Addressing the ESG Gap: Reconciling ESG Performance and Perceptions

Identify and address gaps in ESG performance and customer perceptions.

ESG is not just a feel-good initiative – it is a vital part of business and employee engagement strategies that drive growth in a world that increasingly needs businesses to address pressing global challenges.  

Companies face pressure from multiple stakeholders to be more socially and environmentally responsible while being transparent about that progress. While there is a continued push by consumers and employees, regulators and investors are also pushing harder for ESG. The EU now requires companies to publish reports on the social and environmental risks they face (with the US not too far behind). 

As a result, businesses have begun to invest more seriously in delivering against their ESG ambition and targets – aiming to create a tangible impact. But as the ESG focus strengthens, there is often a gap – between how companies perform on ESG, and what customers perceive of a company’s ESG strategy. 

Evaluating the ESG Gap 

The ESG performance vs. ESG perceptions gap is based on two questions: 1) How well is my company performing on ESG? and 2) How do customers perceive we’re doing on ESG?  

The glaring discrepancy between these two questions has fueled the rise of “greenwashing” or “purpose washing” accusations against some companies, while the reconciliation of this gap has generated growth by leaning into customer preferences. As a result, it’s urgent that companies understand and evaluate their gap to maximize their ESG impact and tap into new opportunities. 

Note: Dots represent industries and companies included in the Prophet analysis.

Figure 1: ESG Performance vs. Perceptions example

ESG Performance 

In addition to companies’ internal reporting, a wave of third-party ESG metrics and ratings (e.g., MSCI, S&P ESG Scores) have emerged. These scores measure how well a company addresses and manages risks in the areas of environmental, social, and governance. As a result, ESG scores should provide an unbiased, comparable view of a company’s ESG exposure to guide investors. 

While these metrics aren’t perfect – they often leverage incomplete data and standard measurement processes have yet to be implemented – they provide much-needed visibility to external stakeholders and comparability across companies and industries. 

ESG Perceptions 

ESG performance scores measure what a company is doing across ESG initiatives – it’s another effort to be recognized and rewarded for that investment by consumers.  

While many factors affect brand perception, companies are starting to integrate customers’ ESG perceptions into their analysis as ESG becomes a purchase influencer. For example, products making ESG-related claims averaged 28% cumulative growth over the past five-year period, versus 20% for products that made no such claims. Companies can look at data (like the Prophet Brand Relevance Index ®) to better understand what consumers think of their brands. 

Using performance scores and customer perceptions of ESG, companies can start to understand if they are successfully communicating how their ESG agenda translates to additional value. Alternatively, these metrics can help companies determine if their words are ahead of their actions and if they are at risk of greenwashing or virtue signaling.  

The Framework 

By identifying the gap, companies can diagnose where they are in their ESG journey and the next steps for progress: Are they slow to adopt ESG and need to integrate it into all functions? Are they perceived by customers to be performing well on ESG but not living up to it? Do they have robust ESG programs but aren’t publicly recognized for them? Or are they ESG leaders? 

To better illustrate the gap, we mapped customer perceptions and ESG performance scores, identifying four quadrants that companies may occupy. We will take a closer look at the automotive and retail industries, both of which have organizations that occupy all quadrants. 

Overall, one theme emerges: Companies need to do better on ESG, both in establishing and executing ESG commitments and initiatives and sharing that progress openly with stakeholders. 

Figure 2: ESG Performance vs Perceptions: Automotive Industry

Figure 3: ESG Performance vs Perceptions: Retail Industry

Leaders (HIGH Performance/HIGH Perceptions) 

What this means: Companies here are both performing well on customer perceptions and ESG performance scores. Some of them have found strong alignment between elements of ESG and their businesses. Others have leveraged an element of their business (a product or a component) to build credibility with consumers around an area of ESG (e.g., using recycled or renewable materials in a new product). Overall, these companies are born out of purpose, intertwining their ESG strategies with business strategies. 

Who we’re seeing in this space: This is an aspirational quadrant not characterized by any one industry. The few inhabitants often represent the best of their category, having typically established ESG precedents for their industries.  

For retail (see figure 3), Adidas, Sephora, Etsy, and Athleta live here. Sephora is known for integrating DE&I thinking not only into its internal culture and employee operations but is also committed to ensuring that its products are sourced from diverse businesses. It was the first retailer to dedicate at least 15% of shelf space to Black-owned brands and commissioned the first-ever large-scale study on Racial Bias in Retail to improve the shopper experience.  

What to do if you’re here: Continue to make sustainable and socially responsible products, services, and investments in ESG. By seeking industry collaboration, companies can bring others along on the journey and strengthen the category. But while it’s great to have established leadership, companies here will need to be vigilant and make their leadership positions defensible. Other companies will see the benefit of being known as strong ESG performers and will strive to replace the current leader. 

At Risk (LOW Performance/HIGH Perceptions) 

What this means: This quadrant is characterized by high customer perceptions of ESG in contrast to low performance on ESG. ESG may be well integrated into the brand story through messaging, but there hasn’t been strong progress in delivering on that narrative.  

Some are purpose-native companies that made ESG a core part of their brands, benefitting from the halo effect from their origin story, despite being unable to enact a robust ESG strategy as they scale. Other companies include strong consumer brands with ESG-friendly elements, but company performance on ESG doesn’t match.  

As a result, companies here are at risk of being labeled as “greenwashing” or “virtue signaling” if customers realize the company’s ESG initiatives amount to statements with little evidence to back them. 

Who we’re seeing in this space: Some companies may be unable to scale their ESG performance to align with their words. For example, Tesla (see figure 2), nearly synonymous with EVs as the pioneer in the space, was born out of the purpose to accelerate the world’s transition to sustainable, clean energy. However, despite this clear mission, the company has struggled to make strides in other facets of ESG – Tesla was removed from the S&P 500 ESG Index because of issues of racial discrimination within its workplace. Its CEO is famously outspoken for his anti-ESG rhetoric

What to do if you’re here: Assess where to improve or build strategies to deliver on ESG promises and customer expectations. Commit to bold moves against top risks to show progress and authenticity.  

To avoid widening the gap, companies should evaluate the validity of any explicit ESG claims in their messaging to ensure that they are staying true to their statements. ESG performance should be prioritized over ESG perception building. 

Invisible Innovators (HIGH Performance/LOW Perceptions) 

What this means: Companies here are performing well on ESG but aren’t recognized for their progress by consumers. This could stem from 1) not communicating ESG strategies to external stakeholders, 2) not coordinating ESG excellence with brand and marketing, or 3) believing that their customers might not prioritize ESG when they search for and purchase products. Some companies, like a QSR or CPG food company, might even be plagued by category stigma developed over years of a tarnished reputation. 

We also see more consumer awareness of social and environmental efforts in lifestyle, fashion and entertainment categories – consumer-facing brands that play prevalent roles in culture and identity – rather than functional brands in the appliance and food categories. ESG expectations will also vary by the category of the issue. For example, some customers may think a transportation company should prioritize environmental issues over social issues.  

In figure 1, we see a relationship between low ESG performance scores and low ESG data availability – illustrating that without robust data sets for third-party ratings, companies’ ESG scores will ultimately be hurt.  

Who we’re seeing in this space: When we look at the rest of the automotive industry (see figure 2), there is an intriguing contrast with Tesla. There is a cluster of auto companies including Volkswagen, Mazda and BMW that have higher ESG performance scores but lower customer perceptions of ESG. This illustrates the necessity of not only delivering on ESG ambitions but communicating them well.  

For example, BMW established clear goals such as reducing CO2 emissions by over 40% by 2030 and meeting climate neutrality no later than 2050. Additionally, the company aims to have 10 million fully electric vehicles on the roads by 2030, with all vehicles able to be fully recovered and reused for circularity. However, BMW’s lower customer perception of ESG illustrates that customers don’t know what BMW is doing to leave a positive impact on the environment, potentially leaving environmentally conscious consumers out of reach. 

What to do if you’re here: Companies should build connectivity between their ESG and brand narratives for a cohesive story that touches all stakeholders. They should also start sharing their ESG data more openly to socialize their performance. If their brand is rooted in ESG, then they should follow up with the numbers to support it. 

Companies should increase collaboration between the Chief Marketing Officer and the Chief Sustainability Officer. Shine a bright light on the elements of ESG that consumers care about. If companies don’t know if or what they care about, they need to find out.  

Laggards (LOW Performance/LOW Perceptions) 

What this means: Companies here are underperforming on ESG and are perceived poorly by customers with respect to ESG. This may mean that these companies still see ESG as a siloed function (like Corporate Social Responsibility) in the business. Companies here may also be in an industry where no player is focused on delivering against ESG. Or the company is lagging, relative to its more ESG-progressive peers.  

As a result, there is ample opportunity to establish a strong foundation for growth in all areas of ESG. 

