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Finding Uncommon Growth in Four Steps

Uncommon growth is purposeful, profitable, transformative and sustainable. And it has to start with customers.

In today’s disrupted markets, incremental sales gains aren’t enough. Companies need to find paths to uncommon growth, moving them ahead of competitors and potential disruptors. That can only happen when businesses answer two daunting questions: Where can we play to win? And how can we win there in a differentiated and relevant way?

We help companies identify those growth paths, even as new entrants surge into already crowded categories and core products continue to get commoditized. Deciding where to play requires a clear sense of which market a company is best equipped to play in, and then uncovering gaps of opportunity and developing a razor-sharp definition of the customers it believes are its best targets. Figuring out how to win calls for finding the best products, services, experiences and business models to reach them.

“Companies need to find paths to uncommon growth, moving them ahead of competitors and potential disruptors.”

Once these areas are fully developed, we can start to apply both in-category expertise as well as out-of-category thinking, finding innovative and unexpected avenues to more revenue.

It’s tempting to take shortcuts. Many companies do, and some even stumble into growth that way. But for growth to be uncommon, which we define as purposeful, profitable, transformative and sustainable, every future move needs to start from the customer’s perspective. That means focusing on humans first, with a detailed and holistic understanding of what they want, need and expect.

From that point of view, it’s possible to design and activate new offers with the best potential to increase sales and build relevance. Our experience shows these four steps–answering the who, what, how and why of any new approach–is essential.

Step One: Who is the Target?

Companies often start their growth strategy thinking about what products they can make or services they can offer. Insurance companies want to dream up new policies. Restaurants want to launch a new sandwich. But the key to sustainable success is to understand who makes up the market landscape and which groups are the best match for its capabilities.

Intelligent segmentation and targeting may reveal certain insights that change your strategy. Maybe the most potential segment for your insurance company wants fewer policy choices but better service. Or maybe restaurant customers want more bowls and less bread.

We drive our segmentation and targeting strategies by balancing two key things:

  • We make sure target audiences can be identified using demographics, media behavior and other transactional data
  • We guarantee that the audience can be understood by uncovering behavioral insights

Often, companies already have much of this information. To define the most attractive and winnable target segments, we combine client data with third-party insights and our own quantitative and qualitative research.

These can’t just be numbers and ideas on a page, though. A vital part of this work is moving beyond rough sketches and bringing these people to life through powerful personas. Everyone in the organization needs to understand who these new customers are and what makes them tick. That way, they can get excited about the prospect of winning with them and finding new ways to meet their needs.

Step Two: What’s the Unique Value Proposition?

It’s not enough to crystalize an innovative growth strategy. Unless

There’s a compelling value proposition – a thing that makes an offer different from its competitors – it’s difficult to persuade people to try a new brand (let alone give up on one they’ve been loyal to in the past).

Too many companies gloss over this step, moving straight from strategy to messaging without deliberately defining the core benefits they offer. Until they take the time to painstakingly codify its virtues, the product, service or experience, is unlikely to break through the clutter.

This step is crucial in crowded categories. In a world with hundreds of financial products, seltzer brands and car insurance companies, the value proposition serves as a filter. It clarifies a company’s promise to customers and becomes an internal rallying cry.

Step Three: How Should it Go to Market?

The pivot from product innovation to in-market thinking is almost always challenging. If these new ideas are to lead to uncommon growth, it’s pretty likely that they are different from previous launches. That calls for a departure from the company’s usual way of doing business. Maybe they’re reaching different customers, like a newly defined target. Or perhaps they’re serving existing customers in different ways via new channels. That often means that the right go-to-market strategy will require operational shifts. And it may even require changes in the company’s culture.

For example, how will the new offers be distributed and sold? How will they be marketed? What is the best channel to leverage for go-to-market? What’s the messaging? It takes careful alignment of all these elements to maximize success.

Step Four: What’s the Best Way to Define the “Why” (With Purpose and ESG)?

Environmental, social and governance strategy is still a relatively new discipline, and many companies continue to view it simply as a risk-mitigation tactic. We believe that’s a missed opportunity. When intertwined with a company’s purpose –its reason for existing in the world – ESG is a powerful way to create value. And it can lead to meaningful and sustainable engagement with multiple stakeholders.

It’s not easy to define precisely how the world has changed over the last few years. An endless news cycle perpetuates negative outlooks on health, climate and communities. And people increasingly expect the companies they do business with to play a role in helping solve these problems. Businesses that accept that responsibility, making sure everything they do fits credibly into their ESG strategy, will win their respect.

At Prophet, we believe building a purpose-led organization is the key to achieving uncommon growth. But we also know simply articulating and communicating purpose is not enough. To create value, purpose and ESG must act together, providing a golden thread across the organization. In this position, at the center of all activity, it can drive transformation.

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In this age of disruption, companies that want to grow faster than their competitors need a clear understanding of where they can best play to find new growth and exactly how they can win there. That can only happen with a holistic view of who they want to reach, what they can uniquely deliver and how to go to market. And with a well-defined purpose and ESG strategy, they can let all stakeholders know why they deserve their trust.

To learn how Prophet can help your organization accelerate growth, visit our website.

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2021 Brand Winners and Losers: From Taylor Swift to Billionaires in Space

Colleagues helped me name seven brands that won the year, and five brands that simply blew it.

Just a year ago, I talked about how 2020 was unprecedented for so many reasons. And 2021 seems to be a “rinse and repeat” of the same themes, relative to the brands that showed up to surprise and delight us, as well those that failed or disappointed us. Once again, I turned to my 500 Prophet colleagues around the globe to help decide which brands won and which lost.

There was a lot to chew on. In a year when Square turned into a Block, Facebook became Meta and the Cleveland Indians transformed into the Guardians, the debates got intense.

For instance, last year’s clear-cut winner, Peloton, got votes on both sides. Is it a winner because people still love it? Or a loser since it just slashed its annual sales forecast by $1 billion, as more consumers head back to the gym? Zoom, another of last year’s winners, continues to be as integral to people’s workday as that second cup of coffee–and is on its way to becoming a leading tech sector brand.

Many mentioned the streaming wars, which rose to a whole new level. There’s the introduction of Paramount Plus. HBO Max is taking a gamble, streaming new theatrical releases, like “The Many Saints of Newark.” And then there’s Netflix, which may have seen new subscriptions levels drop but also saw “Squid Games” become the most popular show in its history, pulling in an astonishing 1.65 billion hours of viewing in just 28 days.

Some of our favorite ‘new’ everyday brands went public, including Sweetgreen, Roblox, ZipRecruiter and Instacart, while many crypto brands saw their market value aspire toward FANG territory, only to correct themselves dramatically.  Every year, we think we’ve reached the apex of DTC brands, only to have us see another set of stellar performers. This year, those stars include Away, the ever-expanding Bombas, weight loss king Noom and the “lit” cosmetic world of ColourPop and Glossier.

And while everyone wants to pounce on Facebook renaming itself as Meta (and this would be an easy one to put on our brand loser list) as a colossal misstep, we do think the jury’s still out and want to revisit this a year from now. It’s a strategy that’s worked well for Alphabet and Google and, if they pull off the idea of taking us all into the next digital era, exploring augmented, virtual and mixed reality technologies, while working deeply on the many issues facing the brand, this could be a different story a year from now

“Every year, we think we’ve reached the apex of DTC brands, only to have us see another set of stellar performers.”

