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Demystifying Today’s Confusion Around Brand Purpose and Social Impact

Both brand purpose and ESG strategy are important to build a relevant brand, but they do not have to be one and the same.  

The idea of brand purpose is not new. For years Prophet has helped clients fuel business growth by defining their purpose – an evergreen and inspirational North Star that articulates the core business strategy and guides internal and external audiences by answering two key questions: What do we believe? And why do we exist? While brand purpose has long been a critical first step in building and maintaining brand relevance, today, it has become a highly discussed and often misunderstood catchphrase.

A recent “Wall Street Journal” article investigated “the brands-with-purpose strategy,” questioning Unilever’s decision to assign each of its 400 brands a socially or environmentally focused purpose. As purpose continues to rise to the top of brand builders’ “to do” lists, these conversations illustrate a growing misconception: Purpose is being conflated with social or environmental impact. While it’s true that purpose and Environmental, Social, and Governance (ESG) strategies are both critical to building a relevant brand, not all brands’ core reasons for existing can or should be centered around social or environmental impact. 

Brand Purpose and Its History

Over the last century, in the first iteration of purpose, brands often focused on signaling strength and building employees’ and shareholders’ confidence. Under legendary CEO Jack Welch in the 1980s, General Electric existed “to be the world’s most valuable company.” Brands formed consumer relationships through one-way mass media communication, and consumers had more transactional expectations of brands, so many brands anchored their purpose (or mission, as they were often called) around a strong product portfolio, optimized operations and a healthy balance sheet that resonated primarily with shareholders. This is no longer a viable option.

In today’s world of unprecedented access to data and elevated customer expectations, brands have an ability – and indeed a responsibility – to speak directly to the needs and motivations of consumers. McDonald’s falls squarely in this realm. The fast-food giant exists “to make delicious feel-good moments easy for everyone.” With a focus on the customer, the brand is built around taste, happiness, ease and accessibility. Many brands today successfully anchor their purpose around the key impact they make in customers’ lives, even as they implement strong and cohesive ESG strategies.

Over the past two years, the pandemic, social justice movements, political polarization and climate crisis have accelerated the transition to the next stage of brand purpose. In this environment, consumers are more socially- and environmentally-minded than ever before and, thus, a socially- or environmentally-oriented purpose can be a viable strategy.

For those brands attempting to build relevance by elevating social or environmental impact into their purpose, two key considerations can help ensure authenticity and avoid accusations of virtue signaling or greenwashing – creating an authentic connection between the business model and social or environmental impact and taking meaningful action to back up the brand’s purpose.

Create an Authentic Connection Between the Business Model and Social or Environmental Impact

The closer the inherent connection between the business model and the social or environmental impact at hand, the more authentic the purpose becomes. Patagonia’s dedication to climate protection, for example, is a natural fit with its outdoorsy audience. Tesla’s quest “to accelerate the world’s transition to sustainable energy” aligns with the gas-free cars it produces. Oat milk brand Oatly exists “to make it easy for people to turn what they eat and drink into personal moments of healthy joy without recklessly taxing the planet’s resources in the process.” As an oat-based milk provider, Oatly can credibly deliver against this purpose simply by continuing to produce oat milk over dairy or almond milk.

Take Meaningful Action to Back up a Brand’s Purpose

Brands must also consistently take real, substantial action to bring their purpose to life. Oatly backs up its purpose with actions like opting to include its environmental impact statistics on the back of its packaging and leading a campaign to encourage lawmakers to require all food producers do the same. Some of Unilever’s brands including Ben & Jerry’s and Dove have been able to authentically build social impact into their purpose through true dedication, as evidenced by in-market moves over many years. Including their recent move to go as far as to sue their parent company “to protect the brand and social integrity Ben & Jerry’s has spent decades building.”

The idea that brand purpose must always be focused on social or environmental impact is a misconception. It is neither authentic nor prudent for every brand to integrate social or environmental impact into its purpose, and many brands with strong ESG strategies do not articulate social or environmental impact as part of why they exist.

Warby Parker, for example, investigated what mattered most to its customers and decided to focus its purpose on style, fit, value and the buying experience – needs that its customers valued more than the brand’s ESG commitment to donate a pair of glasses for every pair purchased. The beloved direct-to-consumer glasses and contacts brand exists today because they “believe that buying glasses should be easy and fun. It should leave you happy and good-looking, with money in your pocket.” While its “buy a pair, give a pair” ESG strategy continues to be a critical driver of employee recruitment and retention, its purpose centers on the key impact it makes in consumers’ lives.

Purpose is the North Star – It’s Not the Whole Universe.

Purpose does not – and should not – provide all the critical elements of a strong brand strategy. A purpose must be brought to life through everything the brand does – internally, by whom it hires, how it supports its employees and how it recognizes the values it stands for, and externally, by the promise it makes to deliver value for customers, the way it portrays itself through its promotional marketing, and, yes, its ESG strategy.

Hellmann’s mayonnaise appears to be following in the footsteps of Ben & Jerry’s and Dove, after integrating an explicit emphasis on social impact into its purpose a few years ago. The condiment brand appears to have an authentic dedication to fighting food waste and is determined to build its brand about this social impact. Additionally, Hellmann’s focused on this food waste initiative explicitly and exclusively in this year’s Super Bowl commercial.

If it continues to consistently live up to this purpose through its actions as well as its advertising, it can create a relevant brand that could differentiate it from the competition – as long as it also continues to relentlessly reinforce its core promise to deliver the best tasting mayonnaise on the shelf. Though the Super Bowl commercial focused entirely on fighting food waste, its tagline “Make taste, not waste” indicates that Hellmann’s is on the right track to creating a relevant brand purpose by balancing consumer benefit and social impact.


FINAL THOUGHTS

Many relevant brands build their purposes around a dedication to making an impact in customers’ lives and maintain a strong ESG strategy that dovetails with this overarching purpose. Those brands who do opt to explicitly integrate a social or environmental impact into their purposes must create a coherent connection to the business model and deliver sustained moves in-market to remain relevant and authentic. 

Ready to understand what role social or environmental impact should play in your brand and organization?

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Three Ways Leading BRI Brands Stay Top of Mind for Consumers 

Three things head brands do well to fulfill consumers’ fundamental needs and become an everyday go-to

Each year Prophet asks more than 13,500 U.S. consumers about the brands that matter most in their lives. We codify our findings in the Prophet Brand Relevance Index® (BRI), a tool to help companies understand the significance of relevance and how it can be harnessed to unlock growth. The 2022 BRI revealed the highly coveted group of relentlessly relevant standouts—brands that resonate by appealing directly to our heads and hearts. 

But some brands stand out because they appeal to our practical nature above all else. They’re the brands we rely on day after day—to help us problem solve, check off our to-do lists and keep our lives running smoothly. Brands that rank highly in our head category build relevance with consumers by reinforcing promises with performance and enabling autonomy.  

In addition to our overall BRI ranking, we have identified the top brands that speak directly to consumers’ heads.  