Who we’re seeing in this space: Typically, larger, legacy companies – especially those whose businesses seem foundationally at odds with ESG – may run into these ESG challenges because they are slower to adapt. For example, the apparel and fashion industry (see figure 3) – which is responsible for 10% of human-caused greenhouse gas emissions and 20% of global wastewater – is now scrambling to reduce its environmental impact against the backdrop of the harsh effects of climate change.  

Macy’s is one of the country’s most storied department stores, founded over 150 years ago. As the store looks to set itself up to rectify years of flagging sales, it has turned to ESG to fuel its future. In 2022, Macy’s announced that it will spend $5 billion by 2025 on three pillars of social purpose – people, communities, and the planet – to help shape a more equitable and sustainable future. Legacy companies like this are now realizing that success in the future is tied to meeting the needs of customers and employees, who want the organizations they purchase from and work for to be socially responsible. 

What to do if you’re here: Look for quick wins to establish a foundation for ESG. Try to move performance first, but also evaluate the need to shift perceptions. Start sharing ESG data more openly to socialize ESG performance with stakeholders, emphasizing a commitment to accountability. 

Set an ESG ambition and agenda to identify the next steps to start delivering on their goals. A transformation plan can help outline how a company must change for this new chapter of growth. Additionally, join industry or issue-based coalitions to build understanding, commitments, and relationships. 


ESG PERFORMANCE SCORES: In our analysis, we used 2022 S&P ESG scores to identify companies’ performance on ESG. Unlike ESG datasets that rely simply on publicly available information, S&P Global ESG Scores are informed by a combination of verified company disclosures, media and stakeholder analysis, and in-depth company engagement via the S&P Global Corporate Sustainability Assessment (CSA).  

CUSTOMER PERCEPTIONS OF ESG: To determine customer perceptions of companies’ ESG performance, we leveraged our 2022 Prophet Brand Relevance Index ® (BRI) data. The BRI measures brand relevance – relevance encompasses all the elements required for a strong brand and healthy bottom line, including high demand, strong appeal and products and services that add value to a consumer’s life. 

Prophet asked more than 13,500 consumers in the U.S. about the brands that matter most in their lives today. We measure their relationship to 293 brands in 27 categories, looking closely at 16 attributes. 


Whether you believe ESG is strategic to your company’s growth or that your customers are prioritizing ESG in their purchases, it is vital to recognize and address any ESG performance and customer perceptions gap. Otherwise, your company may miss opportunities to connect with ESG-minded customers.  

The first step to addressing your ESG performance vs. perceptions gap is understanding where your company is today. Once you’ve defined that, the steps we’ve outlined will help guide you toward ESG leadership.

This article is a part of our ESG Performance vs. ESG Perceptions series analyzing the gap between what a company does and what its customers think it does on ESG. Stay tuned for our next analysis featuring our new 2023 BRI data! 


How ASUS is Building Leadership in Sustainable Technology: A Conversation with TS Wu

ASUS’s Chief Sustainability Officer shares how the brand’s “Engineering Spirit” shapes its ESG strategy.

In the face of increasingly complex compliance requirements and growing economic turbulence, a robust ESG strategy has become indispensable for a company’s growth. While today’s corporations often operate in structured and specialized siloes, a successful ESG strategy requires heightened collaboration across all stakeholders in order to find solutions to complex challenges. In our work, we found that companies prioritizing ESG initiatives often excel at identifying innovative solutions to unlock growth opportunities. 

Global technology brand ASUS has long been an industry leader in ESG strategies and sustainable growth. In 2021, ASUS furthered its efforts by launching the “2025 Sustainability Goals,” committing to 100% renewable energy usage by 2035. As part of this initiative, ASUS worked with Prophet to deepen its ESG strategy and narrative. In January 2023, ASUS released its new ESG slogan at CES – “Sustaining an Incredible Future.” 

Cecilia Huang, a partner at Prophet, sat down with TS Wu, chief sustainability officer of ASUS Group, to discuss how ASUS imbues a strong purpose and ESG strategy into its organizational culture to drive uncommon growth. 

CH: In recent years, the technology industry emphasizes more sustainable growth while confronting various challenges, such as compliance requirements and market shifts. What measures has ASUS taken to overcome these challenges as well as elevate its ESG strategy? 

TW: I have seen in the past few years that societal topics such as environmental protection have become increasingly mainstream, and ESG strategies and organizational resilience are more valued. However, there are still many challenges that businesses need to identify and solve urgently. Externally, meeting compliance standards and consumer demands to remain competitive requires rapid iteration; internally, organizations face issues such as talent retention, innovation, brand building, and profitability. 

In order to meet these challenges and effectively integrate ESG, ASUS has implemented three major initiatives: 

  1. First, from “maximizing the interests of stockholders” to “maximizing the value for stakeholders”: In the past, ASUS focused on maximizing stockholder value. But now, we recognize that for a business to achieve long-term success, it must meet the expectations of all stakeholders.  
  2. Second, from “emphasizing technology” to “emphasizing purpose”: The guidance of organizational culture is crucial. Chairman Jonney Shih has always insisted on promoting ASUS’ “authentic and pragmatic” culture internally. He once shared the book, The Heart of Business by Hubert Joly, former CEO at Best Buy, which advocates for leadership and business that starts from the heart. Such a culture allows ASUS employees to focus less on external awards and recognition and more on the original intent and vision of the company. We have been following this philosophy to garner enthusiasm towards ESG, building our strategy from the inside out. 
  3. Third, from “passively avoiding risks” to “actively achieving sustainable growth”: In the past, our focus for ESG has been on risk reduction and legal compliance. Now we are going a step further, with an eye on brand growth and adapting to the future. We’re working to proactively create shared value through the development of ESG strategies that promote sustainable growth. 

CH: When did ASUS’s commitment to ESG begin? What experiences can you share from what ASUS has learned over the years? 

TW: ASUS has undergone six stages towards developing our ESG strategy.  Starting in 2002 the seeds of ESG were planted at ASUS. Customers began paying more attention to product sustainability. We set up Green ASUS under the Quality Assurance Center to meet the demands of the market and our customers. Subsequently, in 2008, ASUS established the ASUS Foundation to invest more actively in social impact programs in order to improve our corporate image and reputation. 

The turning point was in 2010 when ASUS transitioned from passive involvement into active efforts. We proposed standards for ourselves that were higher than industry regulations and sought to bring more environmentally friendly products to customers, with the aim of gaining a greater competitive advantage and penetrating a broader international market. In 2016, we went a step further and embedded sustainability as a parameter in product design, process transformation, organizational design, supply chain management and other processes, formally incorporating ESG into our strategy. 

Now, based on the existing foundation and achievements, we are exploring how ESG can become an important pillar of our company’s future strategic growth. 

After undergoing the six stages of ESG transformation, we understand how to deal with various challenges and recognize the importance of making ESG a core strategy on its own. By setting up a dedicated department and adding the role of chief sustainability officer, we’ve created a culture that allows different departments across the company to understand the importance of ESG, enables experts to help advise on and implement initiatives, and deeply roots ESG within ASUS. 

CH: You mentioned that ASUS’s leadership places great importance on the original intent of the company. What role do they play in driving ESG across the organization? 

TW: I believe the role of leaders in the early stages of ESG development is far greater than in the later stages. Leaders can guide the organization early on and ensure its implementation is not just a superficial branding project. 

At ASUS, our chairman and CEO both lead by example, personally participating in the ESG committee to discuss ASUS’s sustainable business strategy and philosophy. Employees understand that the leadership greatly values ESG Therefore, each department incorporates ESG accordingly and soon sees the benefits of ESG in building the business, thus forming a positive feedback loop. 

Different departments will invite the sustainability team to participate in their strategic planning with the hope that the success of new products will not only come from new functionalities but also from the sustainable features in product design. To us, this signifies real change. 

CH: ASUS’s “Engineering Spirit” is unique. How does it relate to ESG initiatives? How do the two influence each other? 

TW: “Engineering Spirit” is the DNA of ASUS’s organizational culture, and our ESG strategy is connected to it in two ways. 

The first is data-based measurement and technology-centric management. This means that the benefits of sustainability-related actions can be evaluated and managed through quantifiable indicators. Taking environmental profit and loss assessment as an example, ASUS quantifies the air pollution, water pollution, greenhouse gas, and waste pollution generated throughout the process of laptop computer production. This allows us to understand the environmental impact of suppliers in each segment of the value chain and helps us optimize resource allocation. In addition, this initiative allows us to clearly convey to stakeholders ASUS’s emphasis on sustainable growth and the value it brings to society through real and visible figures. 

The second is design thinking. In this realm, we pursue the concept of “beautiful, practical, and environmentally friendly,” and incorporate products’ design, weight, thinness, and ESG dimensions into product parameters. We resolve conflicts through technology and design thinking to find the optimal solution. 

