile, employees are made more aware of the aims of the organization and are actively engaged in delivering its success. They are able to live the brand.

3.1 A cautionary tale
Guiding Principles, together with identity, should hold meaning for the individuals who use them. This is best achieved by allowing a significant cross-section of the organization to develop them. It is not always possible that one set of guiding principles will serve the whole organization and some limited regional or team variation should be encouraged. The process should be highly integrated and inclusive.

However, the commitment to involve staff must be genuine and purposeful. It must be supported by the presence and involvement of senior managers. Employees do notice when they are being served a placebo process. Less-than-genuine attempts to involve staff can result in far fewer committed people than desired—perhaps even an employee revolt. Having a few members of staff involved is a far cry from having an entire workforce mobilized and committed to the cause. Martina Navratilova expressed it fittingly when she described the dedication required to achieve sporting excellence: ‘It’s like ham and eggs. The chicken is involved, the pig is committed.’

4. Where is the customer?
Thus far, this paper has concentrated most of the discussion on the organization itself—not the customer. This is deliberate because it:

• illustrates the yawning gap in internal focus;
• establishes an appropriate sequence of events required; and
• demonstrates the amount of effort that is necessary, in order to deliver desired customer experience.

This in-depth focus on internal matters provides two key brand management deliverables. First, it builds a robust foundation for stimulating desired internal attitudes. These, in turn, become products and services that deliver a valued customer experience. Secondly, undertaking exercises of understanding and behaviour ensures that downstream activities become easier to address and are implemented with greater consistency.

As the mantra suggests, the customer is always right. An inward facing brand process, however, better prepares the organization to respond to customers in the right way.

5. Genuineness and transparency—ready to face the world
In today’s market-place, it is important that any presentation made to a customer needs to be wholly genuine. Further, the organization that delivers the product or service needs to be transparent. This need for genuineness and transparency does not stem from brand management manuals. Rather, this is a necessary organizational response to today’s consumers, who are armed with choices, control and the tribal nature of communities.

5.1 Choices, control and community
In recent times, consumers have gained access to new and powerful tools. In the main, these consumer tools refer to new communication technologies such as the internet, mobile telephony and peer-to-peer connectivity. Less hyped, enabling technologies such as increasing digital storage capacities (i.e. the ability to access, store and transfer large volumes of information) are also critical consumer tools.

While each of these technologies no longer represents stirring news on their own, none of them should be underestimated in terms of the lasting social change that they are introducing. They have the capacity to leapfrog technology generations, connect previously isolated areas, enable the connected portion of the planet to communicate and they provide access to an ever-increasing sea of information.

In brand management terms, these tools have created a state of caveat venditor, where markets provide near limitless choices and the consumer is able to control the exchange. If the company cannot respond, a raft of alternatives is just a mouse click away.

Of particular concern for brand managers is that traditional systems of trust and relationship building are changing at alarming rates. The current generation is the first to be exposed to an endless landscape of sources of trust and the ability to bypass middlemen. As recent as the late 1980s, for example, there were only a few widely acceptable sources of news. Now, news is available from numerous providers, aggregators and commentators—whether in the form of traditional institutions, blogs or others. Indeed, many consumers of news have also become commentators and publishers in their own right.

5.2 A gathering storm
In strategic and brand terms, this means that segments of customers can band together—practically overnight—and shift organizational decisions, in a way that has never been possible before. A few activists can cause years of unwelcome press and lasting grief with court cases against organizations like McDonald’s.⁴ Brand reputations can suffer from reported employment practices in manufacturing assembly plants.⁵ During the construction of this paper, vegetarians united to protest a decision by Masterfoods—makers of Mars and Twix chocolate bars—to use animal rennet in some of its products. The result? Masterfoods publicly admitted that it had made a mistake and reversed the decision.⁶ It is now reported that they are reviewing the broader product range with the diets of vegetarians in mind.⁷

Finally, an illustration involving Apple’s customer base shows the variety of involvement by informal customer tribes over time. From its inception, Apple has attracted an enormously loyal customer base. This was true even during Apple’s lethargic progress in the 1980s.^{8, 9} In those dark days, lore has it that some near fanatical customers even loitered in computer stores to promote Apple products to would-be buyers. Surely this was a welcome if not unexpected asset for Apple at the time.

