Marketplace Insights: October 2017 edition

The latest news, research and buzz on purpose-driven brands and customer trust from Business in the Community's Marketplace team.

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Key news highlighting the change in direction


 

Uber’s latest reprimanding is another example of a business muddying through the grey area of processes not yet caught up to their technological advances. With disruptive brands, it’s important to consider that new technology shouldn’t excuse bad business behaviours, and instead we should be encouraging disruptive start-ups to have a smart growth approach, aware of both the positive and negative impacts such growth may have. Uber had been warned their values were deemed to “justify poor behaviour”, and without a change seen this was the outcome. Yet with Uber vowing to change their ways, perhaps the much-needed push for Uber to do business better.


While Uber struggle to right their wrongs, others are taking a proactive stance to find ways in which to give their business greater purpose than profit driving. Big multinationals are beginning to see the value B Corps can bring to their companies. Earlier this year Unilever acquired Pukka, making it their third B Corp in their portfolio. More recently Natura, a Brazilian cosmetics and personal care company bought The Body Shop, a transaction that represents the first billion dollar B Corp deal. In addition, Danone has claimed their intention to seek B Corp certification, which would make it the first Fortune 500 to earn that distinction.


Companies are being recognised for the positive impacts they are making on the World. Fortune published their 2017 Change the World list, with the 56 companies featured tackling a variety of problems - from Accenture, which is using data to reduce E.R. visits, to IBM, which is helping urban high schools close the STEM skills gap. A study from Reputation Institute revealed the 10 companies perceived by consumers as the most socially responsible, with Lego taking the top spot. Lego recognises that this is most likely due to embedding their CR values throughout the business. Business leaders are now deeply engaged in the pressing societal issues of our day as they increasingly recognize that those issues affect the long-term success of their companies.


Responsible business success factors

It is the role of leadership to ensure values aren't just a set of words on a page, but are reflected in company culture. There are a number of drivers when it comes to creating and implementing successful purpose-driven strategies. Getting it right internally is the first hurdle, where it’s clear that purpose and values are integral to the success of a company at a culture level, but the transition to business behaviours can often be tricky. Amplifying purpose through values helps create an engaged environment, connected through achieving a combined goal. Fostering a space where employees feel safe to share their ideas can help to build a sense of organisational trust, creating a foundation for higher needs like belonging, self-esteem and the drive to create something great.


Yet it can all depend on the customers, who play a huge role in the end result. Recent research from EY has shown how 74 per cent of UK consumers willing to boycott brands they perceive as having bad practices. The research presented that a business’s behaviour is as important to consumers as the products it sells. A new report from Deloitte outlines the drivers of brand-fueled social movements, including creating opportunity for consumers to contribute to a greater good; allowing people to people connections; not being afraid to make a grand statement; and offering the chance for customers to become involved and feel empowered. Companies can work to build brand rapport with customers that forms the foundation of any strong brand, and with the right insight and strategy – untapped opportunities may exist to form a longstanding movement.


Delivering sustainable strategies

For those that are still unsure of the business case for embracing the SDGs, a new report from CISL highlights the benefits for business. The report calls for companies to adopt a systems approach in order to maximize the chances of delivering the SDGs. Examples included how leading companies are already promoting change internally, in their sectors and the wider system. In a webinar delivered by Sustainable Brands, Sustainability experts from Novozymes, BASF and SAP discussed how they’re working towards building the SDGs into their strategy and reporting. A theme among the companies was a form of materiality check against the SDGs to understand which had the most relevance to their business, and where they could have the biggest impact.

In addition, in order to meet these ambitious pledges, better collaboration and interaction with supply chains is needed. Simply requesting sustainability reporting is not enough, big business needs to take ownership of educating those in the supply chain. Without this, sustainability becomes a tick box exercise without truly understanding the linked benefits and impacts.


Understanding the opportunities of sustainability can also lead to innovation, not just through technological advances but through business models. Research from MIT Sloan Management Review and the Boston Consulting Group found nearly 50 per cent of companies changed their business models as a result of sustainability opportunities. In addition, 59 per cent of companies that profited from sustainability did so by changing three or more elements of their business model. Successful innovations focused on opportunity creation — looking at market share, potential efficiencies, competitive advantages, and innovation - rather than risk and regulatory compliance.


See BITC's Marketplace pages for more on this agenda.