As a result, the focus on sustainability has permeated ASUS’s product design, process design, organizational design, and supply chain management. Its importance is highly valued at each stage of the process. 

CH: Lastly, in terms of organizational management, how should companies build a better future through improved organizational processes, values, and talent development? 

TW: I believe a shift in strategic and operational thinking is key. While competition is inevitable, a change in mentality is essential. Organizations in the past emphasized the division of labor and efficiency, but ESG-led organizations emphasize collaboration and connection. Therefore, ASUS’s ESG department plays the role of a facilitator and guide across the organization, rather than a commander. We never require other departments to replicate successful cases. Instead, we use them as experience sharing and a knowledge base, so that each team can reasonably choose resources and invest pragmatically based on real business conditions, ultimately promoting sustainable growth across the company. Externally, ASUS also cooperates with other technology companies to launch a Climate Partnership, with the goal of working jointly on issues that cannot be solved by a single company. 

Furthermore, talent is indispensable to ESG.  We do two things to cultivate our talent development. First, we encourage independent innovation. In our organizational design, ASUS gives individuals greater autonomy to foster innovation. Second, we cultivate interdisciplinary talent. We believe that it is very important to develop employees that can coordinate and integrate different domains, especially for ESG-oriented organizations. As an organization, we are committed to shaping our employees from specialists into generalists, connecting fragmented knowledge and creating higher value. 

Finally, establishing values is very important. To quote our chairman: “Long-term profitability is the standard by which the market measures the success of a company. What truly outstanding companies have in common is that they have a clear business philosophy and consistent values, and they know how to communicate with key stakeholders. When an organization can think deeply, redefine the role of sustainability, and use its unique core capabilities to meet the needs of the environment and society, the performance of the company will be even more outstanding.” 


As shown in our conversation with TS Wu, the key to driving a successful ESG strategy to realize transformational growth lies not only in technological innovation and brand story but also in holistic planning across multiple strategic dimensions, including brand purpose, organizational management and collaboration. 

For business leaders, the starting point is to ensure the right mindset that focuses on creating value for all shareholders, building a purposeful business and actively driving sustainable growth. It is important to take a long-term view to transform the organization and culture with a strong purpose. If done right, an ESG-led strategy can align the company and become the central force for unleashing uncommon, sustainable growth. 

Prophet brings its strengths in consumer understanding, business model design, reimagining brands and experiences, and change readiness to help companies take the next step. Contact us to discuss how to build a growth-oriented ESG strategy. 


2022 Corporate Earnings: Where Do We Go From Here?

Understanding the key drivers of growth and strategies to move forward.

Corporate earnings this season are particularly unique. A global recession, the war in Ukraine, and a virus that is still disrupting normal life are among the many factors affecting businesses small and large, resulting in the first quarterly earnings decline since the onset of the COVID-19 pandemic. 

Leaders are navigating difficult waters as they are tasked with facing the swirl of the macro-economic environment, moving forward from layoffs and identifying new growth opportunities — all whilst budgets are being slashed across industries. Despite this, there are many positive signals stemming from the recent earnings as many leaders are optimistic about a return to normalcy in 2023. 

Prophet looked at close to 100 quarterly earnings results, across varying global industries and sectors, to understand the key drivers of growth, headwinds facing leaders and strategies to move forward in 2023. Here are our learnings on what earnings season could mean as we try to regain balance, agility and growth acceleration in arguably the least predictable time in recent history. 

Top Learnings From This Remarkable Earnings Season

1. No industry or organization was shielded from the impact of a sour macroeconomic and geopolitical environment, with many reactively cutting costs to preserve margins. 

This is a lackluster earnings cycle for most, with “headwinds” as the key buzzword and an average -22% earnings-per-share decline from Q4 2021. In 2022, businesses optimized for pandemic-fueled growth were forced to adjust to a down-market driven by global inflation, foreign exchange fluctuations, COVID lockdowns in China and additional supply chain disruptions.  

As a result, leaders became laser-focused on cutting costs, managing risk and re-evaluating their business model. Banks, for example, are stowing away billions of dollars to protect against rising loan defaults; Harris Simmons, chief executive officer at Zion Bancorporation commented, “We continued to build our loss reserves due to both continued loan growth and the prospect of a slowing or recessionary economic environment in coming months.” Investors are bullish that inflation will slow in 2023, but businesses are managing risk and going lean to prepare for continued pressure. 

2. Despite a harrowing cry that “2023 will be a year of optimization and efficiency”, businesses are sharply committed to returning to growth in 2023. 

While headlines have focused on streamlining costs, the real takeaway from this earnings cycle is what leaders are laser-focused on: improving top-line growth. Many executives highlighted strategies to remain relevant and stay ahead of the competition, such as improving product quality, bringing new offerings to market and investing in customer experience. 

Consumer packaged goods are one of the many industries where executives are investing more in sales and marketing tactics to improve competitive positioning, enhance product superiority, and ensure price increases stick. For example, Mike Hsu, chief executive officer at Kimberly-Clark attributed organic growth in the quarter to “improving our product offering and market positions,” and plans to increase the investment in advertising to “grow the category for the long term”. 

Those who have already been executing these strategies saw unprecedented levels of revenue and customer growth in 2022 — even in a recessionary environment. In fact, Prophet found an 8% average year-over-year growth in revenue for the quarter that ended in December 2022. 

3. Executives are using this downturn as an impetus for transforming their business and reinventing their brand. 

The data is in. Similar to what we saw coming out of the COVID-19 downturn, executives across industries are moving from reactive adaptation to proactive transformation. 2023 has become a fertile breeding ground for brands seeking to drive sustainable, purposeful, and transformative growth. Noel Wallace, chief executive officer at Colgate-Palmolive described how they are betting big on digital transformation as they have now “shifted [their] resources to deliver more breakthrough and transformational innovation” and are confident that, “despite macroeconomic conditions worldwide, we are executing against the right strategy and are well-positioned to deliver sustainable, profitable growth in 2023 and beyond.”  

In healthcare, Eli Lilly & Company is calling 2023 an “inflection point” and “a chance to expand our impact on patients and growth potential as an R&D-driven biopharma company,” and in tech, Amazon is “working really hard to streamline our costs [without] giving up on the long-term strategic investments that we believe can change Amazon over the long term.” While budgets are being slashed, executives are exceptionally clear on the need to preserve investments in firm-wide transformation. 

4. Commitments to environmental, social and governance (ESG) strategies are even more paramount in 2023. 

Pandemic-born ESG strategies were reinforced this earnings season despite a tough macroeconomic climate. Many leaders dedicated time to showing investors how they are measuring up on ESG metrics, such as decarbonization, and activating their investments in the market through new products, solutions and partnerships.  

This is especially relevant given the heightened investment from governments and the private sector in decarbonization, which has the potential to catalyze a mini-boom cycle in the “green” economy. To that end, the industrial sector was particularly vocal on the need to meet “growing customer demand for innovative and more sustainable solutions” (Dow) and “accelerate our transition to a low carbon green economy” (Trane Technologies.) It is clear that economic distress is not enough to dissuade businesses from the imperative of implementing an ESG strategy, especially as consumers are ever more watchful

5. People and teams are imperative to the 2023 turnaround as leaders articulated the importance of building a strong employer brand. 

Layoffs are an unfortunate outcome when growth reverses, such as when the pandemic growth bubble popped in 2022. However, executives are now focusing on the path forward as they highlighted strategies to strengthen their core business, better align operating models to their go-to-market strategy and empower remaining employees. Donald Macpherson, chief executive officer at Grainger commented on the need to “strengthen our purpose-driven culture by ensuring Grainger is a place where our team members can be their true selves and have a fulfilling career”, while Bill Rogers, chief executive officer at Truist pointed to leveraging “our increased capacity, expanded capabilities and talented teammates to actualize our purpose.” 


This is a difficult time for businesses, employees, shareholders, consumers and society alike. Strategies employed in 2022 to protect margins — such as hiking prices or corporate layoffs — are not going to cut it in the long term. Brands are scaling back investments and cutting costs. However, corporate leaders will see this as an opportunity to take advantage of this moment in time to double down in their growth strategies by optimizing their organizational structure, prioritizing brand and demand marketing investments, bringing a strong employer brand to market, and continuing to consider ESG as core to their strategy all while remaining truly customer-obsessed. 


The New Science of Demand: Digital Transformation and Consumer Engagement

Critical steps to accurately forecast consumer demand during turbulent times.

Earlier this year, Target Corporation lost nearly 25% of its $100B market capitalization following a disappointing earnings report. A few weeks later, the stock fell again as the company announced that it would be reducing prices due to rapidly increasing inventories. Walmart, a retailer four times larger than Target, lost 20% of its value over the same period claiming changing consumer behaviors and continued supply chain challenges were responsible. Shockwaves spread across the retail landscape as markets scrambled to process the impact of underlying trends. This may have you wondering: “In a world spinning with constant news of inflation, spiking energy costs and supply-side woes, why would deflationary trends like ramping inventories be hitting some of the world’s largest businesses?”  