However, in recent times, that same loyal base has applied pressure to Apple itself—with expert leadership from Greenpeace—to improve Apple’s eco-friendly practices.¹⁰ The success of this orchestrated campaign makes the clear point that no brand can ignore the mobilized wishes of its customer base; particularly a famously loyal one.

The need for transparency and genuineness is not a marketing tool or branding fad. It is not a management theory for organizational development. It is an irreversible fact of business life that every organization must learn to address. This need will only increase as consumer tools improve and as more people have access to them.

Brands can no longer state unrealistic statements of aspiration. The truth is that they never should have done so. Now brands, or at least those that aspire to build valued customer experiences, can only state what the organization can realistically live up to. This requires learning for some, as it is not necessarily the marketing mix that brand managers learned from the era of Madison Avenue thinking.

6. Values—the customer connection
Brand values are one of the more familiar terms used by businesses and brand managers. Brand values are familiar, too, for many customers. This is justifiable, as values are tangible brand management tools to be shared with customers. Organizations should openly state their values and ensure that they are represented in their activities. Simultaneously, customers are able to use the values as benchmarks to evaluate the success of their exchanges with the organization.

Brand values are more resident in the customer domain than identity and guiding principles, discussed previously. Identity and guiding principles are the strategy in flexible form, and help the employees to be the strategy and live the brand. In contrast, brand values are the currency of customer experiences. Each experience can be considered as positive or negative, in a brand sense. Where the brand values are present in a customer exchange and supported by the actions of staff encountered, the transaction can be considered a positive one. In these positive exchanges, the brand is reinforced and the relationship deepens as a result. In contrast, negative transactions occur when the brand values are not evident in the transaction. Here, the customer completes a transaction (or aborts it) but has a less clear understanding of the brand and its position.

Brand-based organizations would do well to treat these measures of brand values as importantly as they do other measures of success. This is because the degree to which brand values are communicated is directly related to how much the consumers buy into the actions of the company and its longer-term perspective.

7. Putting it all together—a case study
The mobile telephone company, Orange, provides an excellent case study for review. Orange was a fast growing, brand-based and industry-in?uencing organization, particularly in the mercurial heyday of 1994–2003. It was the last of four players to launch in the crowded UK market and was heavily dependent on a differentiated position. From this unlikely position, Orange proceeded to excel at providing excellent customer experiences.¹¹

Like many organizations, however, Orange also faced a number of operational issues, internally and externally. Some examples included dealing with interdepartmental rivalries, supplier inconsistencies, overcoming the communication needs of a large employee base and management and staff mismatches at various levels. Again, these are common issues that many organizations face. Orange, however, was able to regularly overcome these issues, or at least manage them, by demonstrating its strong sense of organizational purpose and by encouraging employee engagement with the brand. The brand values were thoroughly incorporated into the entire organization—product development meetings, personal development, employee achievement citations and much more.

During the period mentioned above, a strong sense of understanding and awareness existed in the organization. It would not have been out of place for a highly technical meeting on telecommunications platforms and infrastructure to close with a discussion on how to make the chosen concept look and feel Orange. Further, the senior team, and in particular the CEO, regularly and personally conducted visible deeds that reinforced the values. These deeds were visible to the organization and were passionately recounted, until they became symbols of the organizational identity. They developed into rich seams of company lore that were ardently repeated.

Below are two examples from the period which illustrate:

• one employee’s personal interpretation and application of brand values; and
• how senior management deeds can build lasting, purposeful narrative.

7.1 Doohickey Day
Many technology companies face a challenge in getting the marketing team to understand the technology team and vice versa. Communications between the two groups can become sterile, even where best intentions are present, normally due to a lack of understanding between the two groups. Orange was no exception. A unique solution for Orange was developed, however, by one of its engineers. He created a forum for sharing technical developments in an engaging format, which the marketing team would appreciate. The concept was called Doohickey Day, named for the way that engineers in the Dilbert cartoon strip sometimes convey key technologies to their colleagues.

The forum consisted of engineers who would present innovative and upcoming technological concepts to a crowd of (largely) marketing people. The attendees all sat at round tables, each with a large red button in the centre. Each button played a unique sound when pressed. When speaking, the technology presenters were not allowed to use acronyms or jargon to describe the concept. If this did occur, the attendees could “buzz” the speaker by pressing the red button. At the end of the day, the speaker who had the most buzzes against him was given a penance. The penance? They were made to work in the marketing department for a day!

