Introducing the Innovation Maturity Model for Financial Services
Prophet’s Innovation Maturity Model helps organizations establish and operate high-powered innovation engines.
Innovation – more and more – is what every financial services company seeks as the primary means of driving growth. That’s true because innovation is increasingly what separates market leaders from also-rans.
But for all the investments in innovation, most organizations struggle to generate the returns they’re looking for or produce the growth that innovation is supposed to unleash. For more on the barriers to innovation and – more importantly – how to get over them, read our recent research report, Winning the Innovation Game in Banking.)
In the intensely competitive financial services sector, it is not enough to innovate every now and then. Rather the goal is to establish a rigorous practice of innovation and to make it a standard part of ongoing operations. The vision is to establish a high-performing innovation engine that continually identifies innovation opportunities, explores those ideas via prototyping and gated investments and efficiently moves meaningful innovations to market. Such a disciplined process is necessary to avoid the common pitfalls that make repeatable innovation an elusive target for many companies.
Introducing… the Innovation Maturity Model
To help banks, insurers, and investment managers industrialize their approach to innovation, Prophet created the innovation maturity model. This model helps organizations:
Assess their own innovation capabilities and opportunities
Identify the barriers – technological, process, human, cultural – inhibiting innovation
Establish tangible innovation goals and actionable plans to overcome those barriers
Define a roadmap to establishing repeatable innovation capabilities
The innovation maturity model inspects five dimensions of the business that are critical to enabling innovation:
Strategy and Vision
Organization and Mechanics
Insights and Measurement
Culture, Behaviors and Rituals
Education and Enablement
Within each of these areas, the model defines varying levels of maturity – beginner, novice, intermediate, advanced, expert – so organizations can understand where they are today and what to aim for tomorrow. For instance, an organization with expert-level capabilities in organization and mechanics would involve the entire enterprise in using innovation portfolios to drive strategic directions and decisions, with all employees aligned to the innovation strategy and with specific responsibilities to drive that strategy forward.
In terms of education and enablement, beginner firms will be those that provide access to and funding for external training for dedicated innovation practitioners. Intermediate firms will have innovation teams in place to help drive behavioral change across the organization and support wider education efforts. At the expert level, innovation training and education will be a mandatory part of onboarding and learning and development programs, with continuously updated curricula and regular use of outside resources for insight and inspiration.
The innovation maturity model reflects our market experience in terms of what works in driving breakthrough innovations. Further, it’s designed to establish cultures that prize risk-taking and experimentation and instill operational discipline relative to innovation. Such organizations are capable of both acting like a startup and investing like venture capital firms. As we highlight in our report, “Winning the Innovation Game in Banking”, it’s a matter of building a portfolio of innovation ideas based on deep customer insight and then rapidly testing and refining those ideas through pilots and MVP launches into the market.
The Many Forms of Innovation
Because innovation can take many forms, our innovation maturity model provides the core insights that can point the organization in the right long-term direction. To put the model into context, consider how the organizations below are evaluating the different ways to set up their innovation engines and flywheels.
Allianz: An ‘Always On’ Dedicated Innovation Center: Allianz has launched dedicated innovation centers to engage a range of partners, including FinTechs, start-ups and firms in other sectors, to develop entirely new insurance solutions for specific industries, including travel and automotive. This looks like a winning strategy considering the pressure on insurers to innovate in the face of intensifying risks from climate change, relentless cyber threats and the growing protection and retirement savings gaps.
JP Morgan Chase: A Condensed Annual Innovation Event:
JP Morgan Chase fills its innovation pipeline in creative ways, too. It holds an annual Innovation Week, bringing together employees in more than 400 events focused on generating new applications for artificial intelligence, machine learning and other enabling technologies, while highlighting specific business issues, opportunities, and current technology trends. It also held a digital innovation competition to generate transformative ideas to enhance the client and advisor experience. Such broad-based approaches reinforce that innovation is part of everyone’s job.
Vanguard: A Culture of Innovation and Commitment to Outside Partnerships: In wealth and asset management, Vanguard has promoted a culture of innovation by empowering employees to drive meaningful change. Further, it’s working with partners, such as American Express, to develop new offerings that give customers increased flexibility.
Prophet’s innovation maturity model helps organizations design the innovation engine they need based on their objectives, customer base, product set and cultures, as well as to establish the right operational model for repeatable innovation. For more insights, read our latest report Building Business Resilience with Innovation.
We’d be delighted to speak with you regarding your firm’s innovation outlook and objectives and how our Innovation maturity model can help you achieve them.
2022 Corporate Earnings: Where Do We Go From Here?
Understanding the key drivers of growth and strategies to move forward.
Corporate earnings this season are particularly unique. A global recession, the war in Ukraine, and a virus that is still disrupting normal life are among the many factors affecting businesses small and large, resulting in the first quarterly earnings decline since the onset of the COVID-19 pandemic.
Leaders are navigating difficult waters as they are tasked with facing the swirl of the macro-economic environment, moving forward from layoffs and identifying new growth opportunities — all whilst budgets are being slashed across industries. Despite this, there are many positive signals stemming from the recent earnings as many leaders are optimistic about a return to normalcy in 2023.
Prophet looked at close to 100 quarterly earnings results, across varying global industries and sectors, to understand the key drivers of growth, headwinds facing leaders and strategies to move forward in 2023. Here are our learnings on what earnings season could mean as we try to regain balance, agility and growth acceleration in arguably the least predictable time in recent history.
Top Learnings From This Remarkable Earnings Season
1. No industry or organization was shielded from the impact of a sour macroeconomic and geopolitical environment, with many reactively cutting costs to preserve margins.
This is a lackluster earnings cycle for most, with “headwinds” as the key buzzword and an average -22% earnings-per-share decline from Q4 2021. In 2022, businesses optimized for pandemic-fueled growth were forced to adjust to a down-market driven by global inflation, foreign exchange fluctuations, COVID lockdowns in China and additional supply chain disruptions.
As a result, leaders became laser-focused on cutting costs, managing risk and re-evaluating their business model. Banks, for example, are stowing away billions of dollars to protect against rising loan defaults; Harris Simmons, chief executive officer at Zion Bancorporation commented, “We continued to build our loss reserves due to both continued loan growth and the prospect of a slowing or recessionary economic environment in coming months.” Investors are bullish that inflation will slow in 2023, but businesses are managing risk and going lean to prepare for continued pressure.
2. Despite a harrowing cry that “2023 will be a year of optimization and efficiency”, businesses are sharply committed to returning to growth in 2023.
While headlines have focused on streamlining costs, the real takeaway from this earnings cycle is what leaders are laser-focused on: improving top-line growth. Many executives highlighted strategies to remain relevant and stay ahead of the competition, such as improving product quality, bringing new offerings to market and investing in customer experience.
Consumer packaged goods are one of the many industries where executives are investing more in sales and marketing tactics to improve competitive positioning, enhance product superiority, and ensure price increases stick. For example, Mike Hsu, chief executive officer at Kimberly-Clark attributed organic growth in the quarter to “improving our product offering and market positions,” and plans to increase the investment in advertising to “grow the category for the long term”.
Those who have already been executing these strategies saw unprecedented levels of revenue and customer growth in 2022 — even in a recessionary environment. In fact, Prophet found an 8% average year-over-year growth in revenue for the quarter that ended in December 2022.
3. Executives are using this downturn as an impetus for transforming their business and reinventing their brand.
The data is in. Similar to what we saw coming out of the COVID-19 downturn, executives across industries are moving from reactive adaptation to proactive transformation. 2023 has become a fertile breeding ground for brands seeking to drive sustainable, purposeful, and transformative growth. Noel Wallace, chief executive officer at Colgate-Palmolive described how they are betting big on digital transformation as they have now “shifted [their] resources to deliver more breakthrough and transformational innovation” and are confident that, “despite macroeconomic conditions worldwide, we are executing against the right strategy and are well-positioned to deliver sustainable, profitable growth in 2023 and beyond.”
In healthcare, Eli Lilly & Company is calling 2023 an “inflection point” and “a chance to expand our impact on patients and growth potential as an R&D-driven biopharma company,” and in tech, Amazon is “working really hard to streamline our costs [without] giving up on the long-term strategic investments that we believe can change Amazon over the long term.” While budgets are being slashed, executives are exceptionally clear on the need to preserve investments in firm-wide transformation.
4. Commitments to environmental, social and governance (ESG) strategies are even more paramount in 2023.
Pandemic-born ESG strategies were reinforced this earnings season despite a tough macroeconomic climate. Many leaders dedicated time to showing investors how they are measuring up on ESG metrics, such as decarbonization, and activating their investments in the market through new products, solutions and partnerships.
This is especially relevant given the heightened investment from governments and the private sector in decarbonization, which has the potential to catalyze a mini-boom cycle in the “green” economy. To that end, the industrial sector was particularly vocal on the need to meet “growing customer demand for innovative and more sustainable solutions” (Dow)and “accelerate our transition to a low carbon green economy” (Trane Technologies.) It is clear that economic distress is not enough to dissuade businesses from the imperative of implementing an ESG strategy, especially as consumers are ever more watchful.
5. People and teams are imperative to the 2023 turnaround as leaders articulated the importance of building a strong employer brand.
Layoffs are an unfortunate outcome when growth reverses, such as when the pandemic growth bubble popped in 2022. However, executives are now focusing on the path forward as they highlighted strategies to strengthen their core business, better align operating models to their go-to-market strategy and empower remaining employees. Donald Macpherson, chief executive officer at Grainger commented on the need to “strengthen our purpose-driven culture by ensuring Grainger is a place where our team members can be their true selves and have a fulfilling career”, while Bill Rogers, chief executive officer at Truist pointed to leveraging “our increased capacity, expanded capabilities and talented teammates to actualize our purpose.”
This is a difficult time for businesses, employees, shareholders, consumers and society alike. Strategies employed in 2022 to protect margins — such as hiking prices or corporate layoffs — are not going to cut it in the long term. Brands are scaling back investments and cutting costs. However, corporate leaders will see this as an opportunity to take advantage of this moment in time to double down in their growth strategies by optimizing their organizational structure, prioritizing brand and demand marketing investments, bringing a strong employer brand to market, and continuing to consider ESG as core to their strategy all while remaining truly customer-obsessed.