We also took a close look at the sports betting business. While it’s currently dominated by FanDuel, followed by DraftKings, newcomer Caesars Sportsbook is also making a splash, vowing to spend $1 billion to build its fan base. That includes a deal putting its logo on the jerseys of the NHL’s Washington Capitals. Speaking of sports, we still embrace our love/hate relationship with Tom Brady as both the GOAT/Sports Illustrated Person of the Year, as well as becoming an increasingly influential commercial representative…see his star turn in Hertz’s new Tesla ads.

Finally, we still love our LEGO as it continues to lead the way in reducing gender bias and increasing inclusive play. We also love Target for putting the permanent kibosh on Black Friday, starting on Thanksgiving. Rarely do airlines get a mention, but three cheers to United Airlines for becoming the first to make vaccines mandatory, the first to fly passengers using 100% sustainable aviation fuel and the first to ensure that 50% of its flight school students are women or people of color. We also have to give kudos to Sesame Street, one of my favorite clients from a few decades ago, in continuing to give us all timely lessons on how to deal with racial challenges, inclusivity, diversity and empathy. It’s a brand that is as ageless as it is wise.

Now that we are done with the warmup act, let’s get into the winners and losers for 2021.

The Brand Winners

Moderna and Pfizer

It’s no surprise that Merriam-Webster named “vaccination” as the word of the year, injecting people everywhere with much-needed hope. Moderna and Pfizer top our list. (Johnson & Johnson misses, both because it was later for approval and because while its one-dose advantage could have been a game-changer, it suffered by being perceived as less effective.) With more than 8 billion jabs given, experts say vaccines are still our best shot at stemming the ongoing global health crisis and these two brands continue to lead the charge.

TikTok

TikTok is now so much more than the 1 billion monthly users who vibe with its dance challenges or laugh with its happy pranksters or wiseass dachshunds. TikTok directly influences all forms of entertainment, all forms of business and pretty much everything in between. Just a few years removed from Lil Nas X and his Old Town Road becoming the O.G. for viral musical successes, TikTok creators used Adele’s Easy On Me in almost one million videos in the first month after its release, helping it go viral on the app alone. To say that TikTok has become the No. 1 global influencing platform would be the understatement of the year.

Feeding America

I’ve never put a nonprofit on the list of winners. But Feeding America continues to astound us with its rapid growth, canny corporate partnerships and ability to connect people even in these divisive times. It’s grim, but the U.S. is finally hunger woke, recognizing that 38 million people, including 12 million children, are food insecure. Feeding America’s brand makes it easier to help and, potentially, see an end to hunger at some point in our lifetime.

Tesla (again)

In a year when many automakers saw sales decline due to supply-chain shortages, Tesla sales hit new records. And with revenues and profits that are beating analysts’ expectations, its soaring market value shows just how deeply people love the house that Elon built. Even more amazing? While Tesla’s cars still rank nearly last in reliability surveys, it sped past Mercedes-Benz to become the third most popular luxury ride in the U.S. (Lookout, Lexus and BMW. It’s gaining.)

Athleta

Think of it as the anti-Nike, with the determination to move in on Lululemon and the athleisure market. This Gap-owned retailer welcomed high-profile athletes like runner Allyson Felix and gymnast Simone Biles, who publicly broke with Nike over its treatment of women athletes. And, with the Power of She campaign, it’s winning with teens–and well on its way to becoming a $2 billion brand by 2023.

Taylor Swift

Demonstrating that she’s one of the best marketers in the business, the singer struck back against the music machine by re-engineering 2012’s “Red” album, igniting her fan base and winning new admirers. The centerpiece is a 10-minute version of the heartbreaking “All Too Well,” which became the longest song ever to reach Billboard’s No. 1. (Adios, “American Pie.”) We’ll just quote Ms. Magazine here on Swift’s feminist tour de force: “Taylor Swift didn’t just re-record an album—she reclaimed her humanity.”

Bitcoin

Yes, Bitcoin and cryptocurrency prices have fallen sharply recently, wiping out almost $500 million worth of value from the overall crypto market in just a few days. But cryptocurrency still had a breakout year, moving towards the mainstream. Celebrity endorsers are all in, with Tom Brady and Gisele Bündchen telling us, “I’m getting into crypto with FTX. You in?” And Matt Damon is representing crypto.com, which is also the new name of the Staples Center. Like electric cars and Tesla, Bitcoin still dominates any conversation about crypto.

The Brand Losers

Instagram

Some of the most disturbing allegations from Facebook whistleblowing centered on Instagram. Turns out the company has known for some time how toxic the platform can be to the teens who love it, with 32% of teens saying that when they feel bad about their bodies, Instagram makes them feel worse. Concealing that, in our book, is downright shameful. With just over a billion active users, it’s not going away anytime soon. The reports are damning enough that Lush, the body care products company, recently shut down its social media accounts, saying they risk customers’ mental health.

Billionaires in Space

I’m as eager as the next person to boldly go where no human has gone before, but companies like Richard Branson’s Virgin Galactic and Jeff Bezos’ Blue Origin show they’ve got the wrong stuff. At a time when tension between the haves the have-nots keep growing, especially within Bezos Amazon world, these ego-boosting launches are about little more than celebs in space.

Chevrolet

We’ve always wanted to love the Chevrolet Bolt. Not only is it the second-best-selling EV brand in the U.S., but it also beat No. 1 Tesla with a genuinely mass-market EV. And its vow to be all-electric by 2035 got our attention. Then came the massive recalls for defective batteries, with severe design concerns that shut production down for weeks. Then Bolt owners got more bad news when GM advised them to park at least 50 feet away from other cars to reduce the risk that a spontaneous fire could spread.

Robinhood

Robinhood started as an exciting brand, promising to democratize investing. With no fees, it’s tempted 19 million new investors into the stock market, gathering $95 billion in assets under custody. But with the GameStop frenzy, it closed trading, earning the enmity of both regulators and the Reddit bros that are its customer base, with a backlash that’s still generating contempt. The move was anything but customer-centric and now the brand is paying for it.

Casper

For years, branding experts (even us, sometimes) loved the way Casper, a DTC upstart, vowed to “own” sleep, with showrooms offering complimentary naps and ancillary products. But a year after its disastrous public offering and mounting losses, it’s gone private again. Besides illustrating its operational immaturity and brand braggadocio, it underscores the DTC dilemma. Acquiring new customers is expensive. And really, people don’t buy new mattresses all that often.

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Three Branding Trends to Know for 2022

Launching products and services in new subcategories is increasing, fueled by AI and social commerce.

This year presented new challenges and unexpected surprises for brands. After 2020, companies were pushed to become more innovative to meet raised consumer expectations and behaviors around digital experiences. In 2021, consumers began to travel again, brick and mortar retailers, restaurants, entertainment venues and in-person businesses “opened up” with new rules and regulations, and employers sought creative ways to keep their employees happy amidst the “Great Resignation.” Some brands have navigated this tumultuous time better than others. Over the past year, I’ve observed three accelerating branding trends that are affecting nearly every business. The brand leaders of tomorrow are going to be riding these waves rather than swimming against them.

To make a splash in 2022, you’ll need to know these three branding trends:

1) Subcategory Competition

There is a growing trend of organizations realizing that real growth will almost always have to involve disruptive innovation, the creation of a set of “must-haves” that will define a new subcategory competition for which competitors will struggle to be relevant. It’s hard to find examples of growth surges that were not driven by subcategory creations. Consider the Prius, Tesla, Dollar Shave Club, Airbnb, Amazon Alexa, and so many more that created and leveraged new subcategories.