This process tackled an age-old issue of inter-department communication, but did so in a way that was engaging. In fact, the whole exercise was straightforward, refreshing, dynamic, honest and friendly—reinforcing the ?ve espoused Orange values.¹² Most importantly, the concept was created out of an employee’s personal understanding of how the brand values could be applied to solve an internal issue. It is just one of the many ways that an internal brand management focus helped to signi?cantly in?uence the workings of the organization and ultimately, the services that were developed for customers.

7.2 Customers missing in the boardroom
A second example focuses on just one visible senior management deed that carried particular resonance throughout the organization. It involved two members of the Corporate Strategy team, who were tasked with presenting a concept to the Executive Board. While presenting the early portion of a PowerPoint presentation, the CEO, Hans Snook, thanked the two strategy representatives for their effort and asked them to leave. The presenters quickly pointed out that they were not finished and that they still had more pages to discuss. Mr Snook replied that given that they had already presented a number of pages and that they had not yet mentioned the customer, they were indeed, finished. The embarrassed presenters duly left the now silent boardroom.

The impact of this brief episode was immediate and far-reaching. First, it concentrated the minds of the strategy team for that particular presentation and for every subsequent piece of work undertaken. Second, the board members too took away additional insight that day into how the CEO was absolutely determined to represent the customer at all costs.¹³ Finally, stories about that day meandered throughout the organization, establishing a firm body of lore about the importance of remembering the customer and it served as a constant reminder to the whole of the company.

7.3 Talent-spotting
Readers might see these two examples and look for the role of the brand manager in both, for neither example is a result of a brand-led, marketing initiative. One example cited the insight of a single employee and the other referenced the strong personality of the CEO. Nevertheless, the role of brand managers is still key in both. The stories show the underlying need for brand managers to recognize when brand values are being enacted and to support and endorse these activities. Eventually, support from brand managers with regard to Doohickey Day, helped it to grow from a small gathering of people to a highly engaging exchange for hundreds of attendees. Separately, brand managers religiously built the CEO’s insistence of putting the customer first in every communication exercise.

Brand management in these instances did not translate into the clever invention and leadership of a specific project. Actually, it required the wisdom to locate good values-based examples when they occurred and the dedication to support them thereafter.

7.4 Bene?t for the customer
The Orange example is also beneficial for seeing how the brand values were reiterated externally, in customer exchanges.

From the outset, Orange presented an interesting proposition that people wanted to be a part of. At launch, in 1994 for instance, no product-specific materials were used. Instead a broad brand-awareness campaign was built, in an industry that was woefully lacking in powerful consumer brands. It hinged on the phrase the future’s bright, the future’s Orange, a phrase that is still immensely popular today and which is politely modified with wordplay in media coverage. Below are some examples of how Orange reinforced the five brand values, particularly in circumstances of customer experience.

7.4.1 Friendly and straightforward
The values of friendly and straightforward were in widespread use at all Orange touchpoints. Innovative solutions at that time are now readily recognized as industry standards. These included uncluttered shop environments, a reduced number of simplified talk plans and the absence of technology in all advertising. Customers readily bought into a lifestyle concept instead of making independent, product-based, purchasing decisions. Presentation material relied on brief, but clear phraseology and powerful, supportive images. This approach was in complete contrast to an industry that was technologically oriented and rife with complex explanations. Philosophically, the friendly perspective was internally viewed as a child leading an adult into a safe and rewarding future. Thus, advertising often used children’s concepts such as bicycles and kites, or simple line drawings to explain services.

But even the name Orange, while highly respected today, was seen as innovative and unusual. Practically every operator name at that time featured some aspect of mobile telephony—words like phone, net or cell—and thus, emphasized technology. A few company names existed outside the technology sphere, but the companies failed to market themselves in a non-technological way. Today this use of a company name to distance the organization from mobile technology is in widespread use—Wind, Blue, O², 3 are some speci?c examples—but the process began with Orange.

7.4.2 Honest and dynamic
These values were reiterated in several specific and unique offerings for the industry. Per-second billing and caller identification represented the initial manifestations of honesty and dynamism. Until the arrival of Orange, mobile users paid for minutes or portions of minutes even when using the mobile to make a call of only seconds. The concept of caller identification was unthinkable. Now, per-second billing and caller identification are world-wide industry standards.