While top performers among head rankings excel at making the best products, delivering consistent experiences, and meeting important needs, among other attributes, we discovered three additional things head brands do exceptionally well to fulfill consumers’ fundamental needs and become an everyday go-to.  

1. Pursue Partnerships with Industry Leaders  

Top-performing head brands reinforce their positioning as a trustworthy, reliable solution by pursuing authentic partnerships with leaders in the space. Zelle (#9 in head rankings) enables easy, real-time transfers between hundreds of trusted yet “traditional” banks that have yet to get on the digital bandwagon. The Costco Next (#24 in head rankings) loyalty program allows members to purchase products directly from “hand-picked” suppliers. Brands like these take steps to surround themselves with trusted organizations and consequently appear legitimate to consumers when guaranteeing a job well done. 

Clorox (#65 in overall BRI rankings, #14 in head rankings) does this especially well. The leading cleaning brand appealed to consumers as a necessity for keeping our homes clean and safe early during the Covid-19 pandemic. Despite already offering household products with medical-grade certifications, the brand seized the opportunity to partner with hospital systems to stock their inventories and pledged multi-million-dollar donations to those working on the front lines. These extra steps helped position a brand already known for quality cleaning products as an active part of the solution. Clorox successfully bridged the gap between health and wellness and household maintenance, becoming a fixture in under-the-sink cabinets across the nation. 

2. Simplify Complex Tasks 

High-ranking head brands provide clear, easy solutions to complicated problems, giving consumers a sense of control and ownership. They understand daily errands can be time-consuming, confusing, and frustrating. So, they tackle these common tasks with enthusiasm—providing streamlined, accessible, convenient, customizable experiences, to keep things functioning. While brands like InstantPot, Tide, and CashApp have reinvented the way we cook, do laundry, and split the bill, one brand stood out for its ability to make one of the least flashy annual to-dos somewhat enjoyable.  

Filing taxes–it’s one of the most important interactions we have with the government each year, and yet it often leaves consumers feeling anxious, overwhelmed, and frankly, bored. Yet, enter TurboTax (#70 in BRI Rankings, #7 in head rankings), a tax preparation software that has succeeded because it was the first to solve such a tedious process, streamlining the many stages of filing traditional paper tax returns. TurboTax’s software relies on a recall method, prompting users at each step of the process to claim additional deductions or list additional work, eliminating human error associated with the process. Its partnerships with top investment brands and banks also mean consumers’ information can securely and automatically be uploaded into the return, with the click of a button. Customers can even input documents on their own time, as opposed to setting up a meeting with a traditional accountant. These innovative fixes help TurboTax remain relevant as the best-selling tax preparation software and take some of the sting out of filing taxes, which consumers are greatly appreciative of.  

3. Raise the Standard by Defining Your Own Grade of Excellence  

Many highly-rated head brands design trademarkable technologies to integrate with all their products. These brands underpin dependability with high-performing, trademarked technology and consequently reinforce their reputations as trustworthy, reliable options by championing it. Unsurprisingly, many automotive brands appear among BRI rankings– Tesla, Mercedes-Benz, Toyota, Honda—no matter how luxurious or basic, eco-friendly or gas-guzzling, cars are an integral part of life. At any point in time, they can be filled with kids, groceries, suitcases, camping gear, moving boxes, empty coffee cups, and memories. So, we rely on them to get us from A to B as safely as possible.  

Toyota (#23 in BRI rankings, #16 in head rankings), known for manufacturing top-notch vehicles with reliable performance, positions its cars as “built to last, created to perform and designed for life.” Similarly, Honda (#30 in BRI rankings, #22 in head rankings) rose to the top of the head category due to its cars’ long-term dependability. With products that consistently rank among the best energy-efficient options, rarely break down, and consider safety from the beginning, the brands could solely rely on their performance to make sales. Instead, both brands continue to innovate new driver-assistive technology and redefine safety standards with ownable, pervasive technology. Trademarked Toyota Safety Sense™ technology is standard on all new models, to complement its already award-winning built-in safety features. The Honda Sensing® suite boasts modernized safety and driver-assistive technologies featured in a range of its vehicles. So, when it comes to making a smart investment, consumers turn to the cars they know uphold the highest standards—even if those standards were set by the brands.  

What Lessons Can We Learn from Leading Head Brands? 

To go from an amenity to a necessity and build relevance in the daily lives of consumers, brands need to: 

  • Pursue partnerships with top leaders in the space to demonstrate your commitment and expertise
  • Find a way to simplify complex tasks—prioritize user experience and service design when creating your offerings to ensure consumers can use your products easily or quickly
  • Whether it’s messaging around a new technology or suite of offerings, continue to raise standards of reliability, performance, and experience, and find a way to talk about (or trademark) it that’s unique to the brand

FINAL THOUGHTS

Want to learn more about how the most relevant brands are tapping into the head and heart of consumers? The Prophet BRI serves as a roadmap for building relevance with consumers. Contact our team to learn how to apply the insights from the 2022 Index to your organization. 

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How Budweiser APAC is Creating Authentically Iconic Beers: A Conversation with Matt Che 

The industry-leading beer company discusses how to manage a strategic portfolio of resonant, purposeful brands in an authentic and effortless way. 

Building brand relevance with Chinese consumers remains top of mind for emerging and legacy brands alike. Budweiser Brewing Company APAC (Budweiser APAC), part of AB InBev and a key player in both the global and China beer markets, claims some of the most storied beer brands in the world as part of its portfolio – from Budweiser, founded in 1876, to Harbin, founded in 1900. Despite their longstanding histories, these brands are constantly evolving and innovating to maintain relevance in an increasingly fragmented and competitive market.  

Tom Zhang, an associate partner at Prophet, sat down with Matt Che, CMO of Budweiser APAC, to discuss how the Budweiser APAC portfolio continues to house the top beer brands and resonate with Chinese consumers through strong purpose and values.

Matt Che 
CMO at Budweiser APAC 

Matt Che is Chief Marketing Officer at Budweiser APAC, who leads the marketing team in China, Korea, India & Southeast Asia. An over-20-year veteran of marketing and sales, Matt oversees all brand marketing activities including Budweiser, Corona, Hoegaarden, Cass, Harbin, Blue Girl and Sedrin, etc. He is also held accountable for driving marketing-led business growth. 

Regarded as a trailblazer in the industry, Matt contributes to the growth of Budweiser APAC by creating a series of aggressive campaigns and driving marketing digital transformation. 

Matt Che earned a master’s degree in arts from the University of Birmingham. He also completed various marketing courses for executives at Harvard University, Stanford University, and Kellogg School of Management. 

As a major FMCG group, how does Budweiser APAC maintain a pulse on Chinese consumers and the latest trends? 

We must remain curious and constantly consider how the relationship between our brands and consumers is evolving. My thoughts are three-fold.  

First, there is a shift away from educating the consumers. Brands need to think about how to communicate product benefits and brand values in a way that is “effortless” and most resonant to consumers, allowing them to take in the information willingly and easily. Rather than standing on moral high ground and preaching to consumers, brands should view consumers as their equals and strive to grow together. To be a relevant brand means being humble. Champion the consumer. Recognize, appreciate and celebrate them. 