This trend has been put on steroids by the digital world. The emergence of IoT and AI provides new avenues for subcategory creation. The presence of social media, websites and digital communication means that the introduction of a new subcategory no longer needs expensive advertising with a long lead time. And e-commerce options avoid the need for getting a retail presence or creating or accessing a salesforce. As a result, new subcategories are now more frequent, scale faster and have a higher impact than ever before.

Implications for brands:

  • Shift some investments from incremental innovation to “big” innovations
  • Enhance your organization’s ability to recognize what is a “must-have” in the marketplace, what is not and then to act when disruptive opportunities arise
  • Understand the role of branding and build strategies to be the exemplar for the subcategory, using that brand to position, scale and build barriers to competitors

2) Higher Purpose

More and more organizations are elevating higher purposes driven by environmental and social programs, now often labeled ESG programs (social, environmental and governance). Examples are everywhere. Starbucks’ quest to inspire and nurture the human spirit “one person, one cup and one neighborhood at a time” provides a way to connect that means something to customers. Patagonia, known for having environmental considerations in their heritage, in their products and in their programs, attracts customer loyalty among those that share their values.

The visibility of society problems such as global warming, inequality, unhealthy eating and living, unequal education opportunities and more have made this trend turn social efforts from “nice to haves” to strategic imperatives.

There is increased pressure from stakeholders for leaders to think beyond financials and instead prioritize creating meaningful help and shaping society. Employees, especially the younger set, have shown that they are reluctant to join or stay with organizations that lack an inspiring higher purpose. Segments of customers are looking for a relationship with brands they respect and admire for their higher purpose. Even a significant part of the investor class has “changed sides” and now evaluates the higher purpose programs as part of their investment choices.

Implications for brands:

  • Revisit your organization’s mission, purpose, values, and priorities and modify or supplement them so ESG programs can thrive
  • Develop impactful and implementable ESG programs that resonate with your organizational culture. A higher purpose cannot be empty words. To impact internally and externally, it needs to be and feel genuine with substance behind it
  • Become an active rather than passive partner in the development, implementation and measurement of the strategic communication plan
  • Facilitate the ability of the ESG program to enhance the business brand to support a long-term commitment to the social program

3) New Communication Programs

There is a growing shift from communicating facts about a brand’s offerings or programs using conventional media to finding other ways to communicate and, more generally, connect with stakeholders. Among the forces driving this trend is the reality of information overload, media clutter, disinterested audiences, and the growth of social and digital communication.

The tragic reality is that people are not interested in brand facts. They are just not. An alternative is to use research to discover what they are interested in, what activities occupy them, what they talk about and what their passions are. I call the attitudinal data the customer “sweet spot.” Find or develop content or programs around this data on interest areas with the brand as an involved partner.

Implications for brands:

Create brand communities: groups that share values, interests and activities with each other and a brand. This becomes a way to engage customers and others with the brand in a context in which the brand is not in a “selling” role. One example is the activities and social experiences of the Peloton community.

Develop a content strategy that prioritizes compelling storytelling. Stories gain attention, are remembered and avoid counterarguing. As a result, they break through the clutter and communicate in an age of major information overload.

“The future of your brand hinges on the decisions you make today.”

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The future of your brand hinges on the decisions you make today. The world is evolving and changing rapidly, including how people interact with the brands around them. By prioritizing subcategory competition marketing strategies, integrating higher purpose programs into business objectives, and creating powerful stories and brand communities that communicate these efforts can help you stay ahead of the curve as we move into 2022.

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Bringing Luxury Online – Finding Success with DTC Marketing Tactics

Companies like Gucci, Moncler and Louis Vuitton are reaching young shoppers with disruptive digital tactics.

Luxury retail as we’ve known is over. It’s ‘last season’ exclusivity and high barriers to entry are shifting toward online democratization. Critical to this redefined luxury is an effortless curation of content, community and commerce tactics to win the hearts and wallets of digitally and socially aware consumers.  

Let’s look at how successful luxury brands are using DTC marketing tactics to reach new audiences. 

Content: From Fashion House to Content House

the core of any direct-to-consumer model is the creation of content and the spurring of relevant discussions among loyal customer bases and beyond.

From curated city guides to an Instagram feed that gives Vogue a run for its money, Louis Vuitton’s Louis Vuitton City Guides has a firm grip on the digital content pulse.

These guides highlight must-visit sights, stores and snacks in major cities across the globe, offering customers a glimpse of the world and what it’s like as a Louis Vuitton jetsetter. With new cities added frequently, Louis Vuitton is keeping customers engaged with more insider guides and luxury travel accessories to outfit their journeys.

Additionally, brands like Moncler are vying for a Gen Z following on digital platforms such as TikTok, which has been steeped in DTC marketing since its inception. Through its #MonclerBubbleUp challenge, Moncler leveraged both paid and organic content marketing – including dynamic products, collections, and lead generations ads – to reach nearly 7 billion impressions including those from followers who used #TikTokMadeMeBuyIt when featuring Moncler products in their content.

Community: Access to Luxury Doesn’t Have to be an Alternate Reality

In the old days of luxury retail, tight-knit brand communities were often limited to those in the upper-echelon of customer spending. The feeling of exclusivity and access was often formed through limited in-person shopping experiences with customers donned from head-to-toe in the brands’ latest offerings. 

Today, brands are moving these communities and their associated status symbols online. In the digital world, consumers have a direct route for engagement with brands through their DTC marketing channels and content – and feel closer to brands beyond a purely aspirational intent to purchase their goods.  

Gamification is one such method brands are leveraging to redefine what it means to be a part of the luxury community. For example, in honor of its 100th anniversary, Gucci aimed to spur engagement among its online communities. To do so, they teamed up with Roblox to launch the Gucci Garden Experience, a digital experience experiment in the metaverse. Users were transported to ornate showrooms where they could browse and interact with digital versions of exclusive Gucci products. They also had the opportunity to ‘purchase’ luxury items to ‘guccify’ their metaverse. The event spurred visits from more than 1 million Roblox users.  

By departing from tradition and leaning into democratized innovation, Gucci led a luxury brand movement toward new ways of engagement through innovative spaces and online communities, ultimately creating a loyal customer base.  

Commerce: See Now, Buy Now

Fashion Weeks across the globe are known for their exclusive invite lists and designs. However, brands leading the way in the new era of luxury are challenging fashion week norms and creating increased access through a ‘see now, buy now’ approach. This allows viewers to purchase designs in real-time as they are revealed on the runway rather than waiting for exclusive commercial releases and has so far taken the latest New York Fashion Week by storm.

For example, the Dundas x Revolve show experienced a sold-out collection in lockstep when its pieces sauntered down the catwalk. Luxury stalwarts like Altuzarra, Oscar de la Renta and Rodarte also leveraged the see now, buy now commerce model and included live streams of their shows to increase access and encourage purchases among raving new fans.

What’s in ‘Store’ for Luxury Online

Using real-time engagement features – including live streams of product presentations – Tmall’s Luxury Pavilion of digital shops can connect brands and their customers together to spur more personalized digital shopping experiences. With over 100,000 monthly active users on the Luxury Pavilion accounting for nearly 45% of total spending on the Tmall site, the demand for bridging online and offline luxury retail experiences through DTC marketing tactics is strong.

“Direct-to-consumer principles are creating a lasting impression on luxury brands, and in turn, creating engaged.”