Other industry-leading examples included the Orange Value Promise, which gave customers the chance to use other operator tariffs on the Orange network if desired and the Orange Network Promise, where credit was given to users who experienced network connectivity issues.

Orange also influenced the analyst community. Prior to the arrival of Orange, operators were fixated with average revenue per user (ARPU). While ARPU was, and still is, a critical measure, Orange was nevertheless able to introduce the concept of Customer Lifetime Subscriber Value (CLSV). This was a measure of APRU and customer churn, which expressed value over the lifetime of a customer relationship. The analysts of the industry lauded it, as it suited the long-term payback nature of mobile network investment.

Most importantly, honesty was evident in customer relationships. For example, telephone-based customer service staff would willingly indicate to customers when it was felt that they were paying too much by subscribing to the wrong tariff. Customers, pleasantly surprised, would happily migrate to the lower-priced tariff, but thereafter feel inclined to stay with the network longer, underpinning the CLSV perspective above. This is an example of how an extensive internal focus on being the strategy and living the brand ensured that the customer expectations were not just met, but very often exceeded at each exchange.

7.4.3 Refreshing
Collectively, the Orange position represented a refreshing perspective for the industry. Technology was relegated, customer needs were emphasized and communications were clear, but concise.

Moreover, the organization expressed an ability to see beyond its services and even developed the ability to laugh at itself. A good example of this phase was in a run of print advertising which listed activities that could be accomplished with the mobile switched on or switched off. Separately, cinema advertisements of the fictional Orange Film Board reinforced a refreshing perspective. Here the ‘board’ cheekily pitched bogus film scripts with the mobile phone as the star, before stating the core message of Don’t let a mobile phone ruin your movie.

8. Final caution—be careful what you wish for
Striving for excellent customer experiences is what Orange sought and is what most organizations seek. It is difficult to achieve and maintain excellence, as this paper has indicated. Worryingly, however, there are some additional, and perhaps unexpected, pitfalls for successful brands.

Great brands attract talent. People want to be associated with them. They sense the opportunity to display their abilities. Over time, however, great brands attract idlers, too. Idlers are those people who are good at doing very little, surviving instead on the efforts of the people around them. For them, there is less to do in a successful company. They can be more difficult to locate, and they share in a larger reward than if they worked in a lesser organization.

Great brands can also suffer from too much of a good thing. Messages which are constantly stated, but are poorly reinforced by actions, can lead to traits of arrogance or complacency in the organization. Soon, the once valuable programme of community building is perceived as nothing more than corporate propaganda. Sadly, an unending diet of statements, without positive reinforcement, can bring about a culture that is at odds with the brand position that is being espoused.

Finally, great brands can be poor at knowing when the period of success is over. No organization is excellent forever. In fact, the life expectancy of organizations is quite low, according to Arie de Geus.¹⁴ While at Shell as Head of Planning, he searched for benchmarks from other organizations that were, like Shell, at least 100 years old. Interestingly, he and his team found only 40 firms of that age. They concluded that organizations could indeed last longer, but that many of today’s company systems do not nurture this kind of tenure. The result of shorter-term systems is that most organizations will eventually face fundamental change. This could be in their market-place, political system or in the loss of a leader. Each of these examples indicate a need to reevaluate the emphasis in strategy and brand management. The issue here is that while poor and average organizations live in a very real world of knowing that the end could occur at any time, successful organizations are often blind to anything other than business-as-usual expectations.

Conclusion
This paper has discussed brand management and the customer experience. This has been done not by dissecting brand management into its specific components, but by illustrating the robustness of brand management when placed appropriately in an organization. The paper has also highlighted the need to supply employees with tools—identity and guiding principles—to interpret and personally apply organizational attributes. Among other benefits, these employee tools help to breed a consistent and high quality customer experience externally. Both customers and organizations can determine the overall worth of individual customer exchanges by the presence of brand values.

Finally, it is worth reiterating that people are the key ingredient in any branding effort. It is the actions of people inside an organization that feed the experience of those outside the company. The journey of providing quality customer experience is long and can be arduous. It begins at the heart of an organization. It begins with employees who are being the strategy and living the brand.