Top 5 Trends Marketers in Asia Should Expect in 2023
Five marketing trends in Asia to help position brands for uncommon growth this year.
In 2022, companies faced rising costs, continued supply chain challenges, and lasting COVID repercussions, especially with Asia’s more cautious reopening. Despite these challenges, brands found novel ways to adapt to rising trends; creating new products and experiences to surprise and delight their consumers. They reimagined offline experiences, ventured into the Metaverse, and redefined standards for ESG.
Looking ahead to 2023, we foresee continued pressure for businesses and marketers to perform in the face of sustained uncertainties. But we also see more opportunities for brands to rethink their offerings, double down on customer centricity, and build relevance that lasts – for customers and employees alike.
Below, we share our thoughts on five trends for marketers to keep in mind as we head into 2023.
1. Expanding the Scope of the CMO
The role of the CMO and their team will continue to shift as marketing evolves from a predominantly creative function to an increasingly data-driven one. Effective marketing now requires an increased focus on data-driven decision-making, using analytics and insights to understand customer needs and preferences to develop targeted campaigns that reach the right audience at the right time.
The proliferation of new technologies has opened up a wide range of opportunities and challenges for marketers. However, to gain the lead, marketers must hone their skill sets and strengthen their analytical wheelhouse as their MarTech stack is growing ever larger and more complex.
With this expanded remit also comes the need for even closer collaboration between marketing and other departments within the organization. For Matt Che, CMO of Budweiser APAC, a close partnership with the commercial team has been critical to the company’s success in Asia: “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.”
As brands continue pushing for customer-centricity, marketing can continue to elevate the voice of the customer across all areas of the business to drive uncommon growth.
2. Building Purpose-Led Brands
Across all industries, a commitment to ESG is becoming expected, if not demanded, by stakeholders. Consumers, employees, and investors are coming from all angles to hold companies to higher standards, expecting not simply a verbal commitment to ESG but tangible policies and practices that reflect these values. Consumers are increasingly choosing companies that take a stand on issues they care about, with 86% expecting CEOs to speak out on societal issues, according to Edelman. Internally, employees are seeking employers who align with their values, and investors are putting record-breaking amounts of capital behind companies prioritizing ESG. More than ever, marketers must strive to build purpose-led brands that translate aspirational visions into pragmatic strategies that contribute to a more sustainable future.
As an early adopter of sustainable product design and supply chain management, consumer electronics leader ASUS has long been a champion of ESG principles. To further solidify its leadership in this area, the company had been exploring how to make ESG not just an initiative, but a central pillar of future strategic growth. Prophet was tasked with turning ASUS’s ESG strategy into a narrative that could be communicated to both internal and external stakeholders. Our team delivered a comprehensive ESG brand strategy that included a messaging framework, activation ideas, and creative assets to bring the ESG strategy to life, allowing the brand to socialize its core principles effectively and ensure cohesion with the overall brand strategy across both internal and external stakeholders. This ESG strategy was officially launched in the recent ASUS CES 2023 launch event.
3. Deepening Post-Purchase Experiences
As marketers are well aware, the customer journey does not end when a purchase is made. To adapt a true customer-centric mindset, brands must not only convince consumers to choose them, but also pay attention to how their customers use their product or service. As customer acquisition costs continue to rise and channel fragmentation intensifies, customer retainment has become an increasingly important growth driver for brands. Holistic customer experience, particularly when it comes to post-purchase engagement, must not be overlooked. In Southeast Asia, nearly 90% of consumers were more enticed to shop somewhere with a loyalty program. In China, we’ve seen an opportunity gap for marketers to focus more on customer lifetime value to find more sustainable and long-term growth, based on findings from Prophet’s latest research “Brand and Demand Marketing: A Love Story.”
Many leading brands have started taking steps. Outdoor apparel company, The North Face, wanted to redefine how to deliver its XPLR Pass loyalty program in Greater China to drive higher engagement with Chinese members. The company saw an opportunity to expand the types of benefits provided, going beyond solely monetary rewards to better reflect the brand DNA and further differentiate itself from competitors. As part of the Greater China loyalty program revamp, Prophet developed a unique positioning for XPLR Pass and defined key strategic metrics, data strategy and engagement tactics. This work sets the foundation for the revamped loyalty program to be a key pillar of future growth for the brand in that market.
4. Meeting Customer Needs Through Demand Landscape Mapping
Consumers today have access to more information at their fingertips than ever before, making them increasingly sophisticated and discerning shoppers across all categories. As a result, customer segments are becoming more diverse and complex as well, with more variance in mindsets and behaviors. For instance, Asia consumers tend not to be pure luxury shoppers, with 82% of Korean respondents and 72% of Chinese respondents stating that they like to mix and match across premium and mass brands. To develop a brand and product portfolio to meet the nuanced needs of their target audience, brands can leverage demand landscape mapping to understand both where to play and how to win.
Prophet worked with a leading beverage company to develop its China portfolio strategy based on demand landscape. The company had several local and global brands in the market but wanted to more clearly define the roles of key brands and their anchored demand spaces. By combining quantitative data analysis with strategic insights, Prophet mapped its existing brands to high-value demand opportunities – i.e., specific consumer segment, occasion and drinking needs, as well as identifying key whitespace opportunities for innovation. We further developed clear portraits of priority consumer segments, including holistic understanding of their social context, personal motivations, and lifestyle, enabling the company to better activate the portfolio and brand strategies.
5. Driving Growth From Within Through Cultural Transformation
As mentioned previously, workers are increasingly making it a priority to choose an employer that aligns with their values. Organizations know the importance of developing internal branding and communications that are consistent with the external brand, but there’s more work to be done. By taking steps to actively understand and address the needs of their workforce, companies can drive cultural transformation from within. Engaged employees are more likely to be productive, innovative, and collaborative: Within the same organization, highly engaged business units can result in a 23% difference in profitability. In East Asia especially, only 17% of employees report feeling engaged at work (compared with 21% globally) highlighting an opportunity for firms to look inward and close the gap. Whether it’s revamping the company’s values, investing in employee learning and development or driving better collaboration, an engaged workforce is the fuel for a brand’s growth engine.
Polestar, an electric performance car brand, had aggressive global growth aspirations, with plans to add 50 new spaces and over 700 new employees. With this rapid expansion in mind, ensuring that customer-facing staff were equipped to deliver a consistent customer experience was key. Polestar tasked Prophet with developing a clear customer experience strategy that covered recruitment, training, service, and operations. Prophet created a training curriculum, including eLearning modules, live training events, and self-study exercises, which covered how to tell the brand story, how to respond to customer scenarios, and role-specific guidelines. Prophet’s successful training program resulted in high participation and engagement rates, equipping and enabling customer-facing teams at Polestar to deliver a consistent and differentiated customer experience.
The game of marketing means always looking ahead to anticipate not only customer needs but also macrotrends, market shifts, and industry changes. Marketers that are able to think proactively, invest pragmatically, and collaborate effectively with their peers will be well-positioned to unlock uncommon growth for their brands in 2023.
Designing the Employee Experience for the New World of Work
Economic turbulence. Ripples of resignations. Worker power on the rise. To keep up with fast-changing expectations, businesses need to make employee experience a central pillar in their people strategies.
Companies are still struggling to find their footing on the constantly shifting sands of hybrid and remote workplaces. And now, the increasingly turbulent economy further unsettles the landscape, challenging existing employee experience strategies.
Many organizations are reducing headcount and cutting back on engagement efforts. That’s understandable in the short term, but it’s a mistake to take your eye off the ball completely. Longer term, the war for talent will rage stronger than ever, even if we see a relative truce for a while. The pandemic, the Great Resignation and the demand-driven labor market made people realize that they can choose how and where they work. The mold has been broken and you can’t put it back together. Ignoring the experience elements while the economy slows will only worsen the hiring dilemmas of the future and see the confidence decline of those employees that remain. That means every organization will have to grapple with (if they haven’t already) an employee-centric offering if they are to attract, retain and engage the right talent they need to thrive.
Through our work as people strategists, psychologists, change practitioners and service and product designers, we have helped clients around the world accelerate their employee experience journeys and studied countless experiments and their outcomes. As one might expect, there is no silver bullet. However, our work has shown that experiences that are desirable to employees don’t have to conflict with what is viable and feasible for the business. After all, maximizing desirability, viability and feasibility (DVF) is crucial for creating a long-lasting, sustainable impact on the employee experience.
The economic situation may remove the feeling of urgency, but talent will always have a choice about who they work for and in harder times organizations need to motivate and enable their people to perform, even more than usual. Organizations are still entirely reliant on their people and those that accept the reality of employee power and the demands that come with it will reap the rewards in the long term.
Employee Power is on the Rise
Over the two years of the pandemic, every type of organization had to quickly test and experiment with countless workplace policy updates to stay afloat. Companies didn’t have time to “wait and see”– they had to create new policies in a few days. In some cases early on, companies saw surprising increases in productivity. In a survey carried out by the University of Chicago, 40% of respondents said they believe they are more productive at home while 15% said the reverse is true. Others reported remarkable gains in employee satisfaction, even reaching record levels. And for those workers reporting greater happiness when allowed to work remotely at least some of the time, over 80% reported an improvement in their work-life balance.
But now this picture has evolved to one of burnout, stress and cultural disconnect. Job satisfaction has plunged to a 20-year-low. Women have been especially crushed by this downside, with education and childcare crises forcing millions out of the workplace, likely setting gender pay equity efforts back for more than a generation. And as the Great Resignation, well underway before the pandemic, continues to make hiring harder, the economy is sputtering.
The point is, it’s harder to be an employee than it used to be. Economic uncertainty will make it harder still. Organizations need employees to perform, and it creates an even greater need to provide a stable and productive working environment.
“Employee experience” is a common buzzword that is over-used and ill-defined. For decades, conventional wisdom has dictated employee engagement as the ultimate goal of employee experience. Experts believed that engaged employees are more productive, stay around longer and grow into the leaders of tomorrow. One of the problems with employee engagement is that it is inherently employer centric. Firms want their employees to be engaged with work. But employees crave so much more. They want to be well compensated, valued and connected to a purpose. They no longer compartmentalize their careers and work as separate from their personal lives. They pursue well-being across financial, physical, mental, social and intellectual dimensions.