If your business is consumer products, many challenges of the pandemic era have become abundantly clear: hiccups at the top of the supply chain due to lockdowns, shortages in shipping containers and port infrastructure, a massive transition from consumption of services to goods and housing and breaking news every week are impacting all these factors as they shift and churn. While understanding how all these dynamic inputs impact your bottom line might seem like an impossible machine, they all boil down to one core concept: forecasting consumer demand.  

Whatever the incarnation, be it sales operations, inventory, or revenue management, it is someone’s job to predict future demand as input to a variety of investment and staffing decisions. It can be done terribly, as a trendline of historic quarterly sales with a seasonal adjustment applied—an approach completely unable to respond to a shifting macro environment. It can also be done incredibly well, with dynamic tools in the hands of multiple stakeholders sitting on real-time data that responds to the slightest change in consumer preference, sentiment or spending power.  

Below, we outline three key elements to building successful demand forecasts that will keep the pulse of consumer engagement no matter how unpredictable the world can be.  

1. Look to First Party Digital Data for an Accurate View of Individual Customer Behaviors Over Time 

The first thing to note: Organizations need to use web and/or app engagement data as the foundation, ideally first-party data blended with media exposure and eCRM for a more holistic view across the customer lifecycle. These data types are most critical and valuable due to their real-time nature and reflection of active shopping behavior. After all, if a consumer is no longer interested in buying a product from you, they won’t be visiting your website to read about it. This is the signal you want. It is also important to have data tracked via a robust web analytics platform (such as Google Analytics or Adobe Analytics) collected via a logged-in state or a first-party cookie. This will enable consistent visibility into the same consumer’s behavior over multiple visits, especially if your products have a longer consideration cycle.  

Additionally, having a good tagging strategy and metadata is critical. Organizations will want data scientists to mine the data to understand exactly what users were engaging with at each stop across digital properties. One of the big mistakes we’ve seen among companies who use digital data for demand prediction today is that they look at all the behaviors on aggregate, which can mask a dip or rise in demand behind outlier behaviors. Organizations’ goal should be to predict the demand for each individual and then aggregate demand at the other end. Otherwise, they risk forecasting inordinate demand for a single consumer or household.  

Also, strive to migrate complex engagement data (“log-level” data) into a flexible big-data environment. This should be done so that data science models and business applications can be easily built on top of it. A good example of this would be the big-data warehousing products within any of the ‘big three’ cloud providers (AWS, GCP and Azure).  

While it might sound like a lot, most mid-to-large-sized organizations already have most of the key elements in place and will simply require a few small pieces to complete the puzzle. Building the infrastructure can take as little as three weeks or as long as three months, depending upon the current maturity and toolkit. But the value is there: Many companies who accurately predicted the Covid-19 demand shock and subsequent demand spike did so by getting real-time signals from individual consumers based on changing digital engagement with their brands and products.  

2. Empower Data Scientists and Engineers to Design and Automate New Demand Models—but Don’t Sleep on Strategy.  

Another lesson every business has learned over the past decade is that all the data in the world is worth nothing if you don’t know how to use it. A small, dedicated task force of data scientists, engineers and at least one strategist is ideal for building this capability.  

The strategist role is critical for developing any sort of data science application, akin to a product manager but with more specialized skills to serve as a subject-matter expert on digital data and sources. This person acts as a steward of the business to ensure data scientists and engineers have the appropriate context in designing their analysis and setting up the infrastructure to support it. “Demand” as a concept isn’t one-size-fits-all. Multiple ideas and approaches need to be evaluated and prioritized over the course of the project. With that in mind, the strategist also acts as a liaison to the stakeholder teams when decisions need to be made regarding proxy measures, model outputs and historical techniques for comparison.  

Data scientists ensure the data is organized to interpret cause and effect, that the model is as accurate as possible, and that the output is responsive to new information entering the ecosystem. If they’re working in a cloud environment, they will have access to data processing tools and ML-as-a-service. The data science team will likely lean on those tools and their native integrations with the data platforms to develop scalable and up-to-date demand models.  

Data engineer(s) should ideally have expertise in ML Ops and some exposure to digital analytics and demand-side platforms, as source data can be somewhat ugly and difficult to work with. Key tasks for this team will be the processing of source data, staging of data for analysis (and eventually reporting) and automating the model outputs. The latter is of critical importance, since getting updated forecasts frequently is the key to understanding shifting trends and reacting before it’s too late.  

Working together, this team can generate not just improved demand forecasts to inform downstream applications such as inventory, but also outputs powering higher-funnel tactics such as dynamic creative optimization and offer management. Keeping the team online as new capabilities launch and managing a roadmap of prioritized future applications is a great way to get continual value out of your digital infrastructure. 

3. You’ll Need User-Friendly Tools if You Want to Drive Adoption of New Techniques  

The only thing better than having all the smartest tools in the industry: actually using them. Getting the outputs of the organization’s data assets into the hands of decision-makers is just as important as developing those assets themselves. Business intelligence (“BI” or Data Visualization) tools and specialists are the keys to disseminating new data that suits each stakeholder’s needs. BI specialists should work with stakeholders to understand their requirements and with the engineers to produce user-friendly outputs from the models upon which they can design visualizations.  

Reframing team roles and advancing technology and tools allows businesses to democratize critical data and serve business units based on their purpose and key decision points. Regional merchandisers may want to see shifts in demand with the ability to drill down on specific geographies. Others may want broader, national demand (or individual product propensity) visualized alongside incentive, inventory or media spend. Targeting a few stakeholders early who are interested in trying new techniques can be important; building internal advocacy and developing case studies early on can speed up the process of getting new tools to market.  


As the pandemic and its fallout have demonstrated, the importance of having a pulse on demand cannot be overstated. But with a willingness to invest a little in digital platforms, underlying data assets and the right people, sustainable improvements in forecasting are attainable for every organization. Furthermore, this relatively small investment enables more agile teams and better-informed decision-makers at the heart of a billion-dollar problem.  


Banking on the Metaverse: The Imperatives of Web 3.0 for Financial Services

How should financial service companies build resilience for the decentralized future?   

The massive financial services industry (including wealth management, retail banking and insurance) is a powerhouse player in today’s globalized economy. Despite (or perhaps due to) its scale, this sector has traditionally been slow to change, encumbered by legacy businesses, ever-changing regulations and complex business models. However, as the boom in fintech players and investments has shown, incumbents in the business are not immune to disruption.  

Metaverse – The Next Wave of Disruption  

Given the foreseeable growth of the Metaverse economy, digital currency and payments will be key to all transactions. However, amid recent controversies surrounding cryptocurrencies, such as the collapse of FTX, there is a heightened opportunity for financial services providers to build a strong sense of trust and security in the Metaverse with a commitment to strong governance. Both established, traditional companies and newer, digital players would be wise to think proactively about what their presence in the Metaverse can and should be. 

Preliminary forays into the Metaverse by financial services firms have been focused mainly on brand building. In 2022, HSBC, Standard Chartered and DBS all acquired virtual plots of land in The Sandbox, a Metaverse game, with the goal of creating Metaverse experiences and touchpoints to engage with a new generation of customers. Similarly, J.P. Morgan opened a lounge in the virtual world Decentraland earlier this year but has been involved in Web 3.0 since 2020, when the bank launched Onyx, a blockchain-based platform for wholesale payment transactions.​ Meanwhile, new players are pushing in. Cryptocurrency exchange platforms such as Coinbase and Binance have annual exchange volumes in the trillions. Cryptocurrencies themselves are being created by a wide range of decentralized organizations and individuals. 

With these waves of disruption shaking up the sector, financial institutions must consider both the why and the how of their Metaverse strategy. Below, we discuss what financial services brands should consider when building their brand presence, future offerings and new business models. 

Defining the Why: Clarify Business Objectives and Your Audience 

As mentioned, many leading financial services brands have already invested in the Metaverse. But it’s not just about being there; it’s about being there with a purpose. First, a brand must have a clear definition of why they are in the Metaverse. Is the goal to build brand awareness or create brand differentiation? Or is it about engaging with customers, improving loyalty and onboarding a new generation? Or do they want to educate a new generation of investors? Having clarity and alignment throughout all levels of the organization is critical to setting a visionary Metaverse strategy. 

To define the why, brands first need to understand the profile of who is in the Metaverse today, including demographics, attitudes and behaviors. “Metazens” are drawn to the Metaverse for a variety of reasons – from entertainment to self-expression to community to creativity. How can brands enable their customers to achieve these goals in the Metaverse? 