The next trend I see is a shift in focus from brand building to full-funnel marketing throughout the consumer decision journey. With the maturation of digital, social and new retail, there are more ways to not only build brand awareness but also close the gap between awareness and purchase. However, the marketing mix from awareness to consideration to purchase is varied, and we need to consider different content assets at each stage of the funnel to deliver the right message at the right time. As marketers, we must hold ourselves accountable for the full customer lifecycle.  

Lastly, the innovation cycle of FMCG products is changing. Previously, innovation was centered on a few big bets that would generate significant commercial impact. Now, innovation is also a way to drive brand equity. For instance, we launched the Budweiser Brewmaster Reserve in China, an ultra-premium product made with the highest-quality ingredients. Rather than measuring its success with immediate sales KPIs, we are looking at whether it contributes to brand equity. Marketers should approach innovation more strategically to shape the today, tomorrow and future of the brand. 

With Budweiser APAC’s extensive portfolio, how will you drive innovation of products and experiences to meet increasingly diverse consumer needs?  

The traditional notion of brand loyalty no longer exists in this age of fragmented markets. Instead, each brand should strive to build occasion-based loyalty. Consumers might go out to KTV with friends and choose Budweiser, then grab some late-night street food with Harbin. On the weekend they might have a picnic and bring some Hoegaarden, and then order a Corona at the beach while on vacation.  

Rather than spending our marketing budget attempting to make one brand the beer of choice for every drinking occasion, we take a very nuanced approach in segmenting consumer drinking need states and occasions to a high degree of specificity. In each of these need states and occasions, what are the consumer’s functional and emotional needs? Once we understand those, can beer as a category deliver on them? If so, then we can consider which of our brands has the story, value proposition, and DNA to own an iconic demand state and occasion.  

Of course, we will still source sales volume from adjacent drinking occasions, but the center of gravity and the “hook” we communicate to consumers must be clear and distinctive. Once we have this, we must then be disciplined about focusing brand-building efforts on channels and occasions that are core to the brand, allowing each one to own distinctive space in the portfolio. 

Many Budweiser APAC brands go beyond the product to communicate a higher purpose to consumers. Why is this important? 

A strong purpose is what makes a brand stand the test of time. Consumers might select you once or twice based on eye-catching packaging or a unique product, but purpose is how brands can earn an unwavering position in their customers’ hearts and minds. The way purpose manifests will change over time, but the purpose itself should be timeless.  

For instance, Budweiser has always championed authenticity – being true to yourself and living on your own terms. For the Qixi Festival (Chinese Valentine’s Day), Budweiser launched the “All Love Is Love” campaign. We released limited edition bottles that featured illustrations of people of all genders, and the bottles can be paired together in different combinations to feature two figures kissing.

The message is clear – regardless of how you define love, we respect, celebrate and champion it. We’re communicating with our customers as equals, meeting them where they are to convey the brand’s higher purpose.  

Purpose must be built over time. Rather than inundating consumers with a once-a-year massive campaign, we should reinforce the messaging consistently to build a purpose that is lasting and authentic. This is an example of “effortless marketing” in action.  

This reminds us of Corona. Corona is a strong example of how brands commit to ESG initiatives. Why is this important to Budweiser APAC and consumers? 

ESG is among the top priorities for AB InBev globally, and it’s deeply rooted in what we do. As the largest beer company in the Asia Pacific, Budweiser APAC is committed to achieving a future that’s sustainable and inclusive.  

Although there have already been many exciting results, I don’t think we as marketers should overly commercialize ESG. While its successful integration into company strategy, operations, and culture can potentially drive customer love and as a result sales volume, this cannot be the starting point.  

For instance, Corona’s brand essence is about a slice of lime, the sunset, and the ocean. It’s clear and simple. As a result, the brand is genuinely concerned about ocean conservation and marine protection. Corona partnered with Blue Ribbon, the biggest ocean conservation organization in China, and launched limited edition bottles on World Oceans Day, encouraging consumers to use less plastic.  

This March, Corona also initiated the “Ocean Restoration” program for the second year, partnering with fishermen across Fujian and Hainan provinces to recycle plastics from the ocean. Through our continued efforts, Corona is now the first beverage brand in the world to achieve a net-zero plastic footprint, meaning it recycles more plastic than it produces.  

However, the goal of Corona’s ESG efforts is not to convince consumers to drink more Corona but to convey the importance of protecting our planet for future generations. If these initiatives draw consumers to the brand, then that is a positive externality of our ESG efforts, but it cannot be the intention behind them. 

Nowadays, many marketers experience tension between longer-term brand marketing and shorter-term demand generation. How do you resolve the tension to balance “fast and slow”? 

As I mentioned before, marketers have the challenging task of building today, tomorrow and the future. It’s a difficult balance to achieve, especially as marketing has traditionally been less focused on immediate commercial growth in favor of long-term brand building. But our remit is expanding, and we must not only identify consumer needs but also the commercial potential of these consumer needs.  

In my role, I’m working more closely with our commercial leaders to ensure alignment from the get-go and help balance the tradeoff between “fast and slow.” It’s important to align across marketing and sales teams on what long-term success looks like as well as what challenges might arise in the short term. Collaborating with sales allows us to better identify commercial realities such as pricing, competition, and potential cannibalization within our portfolio. 

In April, AB InBev appointed our first global chief growth officer, a newly created position that aligns sales and marketing under the same umbrella. This indicates a clear mindset change.  

Budweiser and Harbin are the official beer sponsors for the 2022 World Cup. How will Budweiser APAC use the event to engage fans and create a memorable brand experience?  

With the resurgence of COVID-19 in some areas of China, consumers are once again dealing with certain levels of anxiety, uncertainty and stress. Thus, we are adjusting our messaging.  

We want to keep things simple and help consumers unleash the fun – not only the fun of the World Cup but the fun that comes with being with family and friends and forgetting about your worries for just a moment. We want consumers to be able to just enjoy the game and enjoy a beer. 


FINAL THOUGHTS

For marketers to shape the today and tomorrow of their brand, they must have a systematic approach to understanding the increasingly complex consumer landscape. To build brand relevance, they must balance long term-brand purpose and short-term demand generation across the full marketing funnel. 

To learn more about how your organization can build brand relevance and drive uncommon growth, contact us today.  

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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.  


FINAL THOUGHTS

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. 

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What is Business Design?

Learn about the modern approach to business building.

Business strategy and design thinking are converging into a new approach for solving business challenges known as business design. This makes sense given that design-driven companies continue to outperform their peers and also explains why so many management consultancies are rapidly acquiring design agencies. A decade ago, business design was an emerging role in design agencies. Today, however, it’s an established role in consulting and moving in-house as well.  

How do We Define Business Design?  

Business design brings a design mindset and methodology to solve business challenges and deliver viable business models. At Prophet, business design is a method for developing products, services and ventures for our clients that are differentiated in the market and able to capture value for their businesses.  

Why is Business Design the Modern Approach to Business Building? 