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Through the optimization of digital channels, conversation amongst digital communities, and the online democratization of the elusive fashion week, direct-to-consumer principles are creating a lasting impression on luxury brands, and in turn, creating engaged current and future customers.

No matter your model, if you want to gain relentless relevance and digital prowess using DTC marketing tactics, brands need to consider the following questions:

  1. How might we create content that inspires interaction through owned and earned media in the age of mass media consumption?
  2. How and where can we extend and deepen our relationships with customers through community building and authentic engagement?
  3. How might we create more accessible, frictionless customer experiences that spur acquisition and retention?

Prophet is helping companies leverage direct-to-consumer practices around content, community, and commerce to drive growth and redefine industries. If you are interested in learning more about our direct-to-consumer expertise, contact us today.

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Webinar Replay: The 2021 State of Digital Transformation (Asia Edition)

Some firms just want to become more digital at what they do. Others want to transform their entire business.

57 min

Omar Akhtar, Senior Analyst and Research Director at Altimeter, Chan Suh, Chief Growth Officer at Prophet, and Jacqueline Alexis Thng, Partner and ASEAN Lead at Prophet, present key takeaways from Altimeter, a Prophet company’s flagship report, The State of Digital Transformation – which surveyed nearly 600 executives from the U.S., Europe and China.

Our expert speakers discuss key trends in transformation, as well as how companies in China approach digital transformation differently compared to other countries, providing important insights for businesses in Asia.

If you’d like to learn more about Prophet’s approach to digital transformation, get in touch today.

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The Healthcare Industry in 2022: What’s Ahead?

Labor shortages aren’t improving, virtual care becomes old news, and the behavioral health boom continues.

Will 2022 be the year when the new normal finally kicks in? Will digital transformation in healthcare pick up steam? Who will acquire whom? Will the pandemic finally be behind us or will new variants keep it front and center?

After several tumultuous years in a row, we expect 2022 will bring plenty more disruption, much of it driven by the usual suspects of rising consumer and patient expectations, ever-advancing technology and intensifying perennial pressure to reduce costs and increase access. Per tradition, here are our annual healthcare “hot takes” as we think about the year ahead.

We’ll Stop Talking About Virtual Care

Just as cable television and streaming became TV, mobile phones became phones, and  online retail and e-commerce reverted to being plain old retail, virtual care will become just “care.” Increasingly, patients don’t differentiate between telehealth from in-person visits – it’s all just one connected experience of care.

This is partially a semantic development but highlights a critical – and unstoppable – trend. Some residual discussion of omnichannel care will persist, as health systems and providers continue to adjust. But final pockets of resistance will fall; even specialties like dermatology and pediatrics will expand their use of virtual (whoops – you see how hard it will be to stop using that word, but we’re convinced it will happen!).

Labor Shortages Won’t Be Solved with More Healthcare Workers

The talent gap and worker shortages will be recognized as unsolvable – at least with current strategies. There are simply not enough doctors, nurses and paraprofessionals around to fill all the open slots. The same is true of data scientists, experience designers, financial analysts and all the other skill sets that are in huge demand within healthcare and just about every other sector.

Rising wages (especially for nurses) highlight how talent shortages can’t be addressed by simply throwing money at them. According to Mercer, 900,000 nurses are expected to permanently exit the healthcare workforce, causing 29 states to face a shortfall of registered nurses in the next five years.

Seeing that they can no longer simply try to win over more nursing students, healthcare orgs need to embrace new talent strategies. They must find new types of workers they can train to play specific roles. Think engineers-in-training to map out new care pathways or data scientists and AI experts designing diagnostic tools that replace nurses’ intake forms and handle initial reviews on medical images.

Kaiser’s foray into medical education suggests how different the thinking will have to become, though, of course, such capital-intensive approaches won’t be an option for every health system. Digital solutions and smarter workflows that replace steps in care delivery, rather than simply automating routine steps, are also key. It’s a matter of succeeding with fewer workers, an operating model, workforce and tech portfolio that has the flexibility and scalability to deal with future growth.

Home Care and Diagnostics Get More Active and Outcome-Based

Post-Theranos and uBiome, the diagnostics boom continues, but we get no bonus points for predicting that growth accelerates in 2022. After all, diagnostic startups had raised $5.4 billion in 2020 – up 19% from the year before, according to Pitchbook. The prevalence of at-home COVID testing will pave the way for many new classes of tests – from fertility and prenatal to cancer and heart conditions, to stress and hormonal issues.

More significantly, we’ll see an important shift from monitoring to active treatment. For chronic care conditions, patients will become equipped with tools they need to solve common issues on their own and at home. For instance, remote patient monitoring tools will provide automatic alerts to patients (e.g., to adjust medications) and providers (e.g., to trigger nurse visits) when patient conditions deteriorate.

“There’s a device for that” will become a strategic default, as treatments are embedded in – or at least accessible from – monitoring devices.

Behavioral Health Evolves to Be A Standard Workforce Benefit

Employee demand for mental health and wellness will inspire large employers to greatly expand access beyond EAPs and therapy. This evolved employee expectation also prompts HealthTech firms to innovate with a fresh wave of tools and solutions available for providers and patients that seek to identify and address behavioral health challenges before they’re exacerbated, including solutions like Sanvello, an app that uses clinical techniques to help dial down the symptoms of stress, anxiety, and depression.

This momentum is another example of the confluence of trends in the post-COVID landscape; everyone is more aware of the need for better behavioral health monitoring and treatments. And employers navigating the Great Resignation must do everything they can to keep employees.

Pharma Takes the Lead in the Drive to Data Unification

Data unification across healthcare has been an “imagine if” proposition – and a huge barrier to innovation. This year, pharma, with its substantial capital and ability to disrupt at scale, makes a major bet to break through the traditional data hoarding problem.

Pharmaceuticals are primarily motivated by the opportunity to use real-world data (RWD) to inform and streamline drug delivery and development. Specifically, they will find new ways to securely blend and anonymize data from EHRs, home care settings, mobile devices, social media and other sources.

Their success will prompt other players – providers, payers, tech platforms, consumer apps and devices – to establish new standards for sharing and using data. For example, Cerner launched Cerner Enviza to sell EMR data in a secure way while protecting patient identities. Ciox merged with Datavant to help accelerate token adoption and increase usage of RWD and real-world evidence.

Bonus prediction: we might see some regulation shifts to give consumers unprecedented degrees of data control, portability and security. Further good news: all the investments and work on the countless data monetization initiatives underway across the industry are not lost but provide a foundation for future success.

ESG Goes From Feel Good Topic to Uncomfortable Issue in Healthcare

In 2020, there were healthcare heroes everywhere and the industry’s pandemic-fighting efforts were rightly applauded. There was also much discussion about access to care and health equity. In 2022, the media, government and public will once again ask these challenging questions of healthcare organizations. Beyond the normal inquiries into the high cost of care, senior executives will be asked why equity and access have not improved more in the wake of the pandemic and how their organization’s purpose statements play out in day-to-day operations.

Increasing health equity is extremely difficult in a world of thin margins; start-ups will deliver some innovation in the public health space, but it’s clear that the largest incumbents will be challenged to “walk the walk” on health equity in ways that match the considerable amount of talk about it.

Similarly, healthcare’s climate impacts will be increasingly in the spotlight. The industry’s carbon emissions represent about 5% of worldwide totals, according to the New York Times. C-suites and boards will make stronger commitments and clearer plans. Public companies will face especially sharp pressure, as they face up to the reality of ESG ratings and the risk of stock price hits if they are excluded from rapidly expanding ESG index funds.