Then, as with any go-to-market strategy, financial services brands should be clear on their target audience within the Metaverse and how they want them to behave and engage with the brand. In Web 2.0, brands cannot be everything for everyone. The same is true in the Web 3.0 world. In turn, a Metaverse strategy should also align with the overall brand strategy and value proposition to ensure that the customer experience across all touchpoints– from offline to mobile to web to Metaverse– is consistent and cohesive. 

Understanding the How: Innovating Business Models to Capture Emerging Opportunities 

Once a brand’s objective on the Metaverse is defined, it must be translated into a feasible business model that can ultimately drive revenue. Unlike the fashion companies that have dominated the early stages of the Metaverse by selling digital apparel for avatars, financial services companies are posed with a more challenging but also potentially more exciting “how” when it comes to monetization in the Metaverse. The blurred physical and virtual realities will create new opportunities when it comes to payments, loans, investments and even new types of financial products not yet in the market today. As the Metaverse is still in its early stages, we’ve only just begun to explore what is possible. 

When considering ways financial services brands can drive revenue, we see two near-term prospects.  

1. The Evolution of Services With Rich Data. 

In Web 2.0, customer data is centralized and comes from the limited customer touchpoints throughout the journey – from website visits to phone calls, from advertisements to purchases. In the Metaverse, customer touchpoints will evolve to become more experiential, multisensorial and multidimensional. Salespeople can interact with customers “face-to-face,” no longer confined by phone lines or chat boxes. Products can be showcased in real-time rather than on a webpage. All these interactions will generate an incredible amount of data points. Financial services organizations, thus, have the opportunity to define and evolve their experience principles on the Metaverse to offer more customized and higher-quality services. However, it is important to note that these data points are also decentralized and anonymous. Collecting data and attributing data to concrete customers will also become more difficult.  

2. The Reimagination of Traditional Revenue Models.

As they do in the current Web 2.0 world, financial institutions have the expertise and resources to provide security, risk mitigation and fraud prevention for Metaverse transactions. They can also offer financing or protection for digital assets just as they do physical ones. Financial services brands can provide loans or insurance for NFTs, virtual real estate and other assets that users in the Metaverse will own. The merging of the online and offline worlds will allow brands to play in both spheres and find the opportunities for crossover.  

(Image source)  

Founded in 2018, ZELF calls itself the first bank of the Metaverse. It started as a messaging-first “neobank,” issuing cards to customers in a matter of minutes, simply by chatting with them via Messenger, WhatsApp, Viber or Telegram. Since then, it’s become the first financial services provider to allow customers to manage their gaming assets, cryptocurrency, digital art and regular (fiat) currency in one place. ZELF simplifies and democratizes access to financial services, facilitating financial transactions in the virtual world of crypto and gaming, enabling NFT trades, and allowing players to trade (or use as collateral) their digital assets earned from gaming for fiat currency.  

Prophet defines the customer-centric framework of business model innovation as one that creates more value for customers while also increasing the amount of value available to be captured by the business.  

Building a Roadmap For the Future 

While the commercial and technological infrastructure of the Metaverse is still be developed, financial services providers need to start innovating their offerings for the future virtual community. In developing a roadmap for the future, financial institutions also need to identify the current knowledge and capability gaps and invest in the appropriate resources to fill them. The multidimensional Metaverse will also require a multidisciplinary effort across organizations.  

As the Metaverse and Web 3.0 continues to evolve, new capabilities, technologies, use cases and business opportunities will continue to emerge. To seize these opportunities, innovation needs to happen across all platforms; thus, financial services brand should be ready with short- and long-term Metaverse activation roadmaps. 


Defining the “why” and understanding the “how” is core to the way Prophet builds brands today. When designing a Metaverse strategy, it is just as essential for the process to be rooted in sharp consumer insights, a compelling value proposition, and a differentiated experience.  

Prophet combines its deep expertise in financial services with a wide breadth of capabilities across customer research, brand building, experience design, business model innovation and digital transformation. Get in touch to see how we can help your financial services brand formulate a strategic roadmap to respond, adapt and transform in this next wave of the Metaverse. 


Why Companies Need to Act on ESG Issues with Authenticity 

Learn how your organization can work better together in service of the greater good.

In an era marked by the convergence of business and activism, many believe that “silence speaks louder than words.” While silence on environmental, social and governance issues may draw the attention of stakeholders looking for statements, empty words and promises may pose greater risks.  

The pandemic, wildfires, controversial Supreme Court rulings, water shortages, mass shootings and global conflict have shone a bright light on the role of business in society, underscoring the need to integrate ESG into business strategy as stakeholders gravitate towards companies that align with their values.  

As a result, business leaders are dedicating more time to responding to these environmental and social issues – both internally and externally. In fact, 66% of American consumers say their social values shape their shopping choices and 86% of employees prefer to work or support companies that care about the same issues they do. 

See Something, Say Something or Say Nothing? 

Taking a stand (or not taking a stand) will invite attention — both negative and positive. In this piece, we will share our framework on when and how businesses should act on ESG issues with authenticity to avoid risks of being perceived as opportunistic or greenwashing.  

Purpose-led companies with ironclad ESG response strategies have the necessary foundation for success. Those that are investing in environmental issues or social issues as part of their core strategy will have more credibility in proactively engaging in topics in addition to responding to events. For example, Patagonia’s self-imposed Earth tax gives credibility to its proactive and reactive environmental activism, and Ben & Jerry’s ongoing commitment to racial justice supports public stances on social movements. While there is no perfect strategy that will please all stakeholders, keep these principles in mind when thinking about how to engage on issues. 

We understand this is difficult work because we are still figuring it out ourselves. Developing these guidelines has encouraged us to shine a brighter light on our own ESG response strategy. While we are far from perfect and still have a long way to go in our own ESG journey, we have identified five essentials for how to respond and engage authentically.  

1. Know Your Company’s Purpose and Build the ESG Response Strategy 

The foundation of a successful ESG response strategy is dependent on an unwavering brand purpose. Purpose acts as a North Star, guiding a business as it makes difficult decisions. If issue engagement is treated as a temporary initiative rolled out for the sake of promoting goodwill, stakeholders will perceive a company as opportunistic. 

Brand purpose does not have to be one and the same with ESG strategy. However, connecting your ESG response strategy to your purpose and values demonstrates genuine commitment and gives the company credibility to play in the ESG arena.    

For example, Patagonia is a “purpose native” company that has an ESG strategy entwined with its purpose. As a company that sells apparel for exploring the outdoors, it has spearheaded several initiatives to protect and preserve the environment.  

2. Identify Issues Your Stakeholders Care About and That You Can Authentically Engage on 

“The goal is to reinforce existing brand identities on issues that matter to customers and employees. If they’re authentic in what they stand for and they reinforce it consistently, then it’s credible.”

Marisa Mulvihill, partner at Prophet, in the ‘Wall Street Journal’ 

With a new set of issues dominating the news cycle every week, businesses may feel pressure to react to every topic, which could potentially result in missteps if there isn’t a concrete ESG response plan in place. By demonstrating authentic action through a robust ESG response strategy, businesses can build their credibility to make their voices heard on a multitude of issues. 

Conducting a materiality assessment will determine what issues are the most important to your stakeholders, ensuring that your company can focus efforts on the most relevant and authentic ESG issues. To stay attuned to evolving customer behaviors, consistently undertaking market research on customer attitudes can propel companies forward by allowing them to proactively strategize where they can meet the needs of their customers. 

Nike has already successfully leaned into contentious conversations. With its bold advertisement featuring Colin Kaepernick, the company fueled the fire of a subset of customers uncomfortable with the company’s embrace of the athlete. However, its younger, diverse consumers immediately rallied behind the cause, showing that the company had done its research on its core customer group by making a strategic, calculated move to solidify its relationship with them. 

In 2020, Prophet was overwhelmed, in the best way possible, with the discussions within the firm to do more and better in the face of systemic racism, particularly as it impacts the Black community in the U.S. As part of our commitments to promote racial and social equity both within our firm and broader communities, we pledged $4M of pro-bono hours to organizations supporting racial justice. As we continue to work towards achieving this commitment, Prophet’s pro-bono program enables teams to connect their passions and share their expertise to support organizations and movements on the ground. We know that racial justice and equity will never be achieved by one leader or one group alone, but we are using our core competencies and influence to do our part in advancing the cause. 

3. Execute With Commitment to Action and Transparency 

Authenticity is key. How your company executes can make or break a response, even if the issue it is addressing is material to stakeholders. While purpose provides the foundation, concrete action on a promise is crucial for an ESG response strategy that leaves an impact.  

Before taking a stand, ask yourself: Is your company contributing value by engaging? Are you shining a light on the core issue and supporting a solution, or are you detracting from the issue or potentially causing harm? 