The New Equation: Flexibility + Connection = Wellbeing
What people want more than anything is holistic well-being. It’s fast becoming the foundational tenant, with a recent survey finding that 80% of employers believe helping workers achieve this well-being is an important objective. Prophet’s research also finds that flexibility and connection are the main levers for getting there.
Flexibility means accounting for individual and team preferences, circumstances and strengths.
Connection, and how people experience it, is complex. It encompasses interpersonal dynamics, relationships and interactions among peers. And it also aligns individuals with the company’s purpose and mission, tapping into their own values. Connection flourishes in inclusive environments when people are psychologically safe and comfortable being themselves at work.
Companies must constantly balance this equation. Any policy that impacts flexibility or connection must be considered.
Designing employee experiences around flexibility and connection creates an environment of:
Wellbeing: The New End Goal
Health is now the ultimate headline. People have had the chance to re-evaluate what’s important and possible in their lives. Fed up with outdated norms like the 9-5 schedule and chronic stress and fatigue, employees are less willing to sacrifice their physical, mental and social health for their job.
As a result, employers are now in the hot seat, charged with prioritizing and more actively supporting these health goals. While previously, employers’ duty of care lay solely in the realm of physical health and safety, the pandemic elevated emotional and mental well-being to the same level of priority.
More traditional leaders may raise their eyebrows at the expansive responsibility of providing for employee wellbeing. And some long-tenured executives want to resist this change. But it’s too late. The paradigm has already evolved, and the trends are clear: Employees today have a record level of bargaining power. And even if a slow economy causes a blip, this trend will only get more prevalent, as we enter the era of “employment as a service”. It’s incumbent on employers to develop an experience that is desirable, viable and feasible.
This power shift has been especially acute in retail and food service. When a leading QSR brand engaged Prophet to understand the evolving restaurant workforce, well-being emerged as the central concern. We learned that employees want more than financial gains and physical safety. To them, well-being also meant personal development, solid communities and psychological safety. They wanted a sense that the company cared about them, of course. But they also wanted ways they could demonstrate their care for co-workers.
Those insights helped us to reinvigorate the employee value proposition and identify the moments that matter, along the entire employee journey, developing initiatives and experiences that would allow it to retain current workers and attract top talent. Prophet developed “100 Ways to Care,” an expanded set of team support systems. The customizable and flexible collection of benefits includes instant pay, automated shift scheduling, and holistic wellness options, focusing on company-led and funded mental health and employee assistance. By first establishing essential truths about team members of the next five to 10 years and envisioning what their journey will look like, signature experiences can address needs and opportunities with new capabilities.
We also developed quantifiable metrics beyond the usual engagement scores to measure the impact of these efforts on the experience. Capturing metrics on a wider range of factors including tenure, attendance, complexity of the role, overall job satisfaction and attention to/interaction with solutions, as well as engagement, enables an ongoing view of “experience” and supports agile refinement and improvement over time.
Other companies are using this holistic approach to make key decisions and reap returns. BP and Bank of America have built mental well-being support and accountability into their leadership cultures. BP gets real-time mental well-being feedback from regular employee engagement surveys to understand how teams feel and how to support them. Bank of America is creating opportunities for colleagues to talk about their mental well-being, breaking down attached stigmas.
Other organizations are taking corrective action with core business activities, demonstrating the power of employee experience (EX) to create significant benefits to customer experience (CX). Mojang Studios of Minecraft fame, for example, recognized the toll that the pandemic and related stress was taking on the well-being of its employees, even as it faced an urgent deadline on the Caves & Cliff Update at Minecraft Live. It decided to delay the update to ease the burden on employees, sharing the news via a blog post. Users of the world’s most popular game, although disappointed, respected that decision. And they responded by pushing Minecraft’s monthly active users to record levels.
That’s not an isolated incident of business benefit, either. One recent study ranked companies by measures of workforce well-being. Those in the highest 10% reported a 27.2% increase in return on equity and a 24.8% gain in profits, substantially higher than their Fortune 500 peers.
The ante is rising. As businesses adapt to growing demands, a holistic well-being strategy will be even more vital to the employee experience. Caring for the entire person–not just who they are at work–is now a table stake when it comes to talent attraction, recruitment and retention. When businesses take care of their people, those people take care of the business.
Flexibility: Developing a Targeted, Flexible Workplace Strategy
Much to the delight of many, hybrid working is here to stay. Even the U.K’s minister for Brexit opportunities and government efficiency has revealed plans to offload £1.5 billion worth of London office space because of the number of civil servants who continue to work from home. More broadly, just over half– 53%– expect a hybrid model going forward, with 24% expecting the option to work remotely all the time.
But for the most part, the policies that initially governed remote work came together in a period of intense panic, implemented in an environment of desperation and uncertainty.
As firms work to create their long-term policies, they have an opportunity to learn from COVID-era flexible working experiments and formalize what started as ad-hoc solutions. As hybrid working becomes the new middle ground, flexibility must become inherent to employee experience. People want to make decisions based on what’s best for them, considering their families, commutes and work-life balance.
Dropbox’s 3,000 employees now work remotely most of the time and go to the office for more collaborative and team-building work. The company redesigned its facilities to make this shift, removing individual desks.
Many financial services companies like Goldman Sachs and Morgan Stanley have drawn a line in the sand for return to the office, wanting employees back five days a week. But fueled by a robust job market, their employees are reluctant to give up flexible working conditions. How can institutions that want employees back full-time compete with others who allow hybrid work?
Prophet worked with one of the U.K.’s leading financial companies to develop a long-term workplace strategy. Early on, it had won rave reviews for its rapid pivot to a work-from-anywhere policy. But as the months ticked by, it realized that culture, morale and engagement began to erode. It needed something beyond a monolithic approach to flexibility. One size, it acknowledged, definitely did not fit all.
And this approach had unintended consequences, including increased pressure on leaders to navigate managing fully remote teams. It also raises the question: How can companies retain the benefits of in-person collaboration, which are proven and time-honored ways to keep people motivated, while preserving the option to be remote?
This model looks at organizations as a macrocosm of an individual– with DNA, Mind, Body and Soul– and provides a framework to map the employee journey and address all of the organizational factors that touch on the experience people enjoy day-to-day. In this instance, we took a closer look at the core employee personas and archetypes. While many people reported improved morale and engagement, there was an increased risk of losing a sense of belonging and investment in the company’s culture.
We helped our financial services client create an employee experience strategy that balances the needs of all stakeholders. That meant a shift from flexibility based on individual needs to flexibility that works for all. Instead of asking employees to work from anywhere, they’re now being asked to work from where makes sense for them and their teams – encouraging them to make decisions that balance their individual needs with the needs of the team and the needs of the business. They are also encouraged to make decisions “led by the work.” That encompasses more than just the tasks on their to-do list. It includes learning and development, team building, career conversations and leadership, which all make them feel more connected to the company’s broader mission.
We’ve worked closely with this client to ensure transparent communication around these changes. Employees must understand that this isn’t about the company going backward on its commitment to flexibility. That would damage the employer-employee trust it has nurtured so carefully since the pandemic began.
Instead, it’s working to ensure hybrid work options that provide “freedom within a frame.”
Importantly, much of the focus has been on leadership, ensuring they can be effective in hybrid and remote scenarios, including performance conversations, spotting well-being needs and empowering decision-making. It is also paying more attention to the importance of role modeling. Leadership is both the most significant risk to employee experience policies and also the best amplifier.
We also helped the company expand the different tools and technology used to maintain performance levels and initiate conversations throughout the organization about what good looks like. Today, they can much more easily encourage inclusive practices to ensure equal opportunity for growth across all talent.
An essential outcome of this type of work is that leaders throughout the organization better understand why this all matters and just how valuable a flexible employee experience strategy is. Being more intentional about how an organization defines “flexibility” goes beyond a happier workforce. It strengthens the organization, expanding the talent pool for employers. That includes geographical range, of course, but potential employees who must work from home, such as caregivers, and those who simply prefer remote work.
However, this recruiting advantage will continue to wane as more companies clarify their version of flexibility. That means it’s essential that each organization defines flexibility in a way that meshes with its operations, culture, technology and purpose. Done right, it makes a company’s employee value proposition distinctive and relevant. It becomes a competitive talent advantage.
Representation and Diversity Matter
Employees increasingly want to (re)build a sense of connection to their co-workers, communities and the broader mission of the employer. We used to have the proverbial watercooler to engage in small talk and get up to date on the latest developments. Often, it’s where we built trust, camaraderie and relationships. But in increasingly hybrid and digital environments, companies are still finding it hard to recreate the spontaneity and organic moments to build those connections.
Representation, too, factors deeply into the connection. Employers need to be clear about what diversity, equity and inclusion mean to them and how it aligns with the organization’s values. It needs to be active in the cultural norms and hard-wired into processes, developing metrics to track impact. Research suggests that diverse teams outperform individual decision-makers up to 87% of the time. And DEI initiatives matter to job seekers too, with 64% of candidates saying diversity and inclusion are key factors when evaluating a job offer.
The presence of women in senior management has long been understood to improve financial performance, and new research finds that as firms add more women, they become more open to change and less afraid of risks, increasing psychological safety in the workplace. Specifically, the firms studied shifted towards innovation, investing more in research and development and less in acquisitions.
As companies scramble to make sure their efforts show tangible results, attracting, retaining and motivating key talent through turbulent times, we’re finding that small acts of inclusion have the most impact. Robust employee resource groups for workers of color and LGBTQ+ are a must. So are networks that encourage women, who continue to leave their jobs at higher rates than men.
Prophet’s global research, “The Collaborative Advantage”, finds that one of the biggest barriers to effective organizational collaboration is a lack of clarity on the connection of work to the broader business strategy. Organizations often fail to show employees how working together more closely helps achieve personal and corporate goals. Despite 80% of leaders believing that collaboration produces better outcomes, many are still struggling to meet the collaboration challenge and break down siloed work.
Humans are fundamentally a social species and people want to belong, to be part of a team. And they want those teams to function well, to collaborate in ways that are rewarding to all involved. Our research shows that individuals who work at more collaborative organizations aren’t just more productive and satisfied. They’re keenly aware that it teaches them valuable new skills and expands their networks.
Connection Starts with Employee Onboarding
Organizations realize that they must be more intentional at creating connections at work, finding new ways to put all kinds of relationships back into play, from formal work roles and team responsibilities to friendships and side conversations.