“2022 will bring plenty more disruption, much of it driven by the usual suspects of rising consumer and patient expectations, ever-advancing technology and intensifying perennial pressure to reduce costs and increase access.”

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As much change as healthcare has seen in the last few years, many organizations remain focused on the pre-pandemic goals of designing better patient experiences, streamlining care delivery and using data and tech more effectively. Those perennial issues are reflected in our 2022 predictions above and we’re willing to bet they’ll underpin our 2023 outlook as well.

Contact our healthcare team today. We’d love to talk about the transformation opportunities at your organization.

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Brand Migration in M&A: Seven Factors for Success

Amid record merger activity, companies continue to underestimate the complexity of integrating brands.

Global M&A activities have seen record levels this past year and are expected to grow even further in 2022. With this, Post Merger Integration (PMI) – the bringing together of two organizations, each with its own processes, structure, culture, and management – will be high on many organizations’ strategic agendas.

PMI is profoundly challenging and one of the most cited reasons for M&A failure is poor PMI. It demands massive executive attention and resources, both in terms of financial investments and people.

While most organizations have established robust processes for the integration of IT systems, HR policies, financial reporting and other vital business model elements, brand migration is a frequently underestimated factor in the PMI equation. And the results of this neglect could be devastating. Switching from a familiar brand to a new one is massively disrupting to customers, business partners, employees, and anyone else who has enjoyed positive experiences with a brand bound to be retired and replaced by a new one.

“PMI is profoundly challenging and one of the most cited reasons for M&A failure.”

Over the last three decades, Prophet has supported numerous organizations with post-merger brand integration. From this work, our teams have learned what works and what doesn’t. While every PMI scenario is unique and requires a bespoke approach, we’ve found that there are common ground rules regardless of industry, region, or market dynamics.

Before diving into the factors of successful brand migration, let’s start with a few of the most common mistakes made post-merger. They are:

  • Leaving brand migration to the marketing or comms teams
  • Positioning brand migration as a mere re-naming exercise
  • Waiting on brand migration planning until after deal closing
  • Developing the brand migration plan without detailed customer input
  • Defining a fixed end date for the brand migration without understanding the full range of implications

Make only one of the mistakes above, and brand migration will end in a disaster.

The Most Important Objectives and Key Success Factors

Successful brand migration starts with defining appropriate objectives. On top of company-specific objectives, these three generic brand migration objectives have proven to be very valuable for steering all related activities in the right direction.

Brand migration must:

  • Ensure the facilitation and enablement of the synergies expected from the merger
  • Unlock incremental growth
  • Happen in a way that avoids losing important customers, business partners or employees

After the appropriate objectives are established, it’s time to move forward with the seven key factors for successful brand migration. They are:

1. Prioritize the Brand Topic Early On

Make brand considerations a fixed topic from the beginning to the end of the M&A process, this includes:

  • Using brand fit already as a filter criterion during target screening
  • Understanding employee and customer concerns before moving on
  • Assessing brand equities and the ability to migrate during due diligence

2. Define Objectives and a Roadmap

Develop a brand migration plan early on, during or right after the due diligence. Define and agree on the target picture for the post-integration brand portfolio. Be sure to include that in the letter of intent as well as later in the contract.

3. Connect the PMI Workstreams of Brand Migration with HR and Culture

Marry the PMI’s brand migration project stream to the culture and people stream. Brand migration is nothing short of a business transformation for the acquired organization. Brand and culture are inseparable, and in terms of organizational migration need to be covered in conjunction.

4. Utilize Existing Values

Systematically transfer valuable equities of the brand that will be retired onto the surviving brand to enrich the customer experience. Make the final switch from the old to the new brand only after this has been accomplished.

5. Make the Necessary Investment

Before making the switch from the old to the new brand, invest sufficient time and resources to demonstrate the benefits of brand migration to all employees affected by it. Resolve any concerns they may have so they feel enabled and motivated to tell the migration story.

6. Define the KPIs

Define and track brand migration KPIs throughout the process. Make progression from one phase to the next dependent on hitting pre-defined KPI thresholds (e.g., the awareness level of the continued brand with customers of the to-be retired brand).

7. Go the Distance

Do not stop halfway. Dual branding can be a necessary interim step on the journey to full integration. It is tempting to get stuck with dual branding because it creates the least resistance internally and externally. But rarely is it the most effective long-term solution since it prevents the stronger of the two brands from unfolding its full potential.

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Successful brand migration in M&A can have a disproportionate bearing on protecting and creating value for the entire integration. Taking into consideration these seven factors will create a solid foundation for effecting that impact.

Does your M&A approach require a new playbook? Our M&A strategy consultants can help you to drive growth while minimizing risk, get in touch.

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3 Steps to Human-Centred Leadership in a Hybrid Working World

A co-created philosophy, agility and aligned leadership can smooth the way for hybrid work models.

Everywhere you look organizations are trying to figure out how to future-proof themselves. Organizations are grappling with how their flexible, hybrid working model might look and how to cope with the diversity of employee preferences created by the pandemic.

The role of leadership has never been more important to the health of employees and the success of the organization as business leaders across the globe manage through this uncertainty. What was considered effective leadership pre-pandemic (coaching, feedback, empathy, trust) is now a basic leadership requirement. And as the war for talent intensifies, the quality and empathy of leadership will be an important differentiator for current and prospective employees.

“As the war for talent intensifies, the quality and empathy of leadership will be an important differentiator for current and prospective employees.”

Therein lies the problem. The general quality of leadership is not where it needs to be. In 2020, MIT global research with c5000 Executives found that less than 10% of employees strongly believed that their organizations had leaders with the right skills to thrive in the digital economy. But the pandemic turned every leader’s world fully digital overnight.

At Prophet, we have developed a Human-Centred Transformation Model that guides holistic cultural change and identifies organizations as macrocosms of an individual with DNA (strategy, values, purpose, Mind (talent, skills, capabilities), Body (structures, processes, tools) and Soul (mindsets, behaviors, rituals). Through the lens of the model and our client work, we have identified three steps that will help you raise the floor of your leadership capability and take a human-centered leadership approach in a hybrid and digital world.

Step 1: Co-create a leadership philosophy (DNA)

Leadership is a term that everyone understands or thinks they do. We all have our own view of what a strong leader looks like and who we want to emulate. However, individual perspectives don’t breed quality or consistency. It’s critical for your leadership (and your employees) to co-create and align on the version of leadership that’s right for your strategy, your people and your culture, particularly in your new hybrid context.

In addition, the remit of leadership has changed. With societal trends coming to the forefront of daily organizational life, leaders can’t lead without acknowledging and supporting their people during uncertain times. Leading with values and purpose is a prerequisite now; leaders cannot focus solely on strategic or operational topics to get them through.

Allied to that point, leadership roles should include a tangible set of leadership responsibilities and objectives. For example, leaders need to be leading, not just doing tasks or making decisions. They must be empowering, nurturing and guiding their teams. It takes time, effort and skill to adopt a human-centered approach to leadership and to do it well. Ensuring your leaders adopt the mindset that human-centered leadership is critical to the organization’s performance, will provide a strong platform to develop your leadership capabilities.

Step 2: Build agility into your leadership development framework to align with your culture and strategic priorities (MIND)

Traditionally, many organizations use prescriptive models of what good leadership looks like, developed directly from theory. However, they were never especially applicable in your organizational context and – rigid by design – they are now out of touch with what’s required in an ever-changing, hybrid world.

