Corporate impact through profitable purpose: Phillip HaidPodcast March 26th, 2021
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As humans, we frequently think in absolute terms, which lead us to believe that extreme amounts of corporate profit – allowed in a capitalist economic system – also cause extreme damage. While this notion often holds, there are exceptions and caveats. On today’s episode of The Decision Corner, our host Dr. Brooke Struck sits down with Phillip Haid, CEO and founder of social impact marketing agency Public Inc.
At Public Inc., Haid and his colleagues help major corporations make positive global impacts. Nowadays, consumers are more and more interested in buying from socially- and environmentally-conscious companies. In turn, major corporations are gaining intrinsic motivation to make positive impacts, since advertising them attracts consumers. For companies, then, profit and purpose seem to go hand in hand.
In this episode, Brooke and his guest discuss:
- The false notion that profit is inherently evil
- The structure of a purpose-led economy, rather than a greed-led economy
- The importance of leadership in social impact
- Consumer views on social impact and why people care
- Tailoring company values to match consumer values
- Working with versus against competitors in the social impact market
- Conveying social and environmental impacts genuinely back to consumers
For good or for evil
“It’s really important that we stop attuning bad motives to companies, and good motives to people who dedicate themselves to an issue where there isn’t a profit motive. And actually get ourselves past it and evolve and say, ‘Actually, what we’re talking about is a more conscious form of capitalism.’”
Purpose over consumerism
“Here’s my hope, actually: as we evolve towards a more purpose-led economy, the level of greed will reduce. Because how much do people actually need? How much profit do companies need? I mean, there is a point in which you say, ‘Why do you need more of that?’”
Importance of leadership
“If the leadership of a company doesn’t fully believe in this, if they don’t believe that they can create – that they must create – positive impact inside their company and outside, in a way that is completely aligned with where they want to drive their business, it’s really hard then, to live this in any material way.”
Do it for the buyers
“Consumers want companies to behave well. They want their companies to treat their employees well. They will frequent, they will buy from, they will choose your brand, your product offering, your service offering, if they believe you are a good company that actually cares about its people and cares about the world.”
On consumer values
“So the key ingredients here are, you have to know your customer, and you have to know that the values that you have aligned with their values, and that the issue that you choose, or issues that you choose to lean into, actually will resonate with them.”
Collaborating with competitors
“There’s very little white space in the market today. So figuring out who you need to collaborate with, including other companies and even competitors, quite frankly, is where the world’s going. So differentiation can come in a number of ways. But differentiation doesn’t mean you must do something completely different than your competitors. It’s more how you do it.”
Bringing it to the world
“Let the market be your real test. In the old days, the way that advertising used to work was, you spent all this money, you developed this whole thing, you focus test to disaster check, and then you put it out there into the world having spent millions of dollars hoping it works. Well, the beauty of a digital world is that you can put stuff out there and see what the market says.”
Brooke: Hello, everyone. And welcome to the podcast of The Decision Lab, a socially conscious applied research firm that uses behavioral science to improve outcomes for all of society. My name is Brooke Struck, research director at TDL. I’ll be your host for the discussion. My guest today is Phil Haid, CEO at Public Inc. In today’s episode, we’ll be talking about corporate impact: the fads, the real thing, and how organizational decision making can contribute to building a better world. Phil, thanks for joining us.
Phillip: Thanks for having me.
Brooke: So please, before we launch in too deep, tell us a bit about yourself and what you’re up to these days.
Phillip: Sure. So, as you said, I am the founder of CEO Public. It’s a social impact agency. We’re really this hybrid of impact consultancy and creative agency. We work with companies all over North America on thinking about how to embed social-environmental impact at the core of their business. For some, it really starts with thinking about their social purpose as a company