It’s especially critical to get this right and set the tone for the new joiners’ tenure. Within an employee’s journey, the onboarding experience can define how engaged employees are within their roles and for how long. We worked with Reltio, a high-growth data management unicorn, to improve, standardize and scale the onboarding experience.
As we spoke to employees across functions and levels, we discovered that new hires depended on the relationships formed in that critical period. In its remote-first environment, Reltio already had a culture of virtual connection and helpfulness, which had become crucial in an employee’s ability to connect and learn important information about the organization.
To better support this informal approach, we articulated “foster relationships”. This became one of five experience principles that now inform how Reltio supports new hires. Designed to recognize relationships as a fundamental need, this ensures that employees can continue to stay in touch and support each other as they find their way within the company. This principle came to life across experience concepts, including buddy systems, pre-scheduled meetings, access to organizational charts that outline roles and teams and one-to-one coffee chats.
The Steep Cost of Standing Still
All this creates an urgent need for companies to sharpen and expand their employee experience. Businesses, even those that were considered highly progressive employers, are losing talent every day. And it doesn’t look like this recent phenomenon is slowing down with a near record-high number of Americans still quitting each month.
Employees, from the most highly sought-after tech executives to fast-food workers, know they have the upper hand. They know they can–and will–find an employer more willing to support their total well-being and in some cases offer a pay rise as well (with a median raise of 16.1% in the US). Recession or not, employee expectations have changed forever.
Twenty years ago, marketers had to accept that the age of customer experience had arrived quickly. Now it’s the employee experience’s turn. Organizations don’t have the luxury of treating the employee experience as an afterthought. They need to be more intentional about every interaction–how they recruit and hire and how they encourage connection. They must acknowledge that individual needs don’t always align with a team or organizational goals.
They can’t–and shouldn’t–revamp their employer brand overnight. But by focusing on the simple equation–Flexibility+ Connection = Wellbeing–they can shape their vision, building a roadmap to working towards over time.
By taking advantage of these turbulent times to reimagine the experience employees enjoy, companies can prepare for the growth journey ahead.
Start with these four general guidelines:
Of every new experience shift, ask: Is this desirable? Viable? Feasible?
Tailor the experience strategy and design to clearly symbolize company values and elements of the employee value proposition, aligning them with the corporate purpose and strategy.
Focus on moments that matter. Employees travel many journeys, and the thing that makes a company great for an entry-level employee may be very different than what matters to a seasoned leader. Understand different employee personas and archetypes.
Make a balanced, healthy and diverse workforce the new end goal, using flexibility and connection to drive well-being and grow stronger every day.
Employee experience design is a rapidly growing discipline. It’s how organizations can maximize their advantage in the war for talent and take advantage of seismic shifts in working patterns. When employee experience becomes a central pillar in a company’s people strategy, it makes it easier to align with brands, business strategy and customer experience.
These five practices will continue to drive uncommon growth in the region in the year ahead.
The Middle East is set for success and growth in 2023, even as businesses in other parts of the world face more challenges. Its importance as a hub for global trade is growing and companies are attracting more significant investments and talent. Overall, the bar is rising as the region takes a more prominent place on the global stage.
That combination is breeding optimism and ambition throughout the GCC region. We’ve identified five opportunity areas companies should consider so that they can take part in that growth.
1. Rebalancing Transformation Strategies, Making Them More Human and Less Digital
Human centricity should be at the heart of any transformation efforts. Organizations should be putting people–customers, employees, investors and communities–at the heart of their strategies and evolving from the inside out.
Digital is still essential, of course. But the goal isn’t to become more digital–it’s to become better organizations. The most progressive companies recognize the difference. The first question is no longer, “What technology should we invest in?”, it’s “What do our people need to be more productive, and how can we best support that?” And with this human-centric approach, companies are redefining what it means to be a modern enterprise.
2. Defining Purpose Through the Sustainable Development Goals (SDG) Lens
Environmental, social and governance policies are growing in importance, shaping businesses worldwide. But here, the emphasis is somewhat different. Organizations in the Middle East are more focused on sustainable development goals. These 17 global SDGs, set by the United Nations to achieve by 2030, matter more than the ESG goals devised by individual companies.
Governments are setting the vision, sometimes with breathtaking ambition. The UAE, for example, has excelled, working SDGs into its national agenda. And it’s paying especially close attention to the guidelines for developing growth and innovation. This approach reflects its national ideals and challenges many people’s perceptions of the priorities of a Middle Eastern nation. Both these focus areas are now enshrined in the SDGs as it moves toward turning commitments into action.
For companies, it’s inherently more confusing than simply delineating a strategy that best suits them. So, companies are plunging in with trial-and-error gusto as each tries to find a path forward. They want to comply, of course, and successfully navigate among many shifting government mandates. But they also want to do so in ways that build on their individual purpose, controlling what is theirs to control. They face intense pressure as they make these decisions–from employees, customers, investors, NGOs and regional communities. As they realize they don’t have to align with every SDG, the most forward-thinking companies choose the goals they can best contribute to and embed those into their purpose and strategies.
For example, we’ll see continued growth in sustainable travel and tourism, with companies carefully examining how people’s hotels, itineraries and experiences impact the entire value chain. And since the region is heavily dependent on foreign investors, there will be greater efforts to demonstrate that companies act responsibly.
3. Investing in the Start-Up Ecosystem
The region is on track to produce a substantial number of unicorns in the next ten years. Uber, for example, recently scooped up Careem, based in the UAE, for $3.1 billion. And companies like Kitopi, a cloud-kitchen company; Fawry, an Egyptian fin-tech company; and Swvl, a mass transit system, are all in the $1 billion valuation club.
This start-up ecosystem’s emergence encourages larger companies to chase business innovations. They’re making strategic bets on new business models. We see companies striving for greater agility. They’re using pod-based innovation, for example, as they look for new ways to collaborate. They’re more deliberate in efforts to break down silos and optimize spending. And they’re more likely to pursue joint ventures.
4. Creating Data-driven Experiences That are Customized for Audiences
Digital thinking continues to be the lifeblood of business. But–as is true in C-suites around the world–leaders in the Middle East recognize that data is only valuable when used strategically.
People in the Middle East, especially in the UAE and Saudi Arabia, are among the most connected and digitally savvy in the world. Consumers want things now. They expect a seamless brand experience. They want holistic omnichannel experiences with personalized communication at every stage of the purchasing funnel. Now that brands have access to more customer data, it’s imperative to use this to unlock the opportunities it presents–delivering very tailored, specific products and personalized messages and communications.
That means moving beyond broader mass-marketing tactics that simply target groups like millennials and Gen Z. Yes, the youth market is intensely significant in the Middle East. But younger consumers only spend on things they care deeply about. They prize authenticity in the companies, brands and influencers they deal with.
Prophet’s recent Gen Z research finds that younger people are increasingly determined to curate their own digital experience. They want to connect with others that share their values and are eager to balance digital interactions with those that are human.
5. Designing an Employee Experience that Delivers Well-Being
More traditional leaders may still roll their eyes at the expansive responsibility of providing for employee well-being. But unless they understand how holistic well-being is fast becoming a requirement for job seekers, they won’t be able to gain a hiring advantage.
Health is now the ultimate headline. People have had the chance to re-evaluate what’s important and possible in their lives. They’re fed up with outdated norms like the 9-5 schedule. They’re more open about burnout, chronic stress and fatigue. Employees are less willing to sacrifice their physical, mental and social health for their job.
In the UAE, the government has set the way forward with a shorter working week–at 4.5 days–to help employees achieve a healthier work/life balance. Such steps allow organizations to re-energize employees, so they can become more productive and innovative. And it also helps retain talent long term. Enterprises are beginning to understand that it is their people that make companies what they are–and it’s essential to take better care of those workers.
Employee experience design is a rapidly growing discipline. It’s how organizations can maximize their advantage in the war for talent and take advantage of seismic shifts in working patterns. When employee experience becomes a central pillar in a company’s people strategy, aligning with brands, business strategy and customer experience is easier.
The Middle East has distinct competitive advantages, positioning it for growth in the foreseeable future. Relatively insulated from current global challenges and replete with an influx of talent, businesses here can–and should–be optimistic. They’re looking for new ways to increase revenues and find uncommon growth, outperforming other regions.
Paying it Forward: A Recap of Prophet’s Impact Auction
From weekend getaways to treasured family recipes, Prophet’s Impact Auction raised over $45k in donations to Partners In Health.
For seasoned Propheteers and our newest employees alike, the bi-annual Prophet Impact Auction generates unparalleled excitement. The Prophet Impact Auction is a global fundraising effort to rally behind a cause as we seek to use our expertise and creativity to spark meaningful change. Since 2010, Prophet has supported a variety of causes, from building sanitation facilities in Uganda, to funding girls’ education in Tanzania, to raising $50K to support local Covid relief efforts in 2020. This year marked our 7th auction and Propheteers upheld the beloved tradition by generously giving their time, talents and treasures, donating a variety of goods, services, and experiences to be bid on by colleagues.
Supporting Justice in Healthcare
Through a firm-wide vote, Partners In Health was selected as our 2022 auction benefactor for its mission to provide high-quality healthcare to those who need it most. Partners In Health believes that every person has the same inalienable right to be healthy and achieve their full potential, regardless of their circumstances or where they are born.
The money raised by Prophet was donated to Partners In Health’s global child malnutrition programs, which focus on providing lifesaving treatment to children in Malawi, Haiti and beyond. A single child’s nutritional support costs around $60 for six weeks of treatment. With $45K raised, we are grateful to contribute lifesaving nutritional support to at least 750 children.
“Our deepest gratitude for your generous support of PIH’s child malnutrition treatment programs in Haiti and Malawi. Our teams are working hard to continue to deliver care amidst challenging circumstances, fighting cholera, and dealing with rising food insecurity. Your support helps them keep that important work going. We know that structural problems require sustained responses, which is why we are proud to partner with local governments and invest in systems, to continue to push for increased access to health care.”
Patrick Ulysse, Partner in Health Chief Operations Officer
The Power of Propheteers
With almost 70% firm participation, our employees donated 539 items valued anywhere between $10 to more than $1,000. Propheteers eagerly bid for these unique offerings that ranged from extravagant weekend getaways, such as a trip to a Mallorca townhouse, to sharing treasured family recipes, and hand-painted cookies.