There are times in which showing up might be perceived as performative, especially if a company’s past actions paint a conflicting picture, or if the response is perceived as reactionary and disingenuous. Purpose washing — touting shallow commitments for marketing purposes without driving tangible change — is a real risk that can discredit a company’s ESG response strategy. While 73% of consumers say companies must act now for the good of society and the planet, 71% don’t believe companies will deliver on their promises. 

For example, financial services firm State Street was behind the infamous “Fearless Girl” statue on Wall Street, highlighting the need to combat gender inequality. However, further digging unveiled that the company’s gender diversity fund did not always vote in favor of gender diversity or pay equity proposals for the companies it invests in. 

Engaging in issues will pose a risk if there is a gap between what a company says and what it does. However, if a company is ready to show up on issues it hasn’t performed well on, it will need to do so with transparency and commitment to action. 

4. Thoughtfully Balance the Needs of Multiple Stakeholders 

The actions of a company ripple across the full system of stakeholders. When developing a response strategy, it’s crucial to understand the diverse needs of customers, employees, local communities, suppliers and more. If companies decide to act, they will need to evaluate whether to act internally to address the topic with their employees, or also externally to engage with customers and the community.   

Thorny issues often pull in multiple stakeholders at once, with each group having different levels of impact and involvement. When companies were deciding on how their responses to the invasion of Ukraine might impact customers in Russia and across the world, they also needed to consider how to support their employees, especially those who had to leave Ukraine and care for their families. Suspending business in Russia may put pressure on the country, but it also affects civilians trapped in the conflict. 

5. Continually Monitor and Evolve 

Taking a stand doesn’t stop after making an announcement. Action must be continually monitored to understand the impact of your ESG response strategy on stakeholders. Metrics can help you understand how to improve and iterate on your strategy: Did your company’s response support the issue in a way that resonated with the stakeholders who were the most impacted in the issue? How did stakeholders view your company’s response to the issue? Did the response address your stakeholders’ needs? 

Additionally, a company’s response strategy shouldn’t be set in stone. With a relentless influx of issues pulling companies in, the strategy should be dynamic and leverage the expertise of multiple departments within a company to adapt to whatever new challenges arise. In a multi-stakeholder environment, determine who within your company should own the response strategy, whether that be HR, consumer marketing, internal communications or another expertise group. 

Lastly, continue to revisit the approach and assess where you can evolve to meet the changing needs of stakeholders. 


Taking a stand isn’t a fad. As the role of business in society continues to evolve, companies need a robust ESG response strategy and processes that evaluate when and where they have the credibility to drive change. 

Ready to get started? 


Four Ways to Power ESG Strategy Through Culture

Learn how you can power an authentic ESG strategy and culture from the inside out. 

Companies around the world are acting on the new reality that ESG – environmental, social and governance – has become the next horizon for business leadership. From going ‘all in’ on a particular social mission, to systematically integrating sustainability and social responsibility into their operations, organizations are taking action.  

While ESG was once about compliance and risk mitigation, we believe it is now a requirement for unlocking uncommon growth. And the companies having the greatest success with their ESG strategies are the ones who have created authentic changes in the culture of their full stakeholder ecosystem. 

At Prophet, we view all organizations as a macrocosm of the individual. Each one has a collective DNA, Mind, Body and Soul. To drive meaningful culture change, leaders need to think about every aspect of this system.  

Prophet’s Human-Centered Transformation Model serves as a framework for effectively driving ESG thinking (and doing) into a company’s organization and culture. Let’s take a look at how these four elements can be used to power an authentic ESG strategy and culture from the inside out. 

1. Code ESG Into Your DNA 

Like the DNA of an individual, the DNA of an organization comes to life across every aspect of the business, helping to direct and blueprint any transformation. For some organizations that have been founded with purposeful, inclusive and regenerative business models, that DNA has been ‘coded’ with ESG from the start. For others, it may require some ‘re-programming’:  

Set a powerful, actionable and clearly-defined ESG strategy—and build it pervasively into your company strategy 

The most mature sustainable and socially responsible businesses are incorporating ESG concepts into the core of their strategy. Some examples include equitable and inclusive design of products or circular and regenerative business models. A materiality assessment can help determine which areas of ESG are most relevant to your organization and its external stakeholders—not only from a risk mitigation perspective but shared value creation. How might ESG help fuel transformative and sustainable growth for your business while doing good at the same time? 

Embed ESG into other key organizational frameworks such as purpose, values and employee value proposition 

The more it can be reinforced as a ‘red thread’ woven throughout the company, the better. How might you visibly showcase your commitment to ESG to help attract, retain and engage your talent? 

Enlist leaders in championing ESG from the top 

Vocal support from across the leadership team is critical to signal ESG as a priority. How can you ensure leadership is not only bought in but actively role modeling sustainable and inclusive behaviors, multi-stakeholder collaboration, etc.? 

Some companies such as Allbirds have always had strong ESG DNA. It established itself as a benefit corporation, which shows a high degree of commitment to a strong ESG-centric operating model. Being a B Corp means a company is legally accountable to all its stakeholders – workers, communities, customers, suppliers and the environment – not just shareholders. And this status ensures that the organization will practice stakeholder governance even after capital raises and leadership changes.  

The ESG orientation that’s genetically programmed into its organization ensures Allbirds takes flight in a sustainable way with commitments to regenerative agriculture, renewable materials, carbon neutrality and more. 

2. Set Your MIND to ESG 

Once an organization sets its ESG strategy, it needs to develop the skills to enable the change. A company’s collective Mind is formed from the talent and skills of its people, so you need to train up (and hire up) in a way that supports the organization’s approach to ESG—especially if it requires more of a departure from ‘business as usual:’ 

Identify the specific skills, capabilities and roles needed to support your ESG priorities 

It is important to consider not only technical skills (e.g., climate scientists) but also critical ESG mindsets such as collaborative orientation and coalition-building. How can you upskill and equip your talent to activate your ESG strategy? Where might you need to hire external expertise? 

Align talent systems in service of the transformation 

How can you ensure your talent systems are designed to hire, measure, and manage employees toward activation of the ESG strategy? 

Unilever, for example, was a pioneer in bringing the thinking behind the UN’s Sustainable Development Goals into the multi-national FMCG space. And the company helped build its ‘mental architecture’ to deliver ESG by internally framing the ambition through concepts of more growth, less risk, lower costs, and more trust.  

As part of its internal education program, ‘bringing sustainability to life’ is a key business skill on the curriculum that needs to be mastered. Additionally, brand managers are taught how to think about the best way to get behind the corporate ESG agenda while delivering the distinctive values of their brand – so Ben & Jerry’s can be playful and provocative, while Knorr goes to market with more of an activist eater tonality. 

3. Build Your BODY for ESG 

In addition to upskilling talent for ESG priorities, it is essential to ‘hardwire’ these priorities into the Body of the organization – in a way that creates transparency and accountability. This includes evolutions in the operating model, org structure, processes and tools that are required to actually direct culture change and get the full power of the organization behind a unified approach to achieving specific ESG initiatives: 

Determine the optimal model for ESG governance and goal-setting  

Some organizations deploy a ‘teams of teams’ in a more holacratic fashion to tackle ESG priorities, while others take a more top-down approach, designating a chief sustainability officer (or similar title) to drive the ambition. In either case, a comprehensive measurement system to share, track and report progress toward goals is key. Which model best fits your organization?  

Align incentives to drive cross-functional (and cross-stakeholder) work  

Often, ESG work requires not only cooperation but collaboration between business units, regions, suppliers and even competitors. How might you empower greater collaboration across stakeholders (both inside and outside the company) to ensure the success of ESG initiatives?  

Build inclusivity into your operating model and organization design  

Given that DEI (diversity, equity, and inclusion) is often a top priority in the “S” of ESG, it is critical that your company is hardwired to practice what it likely preaches. How might you intentionally design (or redesign) aspects of your operating model to elevate underrepresented voices and bring more diverse perspectives to the table? 

Johnson & Johnson is a healthy example of a strong ESG coordination model, with clear top-down direction, and a well-defined operating model for execution. It has clearly prioritized ESG topic areas, revisited annually, that provide a unifying framework for ESG initiatives and teams across the company.  

J&J breaks down its “health for humanity” strategy into key strategic pillars, with metrics and initiatives mapped to each (and executive compensation linked to goal achievement). As for governance, there are focus area leadership roles (e.g., chief sustainability officer, chief DEI officer, etc.), but also a dedicated PMO for coordination across the entire enterprise to ensure a high degree of collaboration. 

4. Inspire socially responsible SOULs 

Finally, winning over the Soul for ESG is all about motivating transformation through shifts in emotions, mindsets, beliefs and behaviors. When it comes to ESG especially, there is an opportunity to truly inspire current and potential employees around an organization’s focus areas, from the environment to inclusivity: 

Consider how you’re engaging your employees in ESG  

While many organizations focus heavily on ESG areas tied most directly to their business model, it is also critical to assess areas that current and prospective talent care deeply about—and would expect their employer to take action against. How might you identify causes that are most inspiring and intrinsically motivating for your talent base? 