The shift to hybrid working provides a reset opportunity and there are some improvements that will help you make your leadership development investment more impactful going forward:

  • Revisit your leadership development approach regularly – now that we are in a hybrid world, tailor your approach to your new context and your strategic priorities. Measure progress and adopt an agile approach that keeps it simple and focuses on only a few priority areas at a time
  • Over-index on purpose, values and the human, empathetic elements of leadership – your employees need more meaningful communication and an increase in the level of emotional and personal support in a hybrid environment
  • Prioritize collaboration and compromise as central tenets of your leadership framework – the days of heroic individual leaders are long gone. Leadership needs to come together and zero in on what’s best for the organization and the people, rather than protecting their specific domain
  • Bring new capabilities to life on the job – set expectations and challenges, create a safe environment to experiment with new leadership ways outside of the development space

A refocus away from the traditional approaches will increase your chances of moving the needle on leadership significantly. In parallel, it’s important to make leadership development accessible to more than just an elite, senior group – take a youth development policy in order to build leadership as a strategic advantage over time.

Step 3: Create an aligned leadership ecosystem (BODY & SOUL)

One of the biggest complaints Harvard Business Review hears about executive education is that the skills and capabilities developed don’t get applied on the job. A note of warning: your leadership ecosystem will make or break your effort. This is the area that most organizations don’t realize they need to address. The most important step you can take to support consistent and effective leadership in action is to analyze how your culture and operating model are impacting your leadership practices and behaviors. Then you can align the critical levers to incentivize, rather than deter, the desired approach.

Additionally, all the development activities in the world won’t create the leadership you want ‘on the job’ unless your organizational ecosystem supports and rewards the desired leadership approach. The latest global research from Prophet’s Organization and Culture practice identified the fundamentals and accelerators for cultural change (e.g., ambition, roadmap, role modeling, decision making, incentives and rewards, mechanisms to experiment) and it’s important to address these to create the environment and the enablers that will embed the new leadership behaviors.

Releasing leaders from a development environment back into their day jobs without adaptive mechanisms and expecting them to change their behavior when all the rituals, processes and incentives encourage them to lead in the same way they always have done is a mistake. This instantly erodes all the value and effort of your investment in leadership development activity. Sadly, this is still all too common in organizations today.

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To summarize, tailoring your approach and aligning across these three dimensions will help you strengthen leadership and equip your organization to navigate through the unchartered waters ahead. The hybrid workplace is different and it demands leadership that is genuine, empathetic and cognizant of the world we live in; we call it human-centered leadership.

If you need help adapting leadership behaviors to excel in the new hybrid working world then reach out today.

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How Open Innovation is Driving the Next Era of Growth for Singapore

How the government is fostering a deep tech ecosystem, designed to encourage open innovation.

Something surprising happened amidst the gloom and doom in the early months of the Covid-19 crisis — companies began to come together to collaborate on an unprecedented level, putting the ability to create value before profits.

To fully reap the rewards from innovation, companies need to prepare for the transformational challenge ahead. Successful innovation often requires operational and structural changes to how business is done. Such changes are difficult for any employee, team or even business unit to undertake. Smart companies, however, will seize this opportunity to rethink their innovation infrastructure.

To reinforce this effort, the Singapore government launched various initiatives to support technology-focused start-ups – one of these initiatives is SGInnovate, a private organization wholly owned by the Singapore government to develop a deep tech ecosystem in the country.

Recently, Jacqueline Alexis Thng, partner at Prophet, and Dr. Lim Jui, CEO of SGInnovate, held a webinar to discuss the importance of open innovation for businesses today and share their predictions on what the future holds. Here, we share some of those key insights:

How is SGInnovate working to create an ecosystem where innovation can thrive?

Dr. Lim Jui: SGInnovate is facilitating the building of a deep tech ecosystem in Singapore by adopting a triple-helix approach that consists of considerations of investment, community building and talent.

On the investment front, SGInnovate is currently Singapore’s only deep tech career and skills development platform and this platform allows us the opportunity to notice and invest in deep tech companies at their earliest formation. To date, we have about 80 portfolio companies and have catalyzed over $700 million of follow-on investments.

On the talent front, we support the development of entrepreneurial scientists by partnering with institutions to enhance beneficial collaboration at the earliest stage. We also hold regular events to help entrepreneurial scientists connect with companies to raise awareness of their new technologies and then take these ideas further.

We hope to build a community that connects every party, including not only deep tech scientists, inventors and entrepreneurs, but also regulators, investors, vendors and manufacturers, helping them to push their innovation agenda.

Why is adopting an open innovation approach important?

Jacqueline Alexis Thng: Open innovation is a business model that incorporates traditional corporate capabilities with external talents and innovations. This business model challenges the traditional silo mentality where companies have conventionally upheld secrecy around R&D as a means to protect their assets. It not only allows for businesses to find new ways to solve pressing problems but through unlocking new relationships with partners with complementary skills, it also offers the potential for future collaboration.

“To fully reap the rewards from innovation, companies need to prepare for the transformational challenge ahead.”

Siemens, for instance, opened up its Additive Manufacturing Network to anyone needing help in medical device design. Similarly, Ford worked with the United Auto Workers, GE Healthcare and 3M to build ventilators. This recent burst of collaboration reminds us of the massive potential that open innovation brings, whether you’re in a crisis or not.

Dr. Lim Jui: These initiatives are often the tip of the iceberg. When it comes to innovation, the challenge faced by many companies in recent years has been the lack of knowledge, skills and best practice. Organizations such as SGInnovate thus help to foster these networks of collaboration through open innovation, building a community that involves an active free flow of ideas and best practices.

We encourage established companies to do what we call ‘reverse pitching’. While normally it is entrepreneurs who pitch to investors and companies for funds, at SGInnovate, we also encourage companies to review innovations from a different perceptive by inviting them to pitch to entrepreneurs.

Where is the future of innovation headed?

 Jacqueline Alexis Thng: Accelerated by COVID-19, digitalization and connectivity has become more essential than ever. We’ve seen a shift in consumer behaviors towards more personalized, contactless and immersive experiences enabled by digital technologies, from healthcare, e-commerce to entertainment.

To respond to these future trends, the Singapore government is said to invest SG$24 billion ($18.1 billion) over the next three years to help local businesses build “deep, future-ready” capabilities for innovation and transformation. They will also enhance programs to support innovation efforts especially in areas such as MedTech and food manufacturing that has seen growing demand across Asean members.

What are SGInnovate’s top two priorities for 2022?  

Dr. Lim Jui: Since our founding in 2017, we have been very invested in digital deep tech, which enabled us to be an early investor in areas such as AI, cybersecurity, transportation tech and so on. However, starting from last year, we moved more to digital health, acting as an advocate for areas in drugs, diagnostics and agri-food that don’t necessarily receive the attention they deserve from private companies.

1. Medicare

Medicare has always been a key focus for SGInnovate because of our ability to work closely with researchers and institutions at an early stage of innovation. With Covid-19, many previously under-addressed needs have been unearthed.

Telemedicine solutions, for instance, are gaining traction in SEA, as consumers now wish to meet their medical needs remotely due to their fear of the virus. The pandemic also exposed the fragile public healthcare system and the lack of healthcare professionals. As a result, there has been an increasing demand for telemedicine to fill this gap in healthcare.

For example, WhiteCoat, Singapore’s leading telemedicine platform for on-demand remote healthcare services, has been backed by SGInnovate to launch a mobile application that connects consumers to an extensive and curated network of medical practitioners and allied healthcare professionals for a best-in-class telehealth experience.