Check out some of the fun items that were donated:
A dozen homemade Swedish cinnamon buns baked by Senior Partner Tobias Baerschneider
A personalized cross-stitched art crafted by Prophet’s Senior Engagement Manager Reem El Sayed
A Manhattan Chinatown food tour with our Associate Kristen Wong
An oil portrait beautifully painted by our Asia Marketing Manager Charlotte Zhang
Weekly French lessons with our Prophet Francophiles
Wine and fries with Prophet President Chiaki Nishino
Through this auction, it was clear that Propheteers were ready to fully embrace the firm’s new values. Prophet’s “Give and Grow” value especially came to life as the entire firm offered talents, time and money in support of Partners In Health. Item exchanges traversed continents, bidding wars sparked conversation on hidden abilities and our value of “Share Joy” emanated across global offices as we came together and celebrated one another’s creativity and artistry.
The Prophet Impact Auction is one of the ways we live our purpose to move society forward and create impact for our local and global communities. We find the best way to tackle societal, economic and environmental challenges is by coming together. Learn more about our other Prophet Impact programs here.
Financial Services Trends We’ll Be Watching in 2023
There are many reasons why 2023 can – and very much should – be the year of relentless relevance in financial services.
It’s that time of year again, when we stick our necks out to envision what’s coming for financial services in 2023. You don’t have to be clairvoyant to know that there will be more disruption and plenty of innovation. The tightening economic landscape means that banks, insurers and wealth and asset managers will need to prioritize investments that deliver results in the near term, even as they look to establish strong foundations for long-term transformation and ongoing innovation.
1. Resilience Through Relevance Becomes the Priority
Yes, customers are likely to be more careful with their spending in 2023. But, no, customer experience will not become less important. Financial services firms should “buy the dip” by continuing to fund innovation programs.
Market experience and research from Harvard Business Review tell us that firms that retain their focus on and continue to invest in innovation (especially in those areas of relatively low opportunity cost) during times of economic uncertainty significantly outperform their peers in sales and profit growth. And many well-known brands and market leaders have fully reinvented themselves during downturns, by focusing relentlessly on resilience and retaining their relevance.
For large financial services firms, they must overcome the common tendency to solve their own internal business problems rather than solving authentic customer problems, as broad and evolving as those can be. Showing empathy and aligning with customer values can help brands stay relevant and differentiate during tough times. That means defining the corporate purpose in terms that are meaningful to customers, a topic we cover in more detail here. Such clarity is especially important in embedded finance and other areas of disruption, where established brands must define their role.
2. Mega-Growth Comes from Sub-Categories
When it comes to reaching new segments, many financial services companies are finding success with tailored offers that can create separation from the primary brand and the competition. As Prophet Vice Chairman David Aaker has written in his book, “Instead of promoting the superiority of a brand, create a subcategory with new or markedly superior customer experiences or brand relationships to create barriers to competitors.”
Sub-categories are promising because they allow incumbent brands to go into new places. And there are many potential opportunities:
Banks offering credit and other services tailored to small business categories
Insurers launching digital policies for millennials and Gen Z
Wealth managers focusing on simpler income protection products and decumulation strategies
There has been considerable market action along these lines in recent years: Some sub-category explorations and extensions have been successful in gaining traction, while others have delivered sub-optimal results, while also producing ample learnings that can be applied to future endeavors.
We’ll give David Aaker the last word here: “Subcategory-driven growth has exploded in the digital era because of technological advances and the fast, inexpensive market access made possible by e-commerce and digital communication.” That trend will surely continue in 2023 and beyond.
3. Brands Will Define Their Roles in the Embedded Finance Value Chain
Critical mass may still be a few years off, but the days of nearly all finance being delivered as-a-service are getting close. Embedded finance is on the same trajectory that made “digital marketing” just “marketing” and “mobile phones” just “phones”.
According to recent research, the U.S. embedded finance industry is expected to grow at a CAGR of 23.5% from 2022 through 2029, reaching $212 billion by 2029. Plaid expects a 10x jump in embedded finance revenue from 2020 to 2025. We expect the growth of embedded finance to be nearly recession-proof.
At the center of this growth is the shift from standalone products to solutions delivered at the point of need. After all, customers don’t want a credit card or an insurance policy, but rather an integrated payments experience that streamlines purchasing and provides protections for important purchases. We believe that a primary way to differentiate in the embedded finance space is to start with the customer and design products and experiences around their needs and relevant to their financial journey.
The next 12 months will see plenty of milestones. Investment advice is everywhere and easily hopping over industry boundaries. Consider how DriveWealth is offering advice for health savings accounts (HSAs).
The tipping point for mass adoption of embedded finance is clearly getting closer and we very well may reach it in 2023. Financial services organizations that start with deep insights into the needs of customers’ financial journeys and that engage successfully in ecosystems will be best positioned to win the innovation game in the embedded era.
4. Holistic Wellness Matters as Much to Your Employees as Your Customers
For many financial services institutions, customers are your employees. A weakening macroeconomic environment will only intensify the need for greater wellness – including physical, mental and financial wellness. There’s a risk that employers may cut programs because of cost pressures in a recessionary environment; that would be a mistake in our view. While wellness may seem a consumer hot topic du jour, financial firms should recognize that wellness equates to confidence and security, which is what consumers are looking for when they buy financial services products.
We expect to see more financial services firms expand their content, education and advisory offerings (via both in-person and Robo channels) for the simple reason that more people need such services. That’s true at every level of the market; from high-net-worth families that want multi-generational wealth distribution strategies to younger consumers just starting their careers and seeking higher degrees of financial literacy and basic tools for budgeting, savings and investing. To realize the benefits, banks, insurers and others will need to master their activation strategies.
Financial services firms keying on wellness would do well to understand the complex linkages between mental health and financial wellness. For instance, financial stress is the number-one driver of poor mental health among employees, according to research from MetLife. Because dynamic relationships between different types of wellness play out for both customers and employees, the group insurance and employee benefits space is seeing more innovation, much of it focused on driving well-being. For example, the Morgan Stanley at Work program offers holistic features for both financial security and empowerment.
5. Human Capital and Strong Cultures Deliver Even More Competitive Advantage
Post-COVID, more companies have rediscovered the power of their people (okay, maybe not Twitter). It’s more than companies having to compete for scarce talent. Rather, those firms that embrace cultures of learning, creativity and flexibility typically realize better results in terms of customer-centric innovation. And it’s not a matter of choosing to invest in tech or people, but rather getting the right people in place to boost returns on your tech investments. For all of these reasons, 2023 will not be the time to cut back on learning, development and upskilling/reskilling programs. These initiatives help strengthen cultures and create a more resilient workforce, just what financial services firms will need to thrive in the near term.
Whether and to what extent inflation or a recession impact the job market remains to be seen. But it’s possible that wage increases may rise faster than price increases. And financial services firms have an opportunity to hire more tech-savvy talent after widespread Silicon Valley layoffs; this is another opportunity to “buy the dip.”
But even if there is more talent available, banks and others must ensure their cultures are attractive to the right type of talent. Typically, that means emphasizing collaboration and taking a human-centric approach. Our research into the Collaborative Advantage shows that higher levels of teamwork enrich individuals, building new skills that increase engagement and job satisfaction – what financial services firms need to complete in a dynamic market landscape today.
6. Balancing ESG Expectations With Reality
While the bright spotlight on environmental, social and governance (ESG) matters will not dim significantly in the coming year, attention will shift toward closer brand scrutiny, both in terms of greenwashing and the authenticity of their ESG claims. More companies – including the “big 6” banks that have aligned to the Paris Agreement – will be evaluated in terms of how well they are “walking the walk” relative to their commitments. That scrutiny will come not just from regulators but the full range of stakeholders, including employees, investors, and clients and customers, who will not react well to big gaps between brand perceptions and actual ESG performance.
Tensions and contradictions will be called out. For instance, many of the firms marketing green products and aiming for inclusion in ESG funds and indexes also continue to underwrite fossil fuel infrastructure. No wonder some banks are considering leaving industry alliances.
Financial services firms should be thoughtful in understanding their ESG efforts from a broader range of perspectives. Certainly, there will be more focus on the “S” or social dimension “People well-being” is one potential lens for evaluating commitments and monitoring progress. For instance, the employee experience can be viewed in terms of its social impacts, as can loan portfolios’ inclusion of minority-owned businesses.
Financial services firms should not shy away from articulating their value relative to ESG, but they must be careful about mere virtue signaling. They should also look to get beyond compliance focus, though of course, lawyers are going to restrict what can be said about green offerings. Further, firms will need to become experts in ESG data and reporting, not least because more detailed disclosures are coming soon.
Anchoring on what matters most to your stakeholders, especially your customers, will provide a tangible edge in a tough market in 2023. From sub-category extensions and embedded finance to employee wellness and ESG, there are many reasons why 2023 can be – and very much should be – the year of relentless relevance in financial services.
Contact our financial services team today. We’d love to talk about what transformation can look like at your organization in 2023.
Healthcare leaders can drive change in 2023 by thinking boldly and targeting investments in the following trending healthcare spaces.
Looking ahead to 2023 in healthcare, the big macroeconomic clouds on the horizon make for a less than cheery outlook. The combination of an economic downturn and higher costs will be a dominant theme for the entire healthcare industry and a huge challenge for organizations across hospitals, health systems and device makers, pharmaceuticals, and life sciences companies, as well as players in technology.
Still, taking the glass-half-full view, we see many opportunities for leaders across the business to drive operational discipline and innovation by focusing on investments that matter most in driving better outcomes for all stakeholders. As we point out in our transformation playbook, changemakers that push beyond the many common barriers to innovation can achieve a great deal. Yes, the economic pressures will be greater. But 2023 will see plenty more disruption – and thus plenty of growth opportunities – as our annual list of healthcare trends below makes clear.
1. Holistic Wellness Solutions Continue to Influence the Market
Successful one-off wellness apps and small niche solutions are adopted by large employers and payers to enhance benefits programs and give people more options to live healthier lives. As consumers adopt wearable data trackers in support of that goal, they will increasingly choose to work with healthcare organizations that are committed to holistic wellness.