Create rituals, symbols and awards that authentically showcase commitment to ESG 

How might you motivate employee behaviors that deliver on your ESG strategy? (e.g., ethics, DEI, sustainability) 

Rapidly share success stories and celebrate progress along the way (not just outcomes) 

Often, ESG commitments such as Net Zero may take multiple years to achieve. How can you inspire belief in your ESG journey along the way? 

Anglo American is creating kindred ESG souls within its organization through a collection of initiatives that inspire employees to feel passion for ‘re-imagining mining to improve people’s lives. Anglo American thoughtfully curates an ongoing feed of well-told verbal and visual success stories about what the organization is doing both within the company itself and within the communities where it operates. Additionally, the organization creates aspiration and symbology for ESG through an annual awards ceremony where employees are recognized for their specific ESG achievements in business and society.  


All elements of the Human-Centered Transformation Model™ play critical roles in catalyzing a winning ESG culture and sustaining the change. Prophet can help companies close the gap between ambition and action. And we are eager to work with clients who share our view that ESG is essential to unlock uncommon growth for businesses and create solutions that move society forward. 


Unlocking Sustainable Growth

How companies can link ESG strategy to business objectives to drive growth and shared value

In response to the rising demands of stakeholders, companies are racing to put out sustainability commitments, with 92% of the S&P 500 now publishing these reports.  

It’s an important shift. Companies with established environmental, social, governance structures have integrated ESG thinking into every aspect of their business – increasing transparency, rethinking environmental impact and improving how they treat employees and other stakeholders. Job seekers, particularly the newest entrants to the workforce, will disproportionately want to work for organizations with an established ESG strategy over others. New hires are also more likely to stay if the intensity of the business’ actions matches the commitments. Lastly, ESG matters more to investors, with 85% of investors now mulling a company’s ESG status before buying shares. 

Many companies, though, are struggling to connect their commitments to action. They set ambitious targets–and that’s a good start. But once it comes to integrating ESG across the business, change leaders often don’t know how to navigate the path from ambition to demonstrable impact. It can be hard to build positive business cases for ESG initiatives. This is because there often isn’t a clear operating model for driving durable change and an ESG strategy requires collaboration across all parts of the business.  

We think another major problem is that many companies still see ESG primarily as a compliance and risk mitigation tool, almost exclusively. 

But we recognize it as a bigger opportunity, offering the potential for shared value creation. And there are many reasons to believe that ESG will be the next big driver of growth and transformation in the coming decade.  

As companies use ESG strategies to find more purposeful, inclusive and regenerative business models, they create value in important ways: 

Attract Talent, Boost Retention and Increase Employee Well-Being

It’s hard to overstate how important positive environmental, social and governance practices are to the modern workforce. A recent study from Marsh & McLennan finds a strong correlation between high employee satisfaction and companies with the best ESG scores. These ESG outperformers are also especially attractive to students and young professionals, with 86% of employees preferring to work for companies that care about the same issues they do.  

Improve Customer Acquisition and Retention to Build Brand Strength

People care–and deeply–about how companies contribute to solving key issues in our culture and society today. Consumers and B2B buyers alike want to do business with organizations that are environmentally responsible and fair to employees. They want businesses to stand for something.  

Ipsos reports that 66% of U.S. adults say they prefer to buy brands that reflect their values, up from 50% in 2013. The global average is even higher, at 70% of respondents, with those in emerging markets especially likely to agree. 

Optimize Supply Chains, Drive Efficiencies and Create New Opportunities

While pandemic-era shortages may have vaulted supply-chain concerns to the popular consciousness, they’ve been growing in complexity for some time. They present dizzying ESG challenges, with the average company having 3,000 suppliers for every $1 billion it spends. Supply chains are fraught with risk, with the World Economic Forum estimating they account for about 90% of all emissions and widespread human-rights problems. 

Using ESG principles to optimize and build resilience into supply chains is a huge growth tool, as companies with advanced supplier collaboration and innovation outperformed their peers by 2x in growth

Power Innovation and Lead to New Business Models, Products and Services

As companies move through the early phases of ESG–from mitigating risks and achieving efficiencies–they reach the point where the assets and capabilities that power ESG performance can simultaneously become growth tools for competitive strategy and innovation. This requires deeper bridge-building across all parts of the organization. ESG may have first emanated from investor and regulatory pressures, but as it becomes more understood throughout organizations – including product, commercial, and go-to-market leaders. This should open up new pathways to business model innovation, new services and inspire new ways of working.  

Here again, bold and clear goals pay off. In a study of 1,000 companies with climate objectives, those with the most ambitious carbon targets invested the most and made significant operational changes. The result? They also drove the most innovation. 

We clearly see how the principles of sustainable and socially responsible business can unlock opportunities for new products and services. The circular economy offers a $4.5 trillion economic opportunity. New business models focused on reuse, recycle and regenerate are unlocking new opportunities for innovation. Additionally, inclusive design, which embraces a larger view of the human spectrum, has proven to drive innovation that leads to business advantage.  

Moving From Ambition to Impact

Companies must find new and better ways to close the gap between ambition and impact. This requires designing scalable ESG solutions, exploring requirements for change throughout the organization and developing plans that integrate ESG into companywide strategies and operations. 

We’re not suggesting a common path. It’s essential to address what’s material to your industry. For example, water usage and resource availability will be crucial to CPG companies but less to professional services firms. In an analysis of 2,000 U.S. companies, a Harvard Business School study found that companies that consistently addressed material issues in ESG strategies significantly outperformed competitors. Those that paid more attention to immaterial problems, however, significantly underperformed.  

Stakeholders and consumers know when companies are authentically supporting their stances with strategy and when they are greenwashing, rainbow washing and virtue signaling. 70% of Gen-Z and Millennials are skeptical of virtue signaling from organizations, and roughly 80% of companies are just going through the motions and not holding themselves accountable with measurable action, continuing to erode public trust.  

It’s also important to take the ESG maturity of the organization into account. Some have been establishing and finetuning policies and programs for decades, while others are just beginning. 

That said, there are five fundamental shifts common to every organization seeking to sharpen ESG strategies to create new value. 

Companies must move from… 

Embarking on Your ESG Journey

Moving from ambition to action is a complex journey. Targets fluctuate as external factors and pressures increase. And as test-and-learn efforts enrich the company’s knowledge, they become agile and confident enough to take on new endeavors. 

To drive meaningful change, leaders need to evangelize the ESG mindset. Acting on these new tenets of sustainable and responsible business, they need to build coalitions, think creatively, iterate continuously and take risks. It’s a unique skill set but essential if ESG is to come to life throughout the company.  

We’ve found meaningful analogies to these shifts in digital transformation. We’ve helped dozens of companies take the role of digital executives from a single department to an enterprise-wide commitment. Digital thinking now forms the backbone of a modern company’s culture, operations, go-to-market strategies and business models. In many ways, chief sustainability officers are already traveling the same path. They’re driving the ESG mindset and bringing it to life throughout the company.  


It’s time for companies to tap into the transformative potential of ESG. It continues to be an important tool for compliance and risk mitigation but can do much more. With bold ambitions, close alignment to business objectives, and commitment to high-impact follow-through, the ESG mindset can create shared value and uncommon growth.


Three Examples of Successful Business Model Innovation

A business model is the backbone of how a company creates, delivers and captures value. When a company innovates on just the customer experience without considering the underlying business model, it not only reduces the value that can be delivered to customers but also fails to realize the full value that can be captured by the business. Over time, that reduces the business’s ability to invest in creating experiences that will power the business of tomorrow. As Ben Thompson wrote in his analysis of Facebook, “succeeding on the Internet didn’t simply mean making a digital product, but also finding a business model that was native as well.”  

Business model innovation is the creation of outsized value – in the form of market share, margin and defensibility, by reconfiguring multiple elements of the business model. Here are three examples of business model innovation that created more value for customers while also increasing the amount of value available to be captured by the business: 

Amazon’s Subscription Model Grows Customer Lifetime Value

Customers can automate the replenishment of household items through Amazon’s Subscribe and Save program. Many parents struggle to equitably distribute the management and execution of tasks in their household, with the greater share often defaulting to women. 

For instance, before buying detergent, someone must remember that it needs to be bought and what type to buy in the first place. This idea leads to friction that forces customers to outsource tasks in order to better distribute the load. The Subscribe and Save program makes it easy to personalize recurring deliveries and gives members the benefit of saving more as they spend more. For the business, it creates a recurring revenue stream while decreasing customer motivation to shop around and price compare each month. And finally, sending multiple items in one box each month lowers the marginal cost of fulfillment. 