Notes
1. O. E. Williamson and S. G. Winter: The Nature of the Firm: Origins, Evolutions and Development. New York: Oxford University Press 1993.
2. N. Ind: Living the Brand, 2nd ed. London: Kogan Page 2004.
3. SMART: a popular mnemonic to recall best practice for constructing Objectives. It states that objectives should always be Strategic, Measurable, Achievable, Realistic and Time-based.
4. McDonald’s Restaurants v. Morris & Steel (1999), colloquially known as the ‘McLibel Case’, which, despite the label, McDonald’s successfully argued.
5. Consider the accusations placed on corporations by corporate critics such as Naomi Klein (No Logo) and Michael Moore (Roger and Me, Fahrenheit 9-11, Bowling for Columbine). Consider, too, the resulting difficulties that can occur when trying to defend against same (e.g. establishing the difference between political speech and corporate speech in Kasky v. Nike, Inc. (2002) 02 C.D.O.S. 3790).
6. See www.masterfoodsconsumercare.co.uk/veg_status.asp: ‘At Mars UK we recently changed the source of some of the whey which is used in some of our chocolate products. We have received lots of feedback that this decision has made it difficult for some of you, especially those of you who are vegetarians, to continue to enjoy our products. We made a mistake. We apologise. The consumer is our boss. Therefore we listen to you and your feedback. As a company we value openness, honesty and diversity and we believe that anybody should be able to choose freely from our range of chocolate brands. But being sorry isn’t enough. Therefore we commit to you today, that we at Mars UK will ensure that a selection of your favourite brands—Mars bars, Snickers bars, Galaxy and Maltesers, will be suitable for vegetarians in the near future. To this effect we are starting to change our manufacturing process today. We will keep you informed of our progress against this commitment through regular updates on this website. Please accept our apology and keep talking to us.’
7. See the statement of Dr Annette Pinner, Chief Executive, the Vegetarian Society, at www.vegsoc.org/news/2007/mars.html, May 21, 2007: ‘The Vegetarian Society’s door is always open to companies seeking to better serve vegetarians. A Masterfoods representative has made contact with us and we are very pleased that they now recognise the importance of integrity to all their customers, especially vegetarians. We cannot endorse any planned actions by the company until we receive detailed assurances about the ingredients and processes involved in production but we are delighted that Mars UK has been honest enough to mark the beginning of National Vegetarian Week by admitting that it made a mistake. The best thing they could do now is, of course, to take up our accreditation scheme and earn the right to brand their products as Vegetarian Society Approved.’
8. L. Kahney: ‘Mac Loyalists: Don’t Tread on Us’, Wired, December 2, 2002.
9. S. Captain: ‘Fans Storm Apple’s 5th Avenue Store’, Wired, May 19, 2006.
10. The successful and award winning Green My Apple web-based campaign organized by Greenpeace is now archived. This weblink tells the story of how Greenpeace enticed the Apple customer base to influence the organization’s green policy: www.greenpeace.org/international/news/greening-of-apple-310507.
11. Orange gained the top ranking for customer satisfaction among mobile phone contract customers in the annual J. D. Power and Associates 2005 UK Mobile Telephone Customers’ Satisfaction Study, seven times in the period 1998–2005. In October 2005, Orange won the Mobile Choice Consumer Awards—voted for by readers of Mobile Choice magazine—for Best Network Operator for the fifth consecutive year. In the same month, Orange also won Best International Mobile Operator at the World Communications Awards.
12. Today the Orange.com website cites these five behavioural values alongside three additional values that describe the reputation it seeks: trusted, innovative and responsible.
13. A brief synopsis on Hans Snook, his business philosophy and his time at Orange is in C. Langdon and D. Manners: Digerati Glitterati: High-tech Heroes. Hoboken, NJ: Wiley 2001.
14. Arie de Geus worked for Royal Dutch–Shell for nearly 40 years. His book introduces the concept of treating companies like living work communities. It is regularly short-listed as one of the best management books of all time. A. de Geus: The Living Company. London: Nicholas Brealey Publishing 1996.

Note: This is a post-peer-review, pre-copy-edit version of an article published in Journal of Brand Management, vol. 15, 2007, pp. 102–14; published online October 9, 2007. The definitive publisher-authenticated version, ‘We the People: the Importance of Employees in the Process of Building Customer Experience’, is available online at: www.palgrave-journals.com/bm/journal/v15/n2/abs/2550123a.html.

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’.