It’s not about the gadgetry, but rather driving good outcomes, particularly relative to social determinants of health (SDoH) and patients’ lived experiences. The start-ups and tech firms with the most attractive and powerful solutions will achieve rapid scale by going the B2B2C route. We think the biggest winners will emerge in in-home diagnostics, preventative health opportunities (e.g., perimenopausal women and metabolism and nutrition) and mental health, which will be of interest to large employers, as well as individuals. Apps and widgets that empower individuals with their own data, plus timely prompts and attractive incentives, will crack the code on growth.
2. Venture Capital Focuses on the Best and Brightest
While we expect to see a few big winners among tech players, most firms will face a tighter funding landscape and more intense due diligence. Venture capital, which has been flowing freely and voluminously for years, will become less available as investors scrutinize business models more closely and back only the best and brightest.
We suspect the firms that attract funding will be those that focus on narrowly defined patient cohorts already engaged in self-monitoring behaviors and where innovation can move the needle on cost control or value delivery. Those that can collect real-world data from outside the four corners of traditional clinical environments, and integrate seamlessly into core systems, will be specially well positioned to attract funding and potential partners. Chronic disease management, patient engagement and population health solutions will also be priorities because there is clear clinical and financial upside in all these areas.
3. The Workforce Shortage Worsens as a Full-Blown Crisis
With continuing burnout among healthcare workers, large provider organizations face issues with care quality and deteriorating patient experiences. The supply-demand fundamentals are inescapable: There are simply not enough doctors, nurses and paraprofessionals – not to mention data scientists, business analysts and experience designers – to fill all the vacancies.
However, there are multiple potential solutions to resolving talent shortfalls. Workforce optimization and workflow efficiency are necessary, so too automation and more advanced technology in everything from reading x-rays to identifying payment fraud. More support for patient self-monitoring, continued expansion of telehealth and in-home care will also help alleviate chronic talent shortages. There’s also a large cohort of tech-savvy talent looking for jobs with a higher mission after layoffs from Silicon Valley giants.
4. Value-Based Care Models Become Innovation Labs
The inevitable momentum toward value-based continues. More than 40% of U.S. healthcare reimbursement now has some value-based component, a proportion that will only rise in 2023 and beyond. Though pockets of resistance remain, more provider organizations will advance and mature their Value-Based Care capabilities. And they’ll do so on several fronts. More sustained preventative outreach efforts to underserved, high-risk and high-cost populations for routine screenings will continue producing strong results. Shared-incentive contracting will be more attractive for capital-intensive equipment, such as MRI machines and CT scanners.
Sophisticated technology usage will be a hallmark of VBC winners. Consider how the burden on the workforce could be reduced with digital apps and AI-enabled patient engagements leveraging HIPAA-compliant natural language processing on existing voice platforms (e.g., Alexa). Such applications also free clinicians to operate at the top of their licenses. The next year will see many pilots of creative concepts in the space.
The tightening economic backdrop, alongside rising consumer expectations, more powerful technology and the prevalence of chronic conditions, will fuel further adoption of VBC models. Large employers wanting to know what they are getting from higher rates will be yet another prompt for innovation.
5. Consolidation Increases as Non-Traditional Players Press on
Challenging macroeconomic conditions will drive more consolidation and spark aggressive plays from tech platforms and large retailers. In this sense, 2023 will look a lot like recent years. Retailers and other non-traditional players are cracking the code on healthcare, faster than healthcare players are cracking the code on consumerism. Amazon, Walmart and other large players will continue experimenting on their own, buying up promising ventures and looking for partners that can further their huge ambitions.
And their ambitions won’t shrink just because the economy does. If you already thought these companies were relentless competitors when the economy was good, then you can expect them to press their advantages even more forcefully in pursuit of ever greater market share as cost and capital pressures rise for others.
The healthcare industry has seen plenty of change during the last few years. The next year will continue that trend. And as challenging as the economic conditions will be, healthcare leaders can drive change for the better by thinking boldly and targeting investments in the most promising areas of opportunity.
Six 2023 Leadership Trends That Will Reshape the C-Suite
Profits, politics and planning will look very different in the months ahead.
The last few years have proven that disruption is the only “normal” in business. The world is still slogging through seismic plot twists of the previous few years, making inflation, supply chains, Ukraine and hybrid workplaces a critical topic on virtually every corporate agenda.
While most forecasts call for nothing but grey skies, we disagree. History shows that periods of economic uncertainty heighten innovation and lead to new products, services and business models. After all, companies like General Motors, Microsoft and Electronic Arts formed during recessionary times.
In 2023 we expect to see new ideas and products emerge from the rubble of disruption we’ve experienced on a global scale. But to get there, c-suite leaders will need to rethink how they lead their organizations.
We expect the most successful c-suite leaders to lean into these six key leadership trends in the coming year.
1. Productivity Improvements Will be a Critical Path to Profitability
Over the last few years, a handful of digitally native organizations have chosen growth over profitability and had ample investors who were happy to take risks on future opportunities.
Rising interest rates have ended that party. And as a result, investors are pressuring companies to continue to grow and make money or at least commit to concrete paths to profitability.
Throughout the second half of 2022, many organizations abruptly shifted their focus from growth at all costs, even if that meant risking profitability, to achieving profitability by cost-cutting measures.
And while some companies may need to lean into cost-cutting efforts in 2023, more c-suite leaders will look to enhancing productivity within their workforce to achieve sustainable growth and profitability. For these leaders, the productivity improvements will come from technology, data and analytics.
2. Balancing Short-Term and Future-Back Planning to Drive Sustainable Growth
Long-term planning will always be a core component of business strategy. But the upheaval of the last few years has made it painfully clear that companies need to speed up the journey from thinking to doing. And that means integrating quick wins with future vision, so that the results you drive today do not hinder your long-term progress.
Take, for example, Disney’s recent decision to increase prices for park admissions, annual passes and vacation clubs. This decision infuriated loyal Disney fans, who accused the company of price gouging. While the company may have achieved a quick win from this plan, the long-term effects of the decision may slow Disney’s progress toward its vision.
In 2023, c-suite leaders will need to carefully balance short-term and future-back planning:
Short-term planning: This type of planning requires leaders to think and make at the same time. Risks are reduced with small bets to show progress quickly. Using data and behavioral insights, companies can identify things they know, which they can execute now. They can also explore what they think they know with new and near-term concepts. And those efforts will inform what they think, allowing them to hypothesize, and validate along the way.
Future-back planning: This approach is about creating predictive models of the future, nine years or more out, to model the probable and preferable future. Which levers should a company pull to get there? Might they do better to build, buy or partner? It considers complex elements, such as politics and socioeconomic shifts, so leaders can confidently see where the business fits in the future and the immediate steps they need to take to get there.
C-suite leaders who successfully lean into this leadership trend will be well-positioned to achieve immediate wins while also investing in the future of their organizations.
3. Purposeful Data-Driven Decision-Making Will Reduce Risks
Data-driven decision-making is critical to increasing confidence and reducing risks. And while that’s been true for decades, more and more companies realize they may have too much historical data and need more predictive data to better inform their decisions. As a result, many executives are making different demands of their AI and analytics teams, aiming to sharpen their business strategy.
But being data-driven in your decision-making is only one part of the equation. During times of uncertainty, it’s essential to be purposeful in utilizing data to inform your decision-making.
Two-way-door decisions are safer and relatively easy decisions to reverse. For example, if the pricing strategy for a new service is hindering performance, it is possible to right-size and reposition the offering or pricing strategy.
One-way door decisions are more complex, nearly impossible to undo, and require rigorous scrutiny. For instance, a company that misjudges the demand for a product or service has no opportunity to take that decision back. These decisions require rigor and high confidence levels that predictive data modeling can provide.
In constrained business environments, risky decision-making can be detrimental to the success of your organization, which is why it is more critical than ever to understand the true impact of the decision and be purposeful in how you evaluate the opportunity.
4. Environmental, Social and Governance (ESG) Regulations Will Require Businesses to Rethink Their Global Approach
There was a time when everyone building a global business and a global brand thought they could have one approach that would work across different countries: One operating model. One brand positioning. One value proposition. That time is over. Every country has divergent priorities, consumers and governments requiring differentiated business strategies.
Consider the increase in ESG regulations that have surfaced globally. For example, the European Union (EU) recently passed the Corporate Sustainability Reporting Directive (CSRD). This new directive will soon require large companies that meet specific requirements or are listed on EU-regulated markets to disclose environmental and social metrics across their supply chains. It will also hold these companies legally responsible for their ESG commitments. To meet CSRD targets, large companies doing business in the EU will have to rethink their supply chains and operations and their entire value chain from product and service design to business models and innovation.
And in the U.S., the Securities and Exchange Commission’s new proposed rule amendments will require domestic and foreign companies to disclose climate-related risks, governance of climate-related risks, greenhouse gas emissions, climate-related financial statement metrics, and information about climate-related targets and goals.
Global businesses need to ditch their one-size-fits-all approach to international expansion to meet evolving government regulations and consumer preferences. Instead, these companies will need to find new innovative ways to tailor their brands, business strategies and operations to meet the diverse needs of each market.
5. New Models of Production Will Unlock Sustainability, Efficiency and Customer Intimacy
The era of mass production may be ending right in front of our eyes. As a result, we’re seeing a new leadership trend emerge from the c-suite: decentralization. Not only is this a solution for the supply chain challenges it is also a more sustainable and efficient way to impact local communities.
Many leaders also realize that decentralization can get their products into the hands of their customers in a quicker and more sustainable way. Localized production also allows for co-creation with their customers, improving service and a low-cost path to differentiated and more relevant product offerings.
There are risks, however. Getting decentralization right will require leaders to closely re-examine their operating models, decision rights, and leadership skills. Without leadership setting a solid direction for the organization, leaders risk efficiency without innovation or innovation without efficiency.
6. Leaders Will Walk a Tight(er) Rope When It Comes to Political Issues
The purpose-driven gospel of recent years insists that companies take a stand on issues–or risk losing employees and customers. But figuring out how to do so keeps CEOs, CPOs and CMOs up at night.
BlackRock’s struggles are emblematic of this challenge. Six states (thus far) have yanked billions in investments from the world’s largest money manager, protesting its commitment to environmental and social change.
Over the last few years, organizations have been called upon to take a stance on hot-topic political issues ranging from healthcare to ESG. But taking a stance (or not) has become more complicated as companies increasingly navigate accusations of being either too woke or not woke enough.