We expect the growth of digital healthcare solutions to continue to catch steam as Covid-19 has made the subject matter a top priority for consumers and institutions alike.

2. Agri-food

Agri-food tech is our spearhead to the sustainability space. We look at innovation in food as a means to tackle climate change because the methane impact from eating meat is resulting in such sizable carbon emissions. In Singapore, where we don’t have farms or livestock, our focus could be on things that we already know, such as how to manipulate certain wavelengths of light to accelerate plant growth.

Covid-19 has also greatly accelerated the growth of this industry. A silver lining of the pandemic is that we have successfully unified all research power in the fight against a common enemy, which gave birth to solutions like the vaccine we have today. In the same way, global scientific intelligence has also come together in the fight against climate change. That is why at SGInnovate, the ability to look externally and collaborate with global research power is an important strength we harbor to help drive innovation within this space.

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Open innovation is a more profitable way to innovate because it can reduce costs, accelerate time to market, increase differentiation in the market and create new revenue streams for the company. With COVID-19, businesses experienced an opportunity to innovate through the crisis and now it’s about how they can continue to fully embrace open innovation beyond. Companies must consider how they can make these altered ways of approaching innovation truly stick in order to unlock speed, creativity and business growth.

Are you interested in increasing your innovation capacity? Prophet’s Experience & Innovation experts can help you to underpin a superior approach to innovation. Get in touch here.

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Inclusion in the Workplace: Why it Matters and Ways to Improve

To prevail amidst new technologies, company leadership needs human judgment, empathy and inclusivity.

Growing up as an Asian American in a predominately white, Catholic community, I became used to being the “other” at an early age. I was the one that didn’t fit in, the one picked last for a gym activity, the one not invited to birthday parties.

In sixth grade, I remember being particularly excited because I was invited to a birthday party. However, this wasn’t just any birthday party, it was the party of a girl who was considered popular. “Did I finally make it? Had I finally been accepted?” When I arrived, to my dismay, the birthday activities in the garden required the birthday girl and her designated team captains to hand-select members for their teams. The goal of the birthday activity was to finish one or more tasks at different stations and each of the teams got to compete against each other. When I was finally the last one to be “picked”, I didn’t feel very picked at all. I wanted to run, hide and disappear. I didn’t want to go back to school. When my parents forced me to go back that Monday, my performance was negatively impacted because I was distracted by thoughts of self-doubt, humiliation and embarrassment. All I so desperately wanted was to fit in.

What might have been more inclusive, in this situation, was if the team members were thoughtfully pre-selected in advance of the party, with varying levels of athletic aptitude and experience. To create an equitable environment, intention is paramount. To me, it would have made a world of difference.

Fast forward almost 30 years, I’ve now worked in various leadership roles at over seven organizations, and I still see this happening. You see, the problem with not including others isn’t an intention issue, the problem is more of an invisible one. We all have had different experiences and learned habits that are both conscious and unconscious. There’s often the challenge of not acknowledging the issues and/or being unsure how to effectively surface the realities. It can be very difficult to know where to start and what to do.

“To create an equitable environment, intention is paramount.”

I believe a leader is defined by how he or she chooses to use responsibility, not by his or her title. Part of that responsibility is a business leader’s obligation to embed “inclusion” into the systems, processes, rituals and symbols of an organization. Inclusion increases employee engagement, belonging and helps create an environment where people can show up as their authentic selves.

When people have the psychological safety to fully express who they are, they do better work, they come up with better ideas, they work better together and cross-functionally. This ultimately drives improved business performance. For organizations to prevail in the future, company leadership will need human judgment, empathy and inclusivity to achieve their full potential amidst new technologies, increased demands and competition, constant changes in customer needs and the expectations to do this all faster and better.

At Prophet, we leverage our Human-Centered Transformation Model to do just this.

Four tips on how to embed inclusion at your firm and with your clients:

1. DNA represents the Purpose, Values, Brand, Strategy and EVP that should direct the organization. Each one of should work to support inclusion. Many organizations have started to weave diversity into their purpose statements, for instance. You might spend a lot of time and money on diversity, but if you don’t have the “inclusion” part right, that diversity goes out the door, literally.

2. MIND is about having the right skills, talent and capabilities to drive the change. To do this internally, ask yourself: Do we have the right set of diverse skills, gender and talent in our pursuit team? Do we have a good balance of shared experiences and perspectives on our account? We should be investing the same amount of time matching talent and skills with including people from various backgrounds, experiences and cultures. If you look at your organization’s talent strategy and notice in the data that there might be certain groups of people leaving the organization at a faster rate than others, you should ask yourself and your clients: Do they have the right tools and opportunities in place to be successful here? Have they been invited to have a voice and decision-making authority in visible ways?

3. BODY is the processes, systems and tools in place. As a seasoned management consultant, we get the opportunity and privilege to solve complex business problems including re-designing systems that don’t incorporate inclusion at the heart of it. For example, Prophet has created a change champion program as part of our strategy to revamp the culture of a tech client. As advisors to the organization’s top leadership, we ensured that our team was mindful and intentional about including representation not only from each global business unit but also from the organization’s employee geography, race, tenure and gender. We also set about improving performance management and career development processes ensuring that it is more than “what you do” but “how you do it” while also linking it back to the organizations’ DNA.

4. SOUL is the mindsets, beliefs, rituals and symbols that ignite motivation and belief. Inclusion efforts must show up in a company’s daily routines and rituals. Some steps are simple, such as using preferred gender pronouns in LinkedIn and Zoom handles and during introductions at internal and client meetings. Others take more thought and require questions like: How representative is the group pitching new business, for example, or meeting with vendors?

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Changes in language and behavior go a long way to normalize inclusivity. However, there isn’t a single definitive roadmap. Each company must find its way to inclusivity.

Prophet’s annual global research on culture transformation has shown that unless it’s powered by many different voices–with cross-collaboration among geographies, functions and diverse employees–it won’t be successful.

This isn’t just a relatively new discipline. It’s intersectional, complicated and ever-changing. Missteps are inevitable and cultural change is inherently complex. Inclusivity is an essential tool for any company that hopes to grow and succeed in the future.

Attracting and retaining today’s top talent requires organizations to be laser-focused on fostering an inclusive culture. Our Organization & Culture experts can help, get in touch.

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Driving Growth With a Purpose-Led ESG Strategy

Communicating where you stand is critical: Most Americans choose or avoid brands based on social issues.

Delivering “impact” has taken on extraordinary new meaning in the last two years. Across the world, consumers, employees, and other key stakeholders became focused on how brands deliver impact through ESG (Environmental, Social, Governance) practices with 2 in 3 consumers willing to pay more for products and services from brands that are committed to making a positive social impact. As a result, the challenge for brands has shifted from talking the talk to walking the walk.

It has become clear simply articulating and communicating purpose is not enough to drive meaningful value. Case in point: according to a global survey of 474 executives conducted by Harvard Business Review, 90% of executives said their organization understands the importance of purpose, but only 46% said it informs strategic and operational decisions.

To create value, we believe purpose must act as the North Star across the organization. At the epicenter of all activity, purpose has the power to drive business transformation including new business models, product and service design, employee engagement and more. Specifically, organizations that tie their ESG strategy to purpose—and thus, business and brand strategy—shift away from risk mitigation towards value-additive action better integrated with the business.