Airbnb’s Value Chain Grows the Total Addressable Market

Airbnb modularized the supply of short-term rentals available, making it easy for travelers to compare options, read reviews and book. By integrating the supply of rooms onto its platform and completely owning the customer relationship, it created the conditions necessary for guests and hosts to trust one another, even without Airbnb owning a single room. In digital businesses, the winner is often the company that can reconfigure the value chain to modularize supply and own demand because it makes it difficult for suppliers to squeeze margins and it creates a virtuous cycle of new demand driving new supply. Airbnb is an example of disruptive innovation because it began in the underserved, low-end part of the travel market by offering inexpensive room rentals outside of tourist districts. After building a great reputation based on customer experience and trust, the platform was able to move upstream to mid-tier, business and luxury segments of the market. 

Microsoft’s App Store Pushes the Industry Towards Open Marketplaces

During its acquisition of Activision Blizzard, Microsoft announced a set of open app store principles, just months after Epic Games accused Apple of anti-competitive practices in the iOS app ecosystem. Microsoft’s leadership is seeking to create a “universal store” in direct contrast to Apple because it believes that outside developers must thrive in its ecosystem to deliver the best experience to customers, even if this means forgoing near term profits that could be gained by showing preference to its own apps, requiring its payment systems be used or acting as a gatekeeper between developers and customers.  

An NFX assessment recently found that 70% of value in tech is driven by network effects. By creating an open app store, Microsoft is betting that network effects will grow the overall value of the gaming industry enough to make up for leaving some value on the table in the near term. By focusing on overall value creation rather than just profit maximization, business model innovation prioritizes models that will create the most sustainable value for all stakeholders in the ecosystem.  

And When it Goes Wrong – Clubhouse’s Fatal Flaw

The goal of business model innovation is to configure business model components in a way that maximizes the total amount of value available to be created, delivered and captured. An offering that fails to solve a real customer problem will never gain traction in the market and a desirable value proposition without a mechanism to capture value for the business won’t last long.  

For example, Clubhouse quickly attracted a sizeable user base by solving a unique problem presented by Covid 19 – the newfound difficulty of getting together. The audio-only, originally invite-only social media app allowed newly homebound people to gather for live conversations around common interests. Rather than commercializing components of the value proposition, such as through subscriptions, advertising or commission fees, the founders focused only on user growth.  

“Business model innovation is the creation of outsized value – in the form of market share, margin and defensibility.”

However, the problem was that Clubhouse’s value proposition was easy for tech giants to replicate. Twitter quickly rolled out Spaces, which solves the same user problem without requiring users to join a new platform. Additionally, due to network effects, these features are more valuable on a platform with a larger user base. Twitter also already had a mechanism in place to allow hosts to monetize, making it a more attractive platform for content creators, while also offering the capability of capturing value with commission fees, as well as growing a new offering that will be valuable for advertisers in the future. 


Because business model innovation is about exploring what could be rather than what has been, there is no standardized answer—but we do have a standardized approach based on human-centered design methodology. The process begins with a thorough economic analysis of the existing and adjacent markets, consumer behaviors and new technology to model many configurations of value exchanges.  

A successful business model innovation will solve new problems for customers and create entirely new use cases – such as employees using Airbnb to work from anywhere during the pandemic. Business model innovation requires multidisciplinary teams of strategists, designers, and technologists to think divergently about what could be, model the highest value opportunities and rapidly test and iterate in-market. At Prophet, we are uniquely equipped to do this because we always start with the customer and the problems they are trying to solve, so we create business models that are in harmony with getting the experience right.  

Interested in learning more about how business model innovation can enable and sustain both incremental improvements and disruptive paradigm shifts in your market? Get in touch 

Brand Equity – Brand Value_1_A


The State of Digital Transformation in Europe

The state and success of digital transformation varies considerably around the world, with some distinct disparities between the digital “haves and have-nots.” The latest global research report from Altimeter, a Prophet company, provides not only detailed insights on the differences between individual markets but also some key learnings.

The U.S. market, for instance, is largely looking past digital transformation, having invested heavily during the last 10 years to replace legacy infrastructure and migrate more operations to the cloud. U.S.-based firms today are focused on strategic innovations (e.g., greater customer-centricity, digital product development). However, China, which never had to contend with outdated systems, was able to leapfrog ahead to advanced apps and immersive digital experiences.

In Europe, there is a wide variance of digital maturity. The U.K. market looks more like the U.S., but Germany is not quite as far along on its digital transformation journey. It’s also important to note that the most advanced firms in Europe have reached the same level of digital maturity as digital leaders in China and the U.S., but average firms generally lag compared to their global peers.

Europe is Catching Up in Its Digital Transformation Efforts – Quickly Enough Though?

Taking a closer look at Altimeter’s data in terms of C-level sponsorship of digital transformation initiatives, the U.K. has the highest tendency to appoint a CDO or CIO to own and/or sponsor digital transformation. However, Germany and the U.S. tend to rely marginally more on the CIO or CEO. At the same time, more American and Chinese firms report excellent results from their digital transformation programs, but most European companies report that they only have good or fair results.

A potential reason for this is that European firms are somewhat more conservative in their approaches to transformation overall. For instance, German firms prioritize employee engagement, digital literacy and operational efficiencies in their digital transformation agendas as much as they do growth. Innovation, on the other hand, is a much lower priority.

U.S. firms are notably more focused on profitability and revenue in their digital transformation programs than their European counterparts. It seems that many European firms are focused on keeping in step with their peers and competitors and that’s especially true in Germany. The implication is that many established European companies are still building a digital foundation for the future.

“more American and Chinese firms report excellent results from their digital transformation programs, but most European companies report that they only have good or fair results”

U.K. organizations are the most likely (69%) to cite using digital technology as an opportunity to become more efficient, perhaps partially reflecting the need to improve their lagging productivity rate versus the U.S. (46%), Germany (42%) and China (52%).

German organizations (58%) are the most likely to view digital technology as a priority investment to replace outdated or obsolete technology, as compared to the U.K. (40%), U.S. (39%) and China (18%).

Europe Invests Long-Term and the U.K. Adopts Agile Working Methods

Compared to U.S. firms, European firms also have longer-term expectations for their transformation investments. At least 40% of surveyed companies in Germany and the U.K. expect it will take at least two years to see positive results from transformation investments, versus 31% of U.S. firms. One reason for the longer time horizon is the relative lack of sufficiently digitally trained staff, which is a bigger challenge in the U.K. and Germany than it is in China or the U.S.

Of course, Europe cannot be considered a monolithic market. There are substantial differences between the U.K. and Germany. The U.K. firms surveyed have adapted better to digital transformation by, for example, adopting agile working to a greater extent than those organizations in Germany, which are more likely to have process-driven cultures.  Additionally, data silos are a much bigger problem in Germany compared to the U.K., which shows more leadership in data science.

In Germany, digital marketing is still mainly viewed in terms of ad campaigns. And in both the U.K. and Germany, digital marketing is generally below average in owning the customer experience. There are also varying priorities for the future: U.K. firms put less focus on hiring and training in digital transformation and as a result, business model changes are less likely to happen in Germany. Also, cybersecurity and cloud adoption are important priorities in the U.K., while cross-functional collaboration platforms are of less relevance in Germany.

Don’t Focus on Infrastructure, Focus on Creating an Agile Organization

Our digital transformation research, as well as our market experience, suggests that firms are better served by focusing on organizational changes and improved agility rather than updating infrastructure. After all, infrastructure is constantly advancing so that’s a job that will never be completed. But increased organizational adaptability and agility will help organizations adjust to ongoing change and proactively drive it.

Approaching these challenges in the right way is key. To do so, companies should follow a three-step approach:

  1. Digital Benchmarking: Conduct a rapid heatmap assessment of your organization’s (enterprise-wide) digital transformation maturity. Identify where the opportunities for improvement are, and how your business benchmarks against best-in-class digital maturity (both in your market(s) and globally).
  2. Digital Immersion: Run a digital innovation workshop with key stakeholders across your organization to share the latest digital trends (not just specific to your industry, but also apply learnings from other industries) and explore the digital art-of-the-possible to identify opportunities for augmenting your own digital transformation journey.
  3. Digital Mobilization: Build (or revisit your existing) digital transformation vision and roadmap, ensure all roadmap initiatives are tied to commercial value and make certain tracking mechanisms are in place to guarantee the realization of this value.


Looking ahead, companies in Europe, particularly in Germany, must address many of the same challenges that U.S. firms (and the more digitally mature companies in Europe) have started overcoming already. That means breaking down data silos, converting raw data into actionable insights and adopting more agile ways of working.

How does your company stack up in the digital transformation stakes? Get in touch today if you’d like to benchmark, excite, transform, and unleash the full power of your business.

Brand Equity – Brand Value_1_A


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.


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.


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.


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.