In the year ahead, leaders will strive to sort out political agendas with three different pathways:
Publicly support political issues
Stay silent on political issues
Show support for political issues within their workforce policies without publicly supporting the cause
Regardless of where you or your company stand, the decision to engage publicly on political issues needs to consider the full range of potential consequences that might arise. Speaking out quickly might feel good in the first 24 hours, but unintentionally create outcomes that fly in the face of the very values you espouse.
The only true business constant is continuous business disruption. Creative leadership, purposeful planning and data-driven decisions will be vital to driving profitability and growth during times of uncertainty.
‘Tis the season for gift giving. This year, with Prophet’s focus on ESG, we’ve sourced ideas for the best sustainable presents.
December has finally arrived, bringing along cooler temperatures, festive lights and the season of giving. Black Friday and Cyber Monday may have ended, but the holiday spirit has only begun. At Prophet, we believe that ESG is core to a business’ sustainable growth. Our ESG team has honed the firm’s efforts this year by supporting 18 ESG pursuits, publishing six ESG-influenced articles and sharing two research reports highlighting ESG themes. That’s why in this year’s gift guide, we have decided to show our support for these ESG-driven initiatives again and address the 37% of surveyed consumers that said sustainability will significantly affect their holiday shopping decisions.
The holiday season frenzy brings the climate risks of consumption to an all-time high, from plastics and packaging to tons of wasted resources. Amidst this time of increased consumer demand, there’s an ethical concern if the individuals working in many production factories are receiving fair compensation and having their well-being prioritized.
But it doesn’t have to be this way. We can all help create a new future of sustainable and ethical shopping from brands that are doing their part and going above and beyond to make a positive change for our world.
By reaching climate neutrality, using recycled materials, and contributing to sustainability and social initiatives around the world, we’ve pulled together a collection of noteworthy brands that can be the next stop on your holiday shopping list this year.
For the Always Active Consultant with a Penchant for Nature and Traveling
(Source: Prophet)
Cotopaxi offers outdoor gear and apparel for the adventurous-hearted. As a Climate Neutral Certified organization, the brand incorporates repurposed, recycled and responsible materials in 94% of its products. It also plans to increase this number to 100% by 2025. On designated Giving Tuesdays, Cotopaxi donates 100% of purchase profits to fight poverty through its own foundation. The brand prioritizes ethical sourcing through rigorous codes of conduct and audits, as well as offering a (Re)Purpose Collection that uses leftover fabrics from other companies. Our new Prophet hip packs came from this same collection!
Noso patches offer an alternative, sustainable solution for repairing your favorite gear. They have designed (stylish) stick-on patches that can be used to repair tears and holes on outdoor apparel such as jackets and pants that tend to get damaged. This prolongs the lifecycle of the products and keeps them out of landfills, a win-win for sustainability. Noso recently adopted a new carbon credits program that allows customers to calculate the cost to compensate for the carbon emissions associated with their purchase, and the extra fee goes towards certified climate investment partners.
For the Activewear Enthusiasts Who Like to Hit the Gym in Style
Fox & Robin is an activewear brand and Certified B Corp, with sustainability initiatives such as donating 1% of all sales to environmental NGOs and using plastic-free packaging. To prioritize responsible production, quality products, and reasonable pricing, the organization has chosen to mitigate costs by spending next to nothing on paid ads and relying on organic advertising. The company is also the first and only activewear brand to disclose its factory workers’ wages to promote greater compensation transparency.
Allbirds is known for its comfortable and stylish footwear, but it also sells a variety of other apparel. The shoe brand is committed to reducing its carbon footprint to nearly zero by 2030 through initiatives such as renewable materials, regenerative agriculture and responsible energy. Allbirds tracks progress to its goals by measuring emissions through materials, manufacturing, transportation, product use and end of life. When shopping on its website, you can see a detailed sustainability breakdown for each product.
For the Content Creator Preparing for Their Next Gram-Worthy Picture
Everlane is a modern clothing and essentials brand that describes itself as embodying “Radical Transparency”. The brand only works with factories that score 90 or above on factors such as fair wages, reasonable hours, and environment, and even reveals the true costs behind its products to customers. Everlane has committed to science-based targets to reach net-zero emissions before 2050 and includes a strategic breakdown on mitigating Scope 1-3 greenhouse gas emissions on its website. Each of its product listings also includes a sustainability breakdown of its materials and construction.
Thousand Fell specializes in comfortable, everyday sneakers made from sustainable materials. The company strives towards a zero-waste closed-loop future by recycling its old sneakers to make new ones, and it has spent over three years designing a supply chain that allows the brand to make a circular lifecycle for sneakers a reality. Thousand Fell also offers its customers shopping credits for sending in old clothing so that it can be recycled and stay out of landfills.
For the Wellness Seeker in Need of a Caffeine Kick or Relaxing Cup of Tea
Pukka Herbs creates organic herbal teas and supplements for a variety of associated health benefits such as digestion and immunity. The company has built itself upon the values of organic farming, fair trade and conservation through commerce. Pukka is Fair for Life certified, donates 1% of revenue to environmental and social causes and has been climate neutral since 2019.
Grosche offers drinkware products for coffee, tea and water while using proceeds to fund its safe water project. Through this project, every product sold by Grosche funds 50+ days of safe water for those in need. Among its many initiatives, the company diverts 91% of its waste away from landfills, operates on 100% green renewable energy and has had a negative carbon footprint since 2010.
For the Remote Worker Looking to Level up Their Household Items
Full Circle Home creates sustainable and stylish home care products. The company is climate neutral and now has hopes of becoming plastic neutral. Full Circle aims to be 100% plastic-free packaging by the end of the year and use only recycled plastics in its products by 2050.
Made Trade is a women-owned and family-run business that offers a variety of home goods, furniture, clothing and accessory. The company prides itself on verifying and vetting each of its products to ensure it meets its core values of equity, sustainability and transparency. Made Trade is Climate Neutral Certified and allows customers to filter product searches by specific criteria such as sustainable, vegan and fair trade.
Yolélé strives to create economic opportunity for smallholder farming communities while also sharing ingredients sourced from Africa with the world. The company offers Fonio chips made out of ancient West African grains, as well as spice rubs and pilafs. By using these ancient grains in its product offerings, Yolélé connects small farming communities with local and global markets, allowing the farms to support themselves from agriculture and increase food sovereignty in the region.
Misadventure takes a new take on vodka by offering the world’s first-ever carbon-negative consumer good. The company fights against the growing food waste problem by taking food waste–specifically from baked goods– and using the starches to create its alcohol. Misadventure’s mantra is centered around “hedonistic sustainability”, the idea that you don’t have to punish yourself to do good and it has done a great job.
Don’t see anything that catches your eye? No problem – check out this website to search through thousands of Certified B Corporations that are committed to doing their best for the environment, for employees and for the community.
While we hope this guide serves as inspiration; sustainable gift-giving can go beyond what money can buy. The ultimate sustainable gift can be the one you make yourself or a special experience you share with others. Our recent Prophet Impact Auction showed the breadth of limitless creativity– from painting lessons and crocheted items to professional coaching and Pickleball games– the possibilities of giving sustainable (and deeply appreciated) gifts are endless!
Whether you are buying a gift for a coworker, a friend or your family the hunt for the perfect gift can be a challenge. Hopefully, our list spurs some environmentally friendly ideas and provides some inspiration during the season of giving. Afterall, we all have the power to #givesomethinggreater this holiday season. Happy holidays from our Prophet family to yours!
Expect marketers to navigate economic upheaval and changing customer preferences by leaning into new approaches.
Chief marketing officers are looking to the year ahead with caution as the story of the economy plays out through 2023. While growing economic uncertainty means almost nothing will be predictable, it also creates opportunities for leaders to shine by doing more with less and leaning heavily into creativity and innovation. On the one hand, CMOs feel pressured to keep in step. They want to move faster and are looking for ways to add speed and tactical agility. But they’re moving more thoughtfully, too. They want to deepen their connections with people at a time when consumers are more conscious about their spending. Importantly, they feel well equipped “to go into battle” as they can lean back on lessons learned from the beginning of the pandemic.
While building a strong brand is always critical, it becomes more important during economic downturns. When presented with brand choices, consumers are more likely to stick with brands they know and trust–even when given lower-priced options. So CMOs are questioning which moves will best strengthen trust with their existing customer base while finding ways to resonate with more consumers.
In the coming year, we expect CMOs to:
1. Flex Into Expanded Roles
Their titles haven’t changed, but marketers recognize that their sphere of influence is shifting. The marketing function is no longer just responsible for using marketing to deliver value to the organization. They must prove and demonstrate how while taking on more ownership of the growth agenda. That includes uncovering new pockets of growth and figuring out new audiences and opportunities.
As board-level expectations rise about marketing’s ability to prove its value, CMOs become integrators. They are bringing together different functions, from sales to product to ESG. This expanded responsibility for growth means moving beyond marketing key performance indicators to commercial KPIs, substantiating their impact on growth.
And that means marketers must embrace a different language, leaving marketing jargon behind as they translate everything they do into the lexicon of business value.
2. Refocus on Existing Customers Through Their Post-Purchase Journeys
In times of economic uncertainty, companies should shore up their customer base, exploring new ways to drive loyalty. In lean times, brands must find ways to build trust and stay top-of-mind. Creating better customer experiences is a sure bet.
The more companies invest in customer experience, the more they learn how to improve it. That means they’re making sure CX is brand-led, differentiated and personalized. The shift comes from seeing CX less as a defensive exercise and more as a positive relationship builder. It’s a way to expand the brand definition, bringing customers closer to its purpose. It creates more meaningfully engaged communities that act as stores of value during challenging economic times and sources of advocacy when conditions improve.
Only data can inform that level of intimacy, so CMOs are becoming more outspoken about ineffective corporate data strategies. They’re learning that an overabundance of data often means they can’t thread the needle. And they’re constantly re-evaluating the role analytics play in the marketing organization, aligning marketing technology to produce more meaningful insights.
It’s not just about having the right data. It’s also about having the right talent and teams in place to support the shifting needs of the business. We expect CMOs to continue to prioritize adding insight and experienced professionals who know how to ask the right questions of data and uncover insights that drive growth.