Today, ESG strategies are too often isolated from the business and either focused purely on hitting rating agency benchmarks or generating positive publicity. Using purpose to drive a linkage across the business, brand and ESG strategy prevents risks associated with virtue washing and ultimately drives competitive advance with differentiated value propositions.

How to Activate ESG to Create Value

So how does a company tie its ESG strategy to its purpose? First, it must build a statement of intent, defining specific plans to deliver its purpose to its community and society at large. For example, ING Bank demonstrates its purpose, “empower people to stay a step ahead in life and in business,” with a slightly more specific ESG strategy aimed at “helping customers and society stay a step ahead of the challenges they’re facing.” By honing its ESG strategy on the “challenges they’re facing,” ING is able to define how it fulfills its purpose in the communities it operates with.

“2 in 3 consumers willing to pay more for products and services from brands that are committed to making a positive social impact.”

While an ESG strategy states how the purpose will come to life, related impact areas allow the organization to focus on its activation efforts. An organization’s impact areas are thematic areas the organization will execute against to bring the ESG strategy to life.

To define these impact areas, organizations should consider four lenses while remaining focused and meaningful in their efforts and, without spreading themselves too thin. Impact areas must be:

1. Specific:

Do impact areas clearly align with the organization’s core business offers and enable necessary choices and tradeoffs? P&G manufactures thousands of products that consumers use in their everyday lives. Because the production, distribution, and waste of these products can contribute negatively to the effects of climate change, P&G has focused one impact area on packaging sustainability, committing to 100% recyclable or reusable packaging by 2030.

2. Ownable:

Do impact areas build from strengths and competencies the organization has today to ensure it can have a unique and material impact in the market? BlackRock’s purpose is to “help more people experience financial well-being,” resulting in an embedded focus on long-term financial sustainability across the business. In pursuing this focus, Blackrock saw an opportunity to focus on impact, setting out to build a new platform to invest in mission-oriented businesses. In 2019, the new platform launched, leveraging existing scale and expertise to strengthen Blackrock’s position while bolstering its intention to make a long-term impact.

3. Applicable:

Are the impact areas appealing and applicable to the organization’s colleagues, customers and communities? The aviation industry accounts for roughly 2% of global carbon dioxide emissions. Delta Air Lines’ carbon footprint is its largest environmental impact, with 98% of emissions coming from its aircraft. In 2020, Delta focused on carbon neutrality, with the goal of becoming the first carbon-neutral airline globally.

4. Measurable:

Are the impact areas conducive to being objectively measured? ABInBev, the world’s largest brewer, embarked on a goal to ensure 100% of its communities in high-stress areas have measurably improved water availability and quality by 2025. Within its breweries, teams leverage internal systems to monitor water use on a routine basis and develop bespoke tools to review operations on a quarterly basis.

“We aim to lead a corporate shift toward measurability and accountability, ensuring that our local investments and programs translate into lasting impacts on water quality and availability for our communities and our operations around the world,” states ABInBev’s stewardship campaign.

Making an Impact in All Directions

The need to connect ESG to purpose has never been more urgent. In 2020, almost 60% of Americans said they would “choose, avoid, or boycott a brand based on its stand on societal issues,” compared to only 47% in 2017. And more than half (53%) of consumers who are disappointed with a brand’s words or actions on a social issue complain about it.

Companies that build their ESG strategies and related impact areas to deliver on their purpose will create memorable, human-centered experiences that allow customers, employees, and other stakeholders to grasp the power of the organization’s efforts. Capturing impact through signature stories creates memorable, human-centered stories for customers, employees and other stakeholders to grab onto as examples of the impact of your ESG impact areas.

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We are all learning how to move forward together, and business leaders are no exception. The challenges of tomorrow have arrived, and the world is eager to witness how companies respond. Any brand can tell a story about how they plan to make a difference. However, the most relentlessly relevant brands are those that put words into action.

Contact us to learn more about how to create a purpose-led ESG strategy that drives growth for your organization.

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In the Spotlight: KEYLENS, the Latest Addition to the Prophet Family

This new acquisition deepens Prophet’s strength in transformation, digitalization and efficiency.

Why did combining the forces of Prophet and KEYLENS make sense right now? KEYLENS owners Dr. Jörg Meurer and Dr. Stephan Schusser, and Prophet’s EMEA Regional Lead and Senior Partner,  Tobias Bärschneider, discuss the opportunities for collaboration, human values and why both consulting firms complement each other so well. 

What excited you most about the potential of Prophet and KEYLENS working together and why now?

Dr. Jörg Meurer: Our company had gotten to a size that made us think about the next step, which actually reminds me of crossing a stream in the mountains. For that, you always need the next stone to get to the other bank. We needed a stone for the topic of digitization, one for the topic of data analytics and one for internationalization. Prophet offered us these stones. Prophet’s solid value proposition and our ambitions go hand-in-hand. With our two firms having been on similar journeys, from our beginnings in branding, and aligned in our human-centric approach to growth and transformation, these synergies and shared philosophies made the decision easy. We now have the opportunity to scale on a national as well as an international level. I’m thrilled to be working with, and learning from, new colleagues across the globe.

Dr. Stephan Schusser: We view our clients as true partners. We don’t want to ‘just’ advise companies, we want to collaborate to develop transformational strategies and solutions to help them achieve their business objectives and build resilience focused on the market and their customers. Prophet thinks and works as we do at KEYLENS, where ‘human-first’ leads the way, finding ways to deliver value in new ways for employees and clients.

“With our two firms having been on similar journeys, from our beginnings in branding, and aligned in our human-centric approach to growth and transformation, these synergies and shared philosophies made the decision easy.”

Tobias Bärschneider: The KEYLENS team is a passionate group of people led by two exceptional leaders in Jörg and Stephan. Their expertise in strategy, analytics and digital marketing will strengthen our competencies and enable us to be true ‘end-to-end partners’ for our clients. This is a truly exciting new growth chapter for Prophet in Europe and I am delighted that we are joining forces and embarking on this together, deepening our ever-growing multidisciplinary and multicultural firm.

As a consultancy that has largely been servicing SME companies, which industries have KEYLENS been specializing in?

Dr. Stephan Schusser: We have built up special expertise in four industries: luxury, tourism, retail and construction supply and our clients value our thought leadership and insights in these dedicated areas. Over the years, we have created knowledge-sharing programs and networking platforms to bring senior executives together and discuss the opportunities and challenges faced around pressing topics such as sales of the future, service concepts and digital transformation. With these formats and our strategy work, we create reports and studies informed by our close relationships with key market players and business leaders. These concepts are something we’re excited to extend to new industries in which Prophet operates and looks to scale nationally and internationally.

How are you managing and supporting employees through this change?

Dr. Jörg Meurer: There is no question that our employees are excited and will benefit from further learning and development opportunities. Stephan and I have invested a lot in our culture and team building over the past ten years. It is something that is very important to us. We have an above-average retention rate and also a diverse team. We’re thrilled that Prophet similarly invests in its culture in the same way. Change starts with our people; their needs are considered in every decision and are at the center of our change strategy. And that is now the focus of the next steps. We will bring the teams together, get to know each other and define the way forward together. We’re looking forward to what’s coming and firmly believe in our joint success with Prophet.

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The interview was conducted by Andreas Nölting

www.noeltingmedia.com

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What’s next?

We believe that with KEYLENS joining the Prophet family, we can both build on highly complementary access to relevant client segments, a team with strong capabilities that is a great fit with our team in EMEA and overall very similar business philosophies. We’re excited to now shift our attention to jointly working on a smooth integration process that brings the best of both companies to the forefront.

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