There is some magic that happens when you bring the design process of divergence and convergence to bear on business challenges. It gets business leaders out of the mindset of competing over existing market share and reorients them to think about what new value could be created based on the emerging needs, motivations and behaviors of all humans involved in the value creation equation – customers, users, employees and communities. 

At Prophet, when we embark on a business design project, there are some key things we set out to do:  

  • Achieve a deep understanding of business challenges faced 
  • Bring a design mindset and use design methods to solve them, including creating new methods 
  • Develop iterative plans and models based on real-world scenarios to understand what will be most viable in the market 

The goal of business design is to ensure that neither of these scenarios happens: 

  • The business minds determine all the requirements for a new offering and bring designers in to beautify the interface 
  • The design team creates the end-to-end user experience of a new offering and brings the business people in to give it a price tag 

The defining characteristic of the business design function is to constantly balance the needs of users with the needs of the business, in the near and long term. A business designer will always ensure that business logic informs any design-build or seek out to better understand the logic that supports their design – whether that be loyalty leading to higher customer lifetime value, efficiency leading to higher transaction volume or something else entirely. On the other hand, a business designer will see through a short-term value capture scheme if it has the potential to hurt the long-term viability of the business. So, it is about balance on two fronts: managing desirability and viability and managing the time horizons. 

Three Examples of Business Design Frameworks 

Here are some business design frameworks that show what it looks like to solve business challenges with design methodology: 

Human-Centered Opportunity Sizing = Total Addressable Problem 

The Total Addressable Market (TAM) approach to opportunity sizing assumes that companies are constrained by the industry in which they operate today and that to outgrow the market, they must take share from incumbents. In contrast, the business design approach to opportunity sizing is based on the Total Addressable Problem (TAP), which a business is trying to solve for users. Rather than starting with an existing industry, such as the hotel industry, it starts with a user need, like the ability to feel at home anywhere in the world. Framing the opportunity based on what you are helping users achieve creates new possibilities and use cases.  

Take Airbnb for instance. Airbnb’s growth far exceeded the budget travel market that it originally entered. Now, Airbnb competes with luxury hotels, short-term rentals and travel services outside of lodging. Uber is another great example. It started from the other end of the spectrum as a high-end car service but through a TAP framework, it far outgrew the taxi industry and instead became a micro-mobility platform with food delivery, bike rentals and healthcare transportation. Lastly, Amazon started in e-commerce, but through a TAP framework, grew to provide convenience in all aspects of household management, including building a smart home ecosystem.  

Human-Centered Commercialization = Incentive Design 

Business design creates outsized value by aligning emerging behavioral and business models and then makes value exchanges that are sustainable and durable in the long run. Before folding in 2013, late fees accounted for 16% of Blockbuster’s revenue. If the way a business captures value is in direct opposition to its users’ best interest, that is not a sustainable business model.  

Netflix’s subscription model, however, aligns user and business interests. The more you watch, the more data Netflix gets on what you like to watch, the better they can recommend additional content. Subscriptions lock in recurring revenue, enabling Netflix to make bigger bets in developing new content. And it is not just about value for customers. Netflix invests heavily in creators with new stories to tell and targets those stories to the right audiences. One of the most important activities in business design is creating growth feedback loops in which new demand drives new supply while increasing value for all stakeholders. 

Human-Centered Planning = Test and Learn 

Business design preferences emergent and iterative models over linear and deterministic planning. You can learn more about the viability of a new business in one meeting with users than in a week of modeling future cash flows based on historic assumptions. A business designer is comfortable with the knowledge that an assumption being off could mean a 10x change in revenue projections. They will not boil the ocean perfecting those assumptions, instead, they will put something into the market and see what happens. Of course, businesses need cash flow today to explore new problems to solve for their users tomorrow. A business designer will think about what can be EBIT-accretive today, while also investing in experiments to rapidly test and learn what new business models might be most relevant in the future. 

Check out our most recent research – Building Business Resilience Through Innovation


FINAL THOUGHTS

Despite its gaining popularity, business design remains a widely misunderstood discipline, yet it is the most important future skill. At its core, it requires a human-centered approach that is simultaneously focused on the needs of customers, stakeholders and key business imperatives.  

At Prophet, our business design team comes from the design world and the business world. We self-selected into business design because we saw that there was no longer a product-solution fit between traditional business strategy tools and the types of challenges we are tasked with solving for clients today. A business design approach is fit-for-purpose to future-proofing businesses as the needs, behaviors and expectations of humans and what is enabled by technology changes at an unprecedented rate. 

Start employing business design to solve key business challenges. Get in touch today.  

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Is Ineffective Collaboration Hindering Your Organization’s Transformation?

Remote work makes cross-organizational change harder. But our Collaboration Flywheel model shows that the right interventions can create a virtuous cycle of cooperation.

As businesses work toward transformation, many find themselves trapped in a structural paradox. The Collaborative Advantage, the latest global research report from Prophet’s Organization & Culture practice, finds 80% of business leaders recognize that collaboration throughout the enterprise is essential. Yet, 50% are struggling to achieve it. And hybrid working compounds this challenge further with only 28% saying they believe their organization effectively supports collaboration in this environment.  

The most successful transformers? They have worked to break down silos and build collaborative muscles by progressing through three essential phases, which we have encapsulated in a new model: Collaboration Flywheel. It’s a virtuous cycle of interdepartmental breakthroughs that reveals a path for leaders to more impactful outcomes and faster growth.  

Prophet’s Collaboration Flywheel

The Flywheel provides a perfect metaphor for organizational culture. Taking a holistic, human-centered approach, it works by reinforcing positive behaviors and outcomes and minimizing negative feedback loops. It builds momentum over time. Each time the wheel turns, it generates more power and benefits for both the business and individuals.  

Phase One: Coordination

This is where many organizations begin and end their development journey. Different groups, traditionally siloed, recognize the need to align horizontally rather than vertically. When leaders promote a broader strategic goal, teams understand that working together is beneficial. And they also understand when it makes more sense to continue with traditional, business-as-usual approaches. To create clarity, organizations need to define the goal and role model the desired collaborative work.  

An example of this in practice might be helping employees to invest time in understanding how different parts of the organization work and identify connection points (e.g., shadow a colleague in another function) or creating a shared vocabulary – even just a few key terms – to use consistently in cross-organizational efforts.  

Phase Two: Cooperation

As each group gains experience in coordination, they get a clearer understanding of how their work fits into the bigger picture. Trust, shared ways of working and incentives become more explicit, making it easier for groups to proactively call on collective capabilities. They move into the who and how of the collaborative effort. They start to define roles and decision-making responsibilities. 

They see the value of shared effort more quickly. They’re informed by a common ambition, a central fact base and well-articulated ways of working. They will also have the right tools to navigate the complexity of their growing interdependence. All of this means cooperation is far more likely to have a greater collective impact than straightforward coordination might produce and depend less on the day-to-day involvement of leadership.  