3. Hold the Line on Brand Versus Performance Marketing Budgets
The mix matters. And it requires extra attention in bumpy economies. Many companies are already slipping into fear-based budgeting, tipping into demand marketing at the expense of brand initiatives. It’s easy to do so at a moment when the rest of the C-suite is begging for quick results.
But it’s also a mistake. And the most effective CMOs will make a case for sticking to the 60/40 rule, even as they find better ways to integrate brand as a growth engine.
And they’ll increase efforts in key areas:
Experimentation: Under budgetary pressure, it’s tempting to back away from unproven channels. Those that continue to test and learn will see the best long-term growth results versus relying solely on quickly outdated benchmarks. But with the stepped-up scrutiny on budgets, experimentation should be agile. It’s okay to redeploy resources if the tests aren’t delivering results.
Channel Strategy: Social media is changing so fast that it requires teams to constantly refine goals and tactics. As TikTok becomes mainstream, Twitter (and new competition) evolves, YouTube gains clout and the metaverse beckons, brands need to constantly chart new directions. Few brands can–or should–be everywhere. But they all need to know how and why their customers use social.
Reporting: Tracking and socializing results should be done through business outcomes, not marketing metrics. This makes it more possible to connect brand and demand performance. No one in the board room wants to hear about clicks. The point of reporting is to evaluate past performance and make better, more effective strategic decisions for future efforts, getting the most out of limited resources.
4. Welcome More ESG Moves into the Marketing Tent
As governments, investors, employees and customers demand more accountability, environmental, social and governance policies are under the microscope–and their weaknesses are showing. Marketers can and should take on more, addressing the many ways ESG issues directly impact brand value. More CMOs are putting sustainability commitments and public announcements on the front of bottles, addressing it in packaging and formulation.
They’re becoming more aware of how vulnerable brands are to greenwashing claims. That means focusing on the key proof points needed to substantiate ESG efforts.
But most importantly, CMOs recognize that ESG has become a customer preference and a strong one. People want companies to make less harmful products and to behave responsibly. It’s no longer possible to think that only subsets of consumers care about the planet or labor practices. It’s a trend that will only intensify.
We’ll see more businesses realize that ESG shouldn’t be thought of as a single set of initiatives. It’s a commitment a company makes, which then translates into many facets of operation and consumer engagement.
5. Rewrite Their Personal Purpose
Many CMOs are facing a significant amount of internal and external headwinds which can lead to a sense of frustration by not being able to deliver the impact they’re looking to achieve. While their creative energy and strategic skills may have propelled them to the top job, the harsh challenges of the last few years have sucked much of the fun out of their careers. Bludgeoned by the Great Resignation, skirmishes over hybrid work policies, positions that seem unfillable and looming economic storm clouds, many feel more like survivors than visionaries. They have less freedom to be creative. And motivating teams while managing department-wide burnout takes much more of their time than it once did.
While the last few years may have presented a number of challenges, there’s ample opportunity to start taking their purpose-branding lessons to heart and redefining their career goals. Expect to see CMOs applying the lessons from tough times to dig deeper for motivation and find new ways to reignite their passion for marketing. Their goal is to transform resilience from a corporate buzzword to a personal mantra.
We’re not surprised that the average CMO tenure hovers at 40 months, the lowest in a decade. Periods of constraint are inherently more demanding than growth spurts, and CMOs have to do more with less. But cutbacks also fuel innovation. We expect to see CMOs build trust with customers by leaning into personalization. They’ll find new ways to collaborate, forming creative partnerships that span silos. They’ll enrich their brands with thoughtful experimentation. And in doing so, they’ll unlock uncommon growth–even in a recession.
From YouTube, Patagonia and Taylor to Twitter, FTX/Crypto and Adidas
This has been a year for brands to shine in big ways–and fall in even bigger ones. It has also been a year of impressive brand heroics, with record-setting generosity, expanded inclusivity and high-octane comebacks. We’ve seen more companies spin pandemic-era lessons into smart marketing moves, using brand purpose and customer engagement to achieve impressive levels of relevance.
Many brands unleashed their inner value propositions, from EVs coming out of Detroit to the inspiration named Volodymyr Zelenskyy to the hard-charging prowess of HBO Max and Hulu. And many took the world by surprise, like the brilliance of BeReal and the reimagination of “ugly” shoe brands such as Crocs and New Balance. It’s also been a blast to see Harry and Taylor rise (again) and watch the coming-out party for AB InBev. All in, 2022 found plenty of unexpected ways to win hearts, minds and wallets, especially in an unstable economy.
With as many brand winners, we saw an equal number that either missed the mark or raised more questions than answers. Elon Musk imploded, tainting Twitter and Tesla. Then there was FIFA’s continued corruption and Ticketmaster’s monopolistic nightmares coming true. Singer Jax revealed the truth about Victoria’s Secret, Shopify lost some magic and Beyond Meat failed to meet the moment. Big Oil garnered record profits while most of the world struggled at the gas pump, and questions about Meta(verse) abound. Many brands are ending the year trying to climb out of big holes.
That said, I went to my amazing Prophet colleagues from around the world to get their take. For the tenth straight year, they delivered, producing close to 100 nominees. A dozen stand out, all with lessons for marketers as we head into 2023.
The 2022 Brand Winners
Airbnb
This hospitality company continues to expand its frame of reference with a super-inclusive approach and stream of updated offers. This includes a new listing service in the U.S. that allows renters to offer their apartments for short-term sublets, just as homeowners can. And its categories feature is a genius way of browsing. Why not stay in homes that are 10,000 feet above sea level, built into caves or with amazing pools? Even as rival VRBO comes on strong with consistently powerful marketing of its own, Airbnb continues to redefine what it means to be a creative traveler.
Patagonia
In a world full of Mars-bound billionaires, Founder and Chief Executive Yvon Chouinard donated the entire organization to Planet Earth. By giving his $3 billion company to a foundation that will devote all profits to the environment, he invented a Triple Crown for branding: Epic generosity, the most significant investment in brand purpose ever and a competitive difference none can match. Bravo Patagonia!
Taylor Swift
Few performers–and fewer women–have built a brand as strong, enduring and appealing as Taylor Swift. Her tightly controlled record releases with a host of product tie-ins (the record clock) show that no one else is calling the shots. And in an acid test for all brands, she’s expertly steering through her part in the epic Ticketmaster fiasco, reaching out to fans to heal the damage.
YouTube
YouTube, the Google-owned social media platform that’s also the world’s second-largest search engine, outdid itself this year, proving its relevance as never before. It surpassed Netflix in global streaming watch time. And it sharpened its support for creators, launching monetization for shorts and providing a much better deal on revenue sharing than TikTok. It’s barreling into live shopping. And it surpassed 80 million music and premium subscribers, up 30 million in one year.
BeReal
This social platform appeared out of thin air and captured an audience of 74 million with its two-minute window of authenticity. Radically different from competitors, it finally gives young fans the ability to shake off that phony Instagram vibe. And like Wordle, which won big love last year by asking for so little, BeReal is fast becoming a daily ritual for increasingly anti-social young people. Is it sustainable? That may be a meaningful question for marketers. Gen Z could care less.
AB InBev
OK, Budweiser and the AB InBev stable of beers have been languishing stateside for years. But a moment on the giant stage of the FIFA World Cup gave Budweiser a chance to shine, making it the beverage of choice for pro-Western democracies. When Qatar banned beer sales just days before the tournament, Budweiser’s quick-witted response made sure its $75 million sponsorship didn’t go to waste, with its promise to donate all that beer to the winning country with a smart new campaign, “Bring Home the Bud”.
The 2022 Brand Losers
Twitter
Unsurprisingly, Elon Musk and Twitter are No. 1 on the most bad-brand lists. But the real loser may turn out to be Tesla. Musk’s reign of terror at Twitter transformed his personal brand from disruptor to dirtbag, a reputational body blow that may follow him forever. With massive layoffs, his gutting of the unprofitable social media company has resulted in plunging ad revenues. Hate speech on the platform is soaring as customers flee: In the first week of Musk’s control, Twitter lost 1 million users.
Tesla
Elon may have also believed Tesla, long a darling of the tech world, was immune. But there may be little overlap between the free-speech absolutists who love him on social media and Tesla’s affluent planet-conscious customer base. Tesla sales are declining, pressured by cheaper competition and anti-Elon-ism. And its stock price keeps dropping, falling 50%–well below the overall market.
Adidas
Adidas first formed a partnership with Kanye West, now known as Ye, in 2013, earning plenty of sales and enviable cultural relevance. The relationship deteriorated, and Adidas reportedly has been looking for an exit for four years. But by waiting until Ye spiraled into overtly antisemitic tirades, Adidas calls its commitment to purpose into question. In some ways, it is understandable: Yeezy products brought in $2 billion in sales or 8% of its revenue. But the delay is inexcusable–perhaps more so because of the founders’ apparent ties to the Nazi party. Will Adidas bounce back? Of course. It’s one of the world’s biggest sporting brands. Will consumers ever believe its purpose blather, all about integrity and diversity? That remains to be seen.
FIFA
This global organization has been engulfed in corruption scandals for so long that it’s hard to imagine the brand faring worse. Yet this year’s FIFA World Cup Qatar 2022 vaulted it to new levels of disgrace. The selection of tiny Qatar, triggering human rights, a bigoted stance on the LGBTQ+ community and more corruption accusations proved that the ugliest organization represents the beautiful game.
Victoria’s Secret
The world’s largest underwear brand is halfway through an ambitious five-year makeover aimed at erasing decades of sexism and misogyny. Some might say it’s working: Sales are rising, and it’s launched new and more inclusive marketing–there are even reports it may reintroduce its fashion shows. But the popularity of Jax’s “Victoria’s Secret” exposes how many younger consumers still take issue with the unrealistic body image standards that the brand is so well known for promoting. And the $400 million acquisition of AdoreMe, the direct-to-consumer dynamo, seems like an admission that it doesn’t know how to talk to Gen Z.
FTX/Crypto
While FTX’s $32 billion meltdown is deservedly getting much attention, the entire crypto market has taken a terrible hit. And certainly, the 30-year-old Sam Bankman-Fried is a Madoff-level conman. But we’d like to call out the mainstream press, including the New York Times and the Wall Street Journal, that lauded him as an altruist. While some brands will weather the crypto collapse, the entire regulatory apparatus that allowed FTX to happen deserves condemnation. And it likely set retail investing back a generation.