Phase Three: Collaboration

As this proactive cooperation builds a shared context across independent groups, interdependence and synergy increase. At this point, the organization can celebrate the visible progress of piloting and embedding new ways of working. Cross-organizational teams see an increase in quality, with a healthy mix of synchronous and asynchronous work. Synchronously working teammates often generate new ideas together. Asynchronously working colleagues bring objectivity and clarity.  

Working together becomes the norm, not the exception. And so, the Flywheel spins. When combined with our human-centered approach to transformation, this new organizational muscle of collaboration taps into the enterprise’s DNA, Body, Mind and Soul.  

With collaboration now a default behavior, it becomes sustainable. Innovation and disruption replace old and ineffective ways of working, which in turn leads to accelerated transformation and results for the enterprise.  

Better Outcomes – For the Business and Individuals

The research shows that higher levels of teamwork enrich individuals, building new skills that increase engagement and job satisfaction – a critical lever in today’s dynamic talent landscape. Of the 1,000+ people we spoke to across the U.S., Europe and Asia, 77% say the organizational emphasis on collaboration enables higher productivity. 

As evidence of its ROI increases, it’s clear that collaboration has moved from a buzzword to a core business strategy. Organizations no longer need to be sold on the benefits and importance of collaboration. Leaders and managers worldwide understand that practical cross-organizational efforts lead to greater success.  

This is especially true as companies step up their efforts in diversity, equity and inclusion, and environmental, social and governance issues. By definition, this work needs to permeate every part of the company and be understood by each employee. Often, it even requires reaching out beyond the organization’s borders and interacting with external stakeholders that may include government, NGOs and communities.  


FINAL THOUGHTS

Collaboration is the future of work. Securing the next competitive advantage depends on agility, finding the most effective and innovative ways to bring the best out of every part of the enterprise. And it calls for incorporating that fluidity into the organizational DNA. Working together, companies are learning, is what sets them apart.  

Want to learn more about how to unleash the transformative power of collaboration? Download The Collaborative Advantage report now.

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Reimagine Retail in the Face of Social and Technological Disruption  

With BRI insights, a look at how the retail vertical in China should build relevance.

As we experience the continuing battle against COVID, we have witnessed many new retail trends emerge since the lockdown, specifically in Shanghai. Some examples of this include group buying by communities, the transformation of brick-and-mortar stores and fronted warehousing. The major changes in consumer needs, brought on by new normals like social distancing, are bringing important challenges to the retail industry. In our eyes, change means not only challenges but also opportunities. It’s a chance for previously less-considered brands to connect and reach out to consumers.  

As a growth and transformation consultancy, our annual Brand Relevance Index® (BRI) regularly observes the moves and shifts of brands across different industries around the world. This year, we found that successful brands build relevance by appealing to consumers’ heads and hearts. Brands that appeal to the head are ruthlessly pragmatic and pervasively innovative, while those that appeal to the heart are customer-obsessed and distinctively inspired. All-star brands that are relentlessly relevant usually hit simultaneously in the head and the heart. 

Right Place: Continuously Optimized Channels 

In the conventional retail experience, retailers such as shopping malls focus on maximizing the use of space and creating a comfortable shopping environment. However, the pandemic uncovered a pressing problem. The normally well-functioned channel system, both online and offline, could be overwhelmed by sudden influxes of customers. Retailers thus must reflect on how to improve the stability of their systems across different channels in order to promptly respond to unexpected disruptions.  

Amazon Go (Amazon ranked #15 in the 2022 BRI) provides unmanned shopping services, solving the problem of long queues faced by most retailers. A recent survey showed that over 60% of local residents wanted an Amazon Go in their neighborhood. Another example of brands tackling this issue is Walmart’s partnership with Gatik, a transportation technology company. Together, the two successfully deliver orders from warehouses to communities through driverless vans. We expect a brand-new era of logistics to arise in the post-COVID era, and the early adopters will stay ahead. 

In addition, new channels have been spawned by the pandemic, for example, the community-based group buying happened on private chat groups. We expect that this trend will stay post-pandemic. Determining how to manage and monitor consumer experiences away from official brand channels becomes a challenge for brand owners. During the pandemic, many businesses launched curated product packages based on communities’ demands and designed branded promotional materials for social networks. Retail managers joined chat groups to answer questions personally. These behaviors are unprecedented, allowing brands to touch their customers directly in the last stretch of their buying journey. 

“It is crucial for brands to provide consumers with highly convenient, consistent and reliable experiences at every corner of their lives to appeal to the head.” 

Right Products and Services: Innovation Inspired by Real Occasions 

The pandemic has also accelerated consumers’ demand for different products and services centering around the home. People’s expectations towards their living space have also evolved – they want a place where they can work, study, play, exercise and live rather than only a place for rest.  

IKEA (#40 in the 2022 BRI) has long been a frontrunner when it comes to designing retail experiences based on occasions. Instead of showcasing products based on their categories–as traditional furniture malls do–it created a series of unique home spaces, leaving customers room to be immersed and unleash their imaginations. IKEA captures people’s hearts by creating a microcosm of what people want in their homes, rather than a cold shopping mall – a key reason why IKEA leads in the home retail industry. 

Retail stores that create an immersive experience are now gaining popularity and becoming the carrier of service innovations. MUJI, for instance, has launched Muji Infill, a home decoration consulting service at its flagship store in Shanghai. This concept turned a home retail space into an immersive showroom that addresses every home living need. 

Some technology brands are also ramping up their retail presence in response to consumers’ home needs. For example, Huawei is opening smart home experience outlets across China to provide all-in-one IoT solutions. As technology giants enter the market, traditional retailers need to think more carefully about the path for innovative businesses, to meet the ever-changing needs of consumers. 

Right Time: Seamless Customer Journey 

Last but not least, the pandemic has accelerated the transformation of the traditionally linear customer journey (need, visit, browse, select, pay and pick up) to become more dynamic. Customers sometimes come across a new product through online browsing before they even have the need for it. They can complete the purchase online without a visit to the store and may return or exchange the product afterward. 

The in-store experience used to be the core milestone of the home shopping experience. When a consumer tries to find a sofa, it is difficult to picture the real product and how it would look in their home just by viewing its pictures online. Responding to this customer pain point, many major retailers have pioneered AR-enabled tools that allow users to see how different furniture fit in their home decors. In the United States, retailers including IKEA, Amazon, Target and The Home Depot, have made the AR-based shopping experience one of the key milestones in the customer journey. 

As we welcome web3 technologies, the retail industry is greatly impacted. The way how retailers showcase their products and interact with their customers in virtual shopping will be disrupted. However, this does not mean copying the traditional retail model into the “metaverse.” It requires retailers to rethink their customer journeys and business models in light of new consumer behaviors.  

How should retail spaces and products be presented to consumers through web3 technologies? And how will new technologies be used to optimize browsing, shopping and the return and exchange experience? Some retail brands are already leading the way. Walmart, for example, is quietly preparing NFT products like virtual currencies and products, from appliances, and toys to decorations. TYB (try your best) is a “community commerce” platform based on web3 technology, where consumers can co-create with brands to win NFTs and virtual collectibles.  


FINAL THOUGHTS

Despite the constant disruptions, the fundamentals of retail remain the same – to provide the right products in the right place and at the right time. Changing consumer demands and emerging business innovations, while posing challenges to retailers, also bring endless opportunities to rebuild their relationship with customers. Perhaps it is the perfect moment to reimagine your retail strategy. 

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Modernize the Marketing Planning Cycle

Clear your calendar. It’s time to make room for a brand-new approach to annual marketing plans.

The annual marketing planning cycle desperately needs a makeover. Every marketer who has ever groaned, “There has to be a better way to do this!” is right, and the most effective companies are already finding new ways to inject efficiency and effectiveness into a cumbersome process.  

While much of this change has been coming on gradually, changing customer behaviors, increasing demands of marketing within the enterprise and growing opportunities with technology have intensified it. And amid growing business uncertainties–inflation, supply-chain and recession concerns–modern marketers feel an urgency to help drive strategy, not just follow it.  

More and more, marketers are being asked to deliver value that is tied to the overall business outcomes.  

That’s because the customer journey is more complex and less linear every day, highlighting the tension between brand and demand marketing. Our recent research takes an in-depth look at the intersection of these marketing disciplines, tapping the insights of more than 500 marketers. Our findings underscore that an updated approach to planning separates the most successful companies from competitors.  

“Today’s marketers are coxing other execs out of their respective silos, moving to “a more agile, `brains in room’ format,” says Tyrrell Schmidt, CMO, U.S., TD Bank, one of our respondents. “We want to build a structure that puts the customer at the center.” 

And business leaders are learning that while the annual planning process is still way too full of retro drudgery, it’s also full of possibility and potential. Many see it as the most creative endeavor of the year, allowing them to show off the value modern marketing can bring to the enterprise.  

Here are five ways the most effective marketers are reshaping the annual planning process.

Take an Integrated View  

Historically, disparate marketing teams have driven different objectives. Because they’re working separately, they’re not optimized for holistic growth. They’re often not even pointing in the same direction. 

Marketing needs a more integrated process. That requires cooperation among brand, demand and corporate marketing teams so that they find agreement on all-important basics (We’ve covered other planning checklists in The Eight Essentials of a Successful Marketing Plan). 

For starters, these working groups can nail down a common language (“Do we say `initiatives’ or `programs’? `Campaigns’ or `tactics’?”). They can also agree on standard measurements, balancing short and long-term approaches, as well as lagging and leading indicators. And they can establish a set of unified tools, such as an integrated calendar and a single marketing brief. 

Focus on Customers-Not the Funnel

If companies want to be customer-centric in how they market, then they need to be customer-centric in how they plan. Yet too many firms lose sight of the people that matter most. 

Part of that stems from the limits of funnel vision. Yes, marketing funnels are the conventional backdrop for planning and helping identify specific marketing strategies. And we’re not suggesting companies shift from that approach outright.  

But on its own, the funnel does a poor job of coordinating multiple efforts. And by definition, it takes a company or product view. That’s the opposite of customer-centricity. 

A journey view helps assess how to best allocate resources to acquire customers and build loyalty. It also has the added vital benefit of revealing missed opportunities in customer experience. 

We understand the shift from the funnel to a customer-centric journey can be challenging, and many will ask if there’s room for both. Of course, marketers can–and maybe even should–keep the funnel in mind even as they develop the journey view. But ultimately, it’s the customer who makes the purchase, so anticipating their needs and providing the right solutions matter more than anything else. 

Align Under Shared Initiatives

Companies often struggle with overly complicated messaging strategies scattered across multiple product offerings and customer segments. They frequently say they’d like programming with “fewer, bigger, better” ideas but don’t know how to get there. 

It’s complex. Because demand marketing has an expanded role in driving revenue, there’s more pressure to crank out more messages and promotions. That means many competing, overlapping, and siloed marketing initiatives reach customers simultaneously.  

That can be managed better with unified views of calendars, a hierarchy for messages and promotions, and commonly integrated plans. Those all build more alignment and clarify optimal resource allocation during the planning process. This view then carries forward into activation and more frequent re-prioritization that may be needed throughout the year. 

It can also be an important venue to talk about experimentation. Test-and-learn thinking that too often gets left behind in the planning process. Will those NFTs pay off? The storefront in Horizon Worlds? Anamorphic billboards? No one yet knows what kind of return on investment these might have, and they indeed fail the “Bigger, better” test. But fledgling ideas need budgetary support if the organization wants to gain agility and build a marketing edge.  

In our research, we found that Marketers who work for businesses that successfully meet goals cite strategic experimentation as the predominant force behind their investment decision-making – perhaps shifting the mix based on objectives. Compare this to marketers who work for businesses that do not successfully meet goals. They, instead, rely mostly on industry best practices and historical effectiveness to inform their decisions – a more static and unchanging approach. 

Importantly, planning under a unified umbrella provides satisfaction. Teams can walk away knowing how their plans and responsibilities support the greater business objectives. 

Bring the Village

Those shared initiatives require inviting a bigger cast of characters into the planning process. Integrated marketing means inviting more people into the planning meeting. When setting up planning sessions, marketers should reach beyond product and sales to include research and insights, partners and operations. 

However, there’s no one size fits all approach. B2B companies may have to think this through differently, often including sales teams and product leaders even earlier, as part of the bottom-up planning process.  

Regardless, all companies should include as many perspectives as possible while also keeping their customers in mind.  

We recognize that this may bring up concerns about “too many cooks in the kitchen”? You’re not alone. While it can seem clumsy initially, it’s an important first step to being collaborative. The more companies strive to achieve cross-functional consensus, the less “re-work” and pivoting they need later.  

Map to Business Outcomes

Our research finds that marketers who describe their companies as top performers actively align marketing activities and tactics to shared business objectives. While many marketing objectives remain essential to the success of the plan’s performance, this calls for bigger thinking. It connects marketing to the goals of other stakeholders in the firm and functions far beyond their own. 

The first step is to decide on those “no-regrets” business opportunities and align the most supportive marketing strategies. Many start with a worksheet that looks like this: 

Download the Mapping Marketing Tactics to Shared Business Objectives Worksheet.


FINAL THOUGHTS

The shift toward integrated, customer-centric planning requires weeks if not months of new kinds of preparation. That can include new journey maps and competitive intelligence.

But the pay-off is well worth it. Integrated marketing allows a company to develop a modern approach that connects brand to demand. And ultimately, it serves customer needs better, improves execution and leads to uncommon growth. 

Ready to reimagine your 2023 marketing planning process? Get in touch with our marketing and sales team today.

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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.  



FINAL THOUGHTS

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.

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Small Acts of Inclusion 

How inclusivity is reshaping the way Prophet works

We have been continuing to work on diversity, equity and inclusion efforts here at Prophet and have have made steady progress since our last update. We know that achieving representation reflecting the communities where we live and work will take time. And we are also learning a lot when it comes to the importance of understanding the complexity of inclusivity. 

While some organizational practices need to be changed to be more inclusive, we are learning that it is at the micro, one-on-one level where change and impact are being felt most. When everyone at our firm understands and makes a habit of small acts of inclusion each day, we believe that change can happen at scale. 

Propheteers are very proud of our culture, and we should be. But as our inclusivity efforts have strengthened, we sometimes bump up against defensiveness. Even among those who are the most vocal about adding diverse representation, there’s a resistance, or perhaps better put, lack of understanding, to becoming more inclusive in our work.  

We are trying to reinforce that bias does exist here and everywhere. There is no organization where bias does not exist. And so creating a truly inclusive culture means looking at the day-to-day interactions that happen throughout the firm. These connections are the foundations of the employee experience. In each moment, they give people a sense of belonging, letting them know they are valuable members of the team.  

In other words, inclusivity has to be addressed at every level of interaction – macro, corporate level, team level and individual level. The quality of those interactions and the relationships that develop determine how well and for whom the systems are working. 

So far, we’ve found three focus areas that are especially helpful. 

Learning New Language

The ability to have DEI-related conversations throughout an organization requires a common language, and the evolving list of terms initially feels unfamiliar. A first step has been starting small group leadership discussions and introducing inclusion concepts through unconscious bias and allyship training. We’re proud that all of our 600-plus employees have completed this work. 

That’s only a start, though. It’s important to keep talking to translate ideas into individual and collective action. 

Tokenism is one example. Building an inclusive team means gender diversity should be represented. But if a partner asks a woman to work on a pitch just because she’s female, that’s not inclusion. Tokenism is just for show–it’s performative. On the other hand, representative teams are intentionally built because if the goal is cognitive diversity, we know that identity diversity is critical to adding a valuable perspective that wouldn’t otherwise be there. Who we are in the world shows up in how we think and navigate the world differently.   

As a practice, leaders should question “Am I building a team that is as representative as possible?”  Slowing down to process and talk about decisions that impact the way we work can open up healthy dialogues and lead to better outcomes.  

The right language takes these daily conversations from defensive to pragmatic, hopefully making them more productive.  

Reconfiguring Networks

Internal networks–often invisible and informal–are places of exclusion in many workplaces. Remote work has made this even more challenging. Do the people who choose to go into the office, for example, have more access to certain leaders and the chance to develop relationships, while those working remotely may not? Or do certain groups have an easier time interacting and building relationships in a virtual group environment than others?

Making Intentional Connections

We are creating strong employee resource groups, which make space for people to build community and find support. These include Black@Prophet, Pride atProphet, Latino@Prophet and Women In Leadership. And we’re constantly looking for new ways to bring people with shared interests together. We need to do more, though. So we’ve begun opening up opportunities to learn about our leaders and different parts of the company. 

How Inclusivity Needs to Change Our Work

We are focused on moving inclusion beyond awareness through group training and individual coaching. We’re seeking more actionable strategies that impact the way we work, including business development and other go-to-market practices. By setting expectations, mitigating structural bias, and role modeling small acts of inclusion, we know that we can create a firm with imperfect people and their biases that nevertheless contribute to maintaining a healthy and inclusive environment.  

We know that more inclusive teams lead to more innovative and varied approaches to our work for clients, from broader digital transformation strategies to more accessible user experiences. We are trying hard to make this a consistent way of doing business. 

There’s growing urgency to these efforts. Like so many other companies, our work accelerated with the murder of George Floyd in May of 2020. It continues to speed up, fueled not just by the increasing awareness of racial and gender disparities but also by the Great Resignation’s tailwinds. An inclusive culture is key to recruiting and retaining the best people–that’s true for Prophet and every one of the clients we work so hard for. 

So we’re not slowing down. We’ve intensified our planning, becoming more intentional. We’re leveraging strategic approaches within campus, lateral and executive hiring efforts to increase the diversity of the candidate pipeline and, ultimately, incoming hires. And we’re systematizing our process, creating a scalable program based on business rules, such as an Inclusion Rule for diversity on interview slates. We’re completing contract-bound pipeline requirements for external search partners. 

We’re looking to our data to understand employee experience across all diversity dimensions. And we’re using that lens across the board to help ensure that we support diverse teams to lead clients to the best solutions.  

The end goal? A Prophet where one cannot predict a person’s success based on how they look, whom they love or whom they pray to.  To get us there we’re working to clarify and communicate each employee’s role in DEI. We’ll know we’ve arrived when DEI is no longer seen as the responsibility of a handful of people but as a new kind of thinking and behavior each of us brings to work every day. 


FINAL THOUGHTS

Prophet’s purpose–the reason we exist in the world–is to help our clients find uncommon business growth. Our inclusivity efforts are helping people find uncommon personal growth, using curiosity and innovation as they discover more equitable and inclusive ways of working with one another.

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Leaning Into Leadership: A Q&A with Mat Zucker

Mat is a marketing strategist who knows how to strike the fine balance between brand and demand for many of Prophet’s biggest clients. To me, he’s someone I can reach out to, bounce any marketing idea off (big or small) and get a genius, creative response. He’s always available to help and is a wonderful colleague I have a ton of respect for. Thank you Mat, for your time! 

Amanda Nizzere: What do you do at Prophet and in what circumstances would I come to you for something? 

Mat Zucker: Technically, I’m the co-lead of the global Marketing & Sales practice, co-executive sponsor of one of our creative teams and a client lead on several interesting accounts. That’s all true, but I find most people come to me for a customer-facing marketing strategy (how to win in the market with an audience), an entrepreneurial solution, creative thinking on a business problem, or anything to do with advertising, content or my beloved hobby—podcasting.   

AN: What’s one professional skill you’re currently working on? 

MZ: Right now, I’m working on media planning, buying and orchestration. Media, unpaid and paid, is so integral to marketing and a large part of the budget, yet too many of us in strategy are too far removed from it. I’ve always been around media both as a creative director and as a digital marketing strategist. While earlier in my career I became quite savvy around creative use of media, now I’m trying to upskill my conversation around how to think of investment, integrating brand and demand efforts, and non-traditional channels such as influencer marketing, search and even the metaverse.  

Image: Mat Zucker, Senior Partner, New York Office

AN: What was your first job? 

MZ: I started as a creative assistant in the creative department at FCB/Leber Katz Partners in New York. I worked for six creative directors and organized travel, filed expenses, pasted TV storyboards, fixed the photocopier and told their spouses, “It’s going to be a late one again.” My bosses knew I wanted to be a copywriter, and several gave me writing assignments, which was perfect training that led to me seeing my first real ads in radio, print and even early web and e-commerce. 

AN: What’s one thing that surprised you about working at Prophet? 

MZ: At first, I was surprised by the volume of calls and nonstop conversation. As a previous creative director, the goal was to get off the call so one could do the work and then share back. What I learned in consulting and an interdisciplinary environment like Prophet, was that the conversation is part of the work. The debate, the discussion, looking at things in multiple ways before settling on an answer… Yes, you should do some research and thinking off-screen but so much work happens in the conversation rather than solely in between it.  

“What I learned in consulting and an interdisciplinary environment like Prophet, was that the conversation is part of the work.”

AN: If you could snap your fingers and become an expert in something, what would it be? 

MZ: Search: SEO and SEM. Seriously, the world is still driven by those search algorithms and if I had the patience to sit through the classes, I’d be a millionaire.  

AN: What’s one thing most people don’t know about you? 

MZ: Most people still think I’m really career-driven, trying to move up. What’s hard to explain is that I’ve had top jobs, I’ve been “Chief.” I love my work and have lots of things I want to do, but while I respect people still seeking titles and elevation (you should scratch that itch if you have it), I’m good. I’m more focused on the type of work I do, what I can create that shows up in market or influences what others do and helping develop the careers of others. That said, if you want me on your Board or to run your company and it’s a tough, fun challenge, I might look at it. 

“…while I respect people still seeking titles and elevation…I’m good.”

AN: If you could trade places with anyone for a day, who would you choose? 

MZ: Someone in medicine. Healthcare was something I avoided in advertising early in my career, but now in strategy and as a 50-something with various weird conditions, I’m fascinated by it. My sister is a social worker. My niece is a med student. My husband, a wellness coach. I’d like to work with patients that are not myself. 

About the Series 

Throughout my career, I have been fascinated with the building blocks of leadership, from motivation, coaching and communication to mentorship, empathy, inspiration and more. Unraveling and understanding what makes a strong and impactful leader tick can help each of us implement new strategies to grow as individuals and leaders ourselves.  

Over the years, I’ve listened to podcasts, read books, attended conferences and listened to TED Talks about various leadership topics, but some of the most impactful lessons and pieces of advice I’ve learned have been from those around me—my mentors, colleagues and industry peers. This has led me to create this interview series, “Leaning Into Leadership.” I invite you to join me as I interview various leaders in my network to share new tools and wise advice from them that you may just want to add to your own leadership toolbox. See previous interviews here


FINAL THOUGHTS

Mat is co-lead of Prophet’s global Marketing & Sales platform, a frequent writer and an avid podcaster, including as host of Cidiot and Rising, a marketing careers podcast. Have a question you’d like to ask him directly? Reach out here

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How Top Brands Get to the Hearts of Consumers

Three standout trends the top heart brands are doing to become relentlessly relevant to consumers.

It’s no secret that the brands consumers are obsessed with hit closest to our hearts–the ones that make up our identities and help express who we are. The brands we call “magic makers” make us feel true affinity and loyalty: the sneakerheads, gamers, Tesla owners and devotees get it. There is no logical explanation for this kind of love— the kind of love that has lines wrapped around the block at Gucci and people camping out to see the next Marvel movie, even amidst a global pandemic. In the 2022 Prophet Brand Relevant Index (BRI), our annual study which asks 13,500 U.S. consumers which brands are most relevant to their lives, we learned what the top-performing brands do to attract such devoted consumers. For one, they create emotional stories and connections that consumers just have to have and experience. Unlike their counterparts, brands that appeal more to our head and practical side, these brands, fill an emotional need that goes straight to our hearts.

In addition to our overall BRI ranking, we have identified the top brands that speak directly to consumers’ hearts.

Top 25 Heart brands, ranked:

So, what do the top heart brands do to be considered relentlessly relevant to consumers? We discovered three standout trends where brands appealing to consumers’ hearts are excelling.  

Bringing the Fantasy to Us

To create “magic,” brands need to do more than fill a need in our life—they must make us feel like part of something bigger and provide connection and stimulation to escape monotonous days. Gaming and platforms such as PlayStation, Nintendo and Xbox enable escape and connection, and respondents agree that they could turn to their consoles to engage in new and unexpected ways. Marvel, Disney, MLB and NFL joined our top ten for brands that “Connect with me emotionally,” making us feel part of something bigger than ourselves. The power of these “magic makers” is to transport us out of our lives and into the past, the future or another planet entirely—and recently that transport mostly happened in our homes.

Nothing gets you closer to a shared in-person experience than live sports and the NFL had an especially strong showing in its first year in the BRI. Despite a variety of controversies, the NFL had more viewers in 2021 than in the previous six years. Because the experience of watching a game depends on live viewership, advertisers could count on a present audience, a rarity in today’s TV market. Innovations in adjacent categories also helped NFL: Sports betting laws opened up and a record 45.2 million Americans are expected to bet on NFL games and wager more than $20 billion, according to CNBC.

Inspiring Authentic Expression

2021 was the year the “creator economy” exploded in full force. From Etsy and Pinterest to YouTube and TikTok, extra time at home coupled with the “Great Resignation” led to increased engagement with social platforms for both viewers and creators. There are over 50 million who consider themselves ‘creators’, according to Forbes, especially among younger generations with strong aspirations to maximize their platform as a career. Creators love these platforms because they allow them to monetize their personal brands and connect directly with their audiences in ways that were never possible before. 

Ranked 13th on “Heart” and 21st most relevant brand overall, Etsy helped connect makers with products they needed and wanted during the pandemic. Etsy reported in 2021 that they had sold an astounding $346 million dollars just in reusable face masks. These products not only fulfilled a need but also felt special and infused with the maker’s craft and love. 

Making Us Feel Special

While still stuck at home during the pandemic with nowhere to go, the 2022 Index shows that we embrace brands that make us feel alive and special, even when they are impractical to our current needs.  Some of our highest performing magic makers were luxury brands: Tesla, Gucci, Sephora and Mercedes-Benz were beloved by consumers and rounded out our top 20 for “Makes me feel inspired.” In the last year, luxury brands rebounded faster than many expected. In times of uncertainty, enduring status and quality symbols can feel reassuring.

Luxury brands have seen record levels of growth coming out of the pandemic. “Revenge shopping” or the phenomenon of those with means spending on luxury goods to fill a void left by canceled social and cultural events may explain the quick comeback of high-end brands. Luxury items aren’t just objects—they deliver a transportive experience that activates their brand. Luxury may not solve problems, but in a time when we sacrificed so much, it delivers the fulfilling indulgence that only a wildly expensive, exquisitely designed object or experience can.

What Can Heart Brands Teach Us?

To go from a commodity to relentlessly relevant, brands need to connect with our hearts. Top heart brands have found ways to connect with consumers’ emotions by:

  • Targeting micro-communities of fans who are obsessed with the same sports team or TV show. Instead of trying to appeal to everybody, narrow in on the people who are most likely to connect with the product or service offered.
  • Bringing together commerce and community. The best brands create loyal followers who look for every new product drop and turn up to every store experience: turn consumers into brand evangelists.
  • Delivering on personalization and quality, whether that’s highlighting the stories of artisans and innovators who design products or offering a customized experience through an algorithm or brand design, makes every person who walks through the doors feel special and loved. Magic.

FINAL THOUGHTS

Want to learn more about how the most relevant brands are tapping into the head and heart of consumers? The Prophet BRI serves as a roadmap for building relevance with consumers. Contact our team to learn how to apply the insights from the 2022 Index to your organization. 

Brand Equity – Brand Value_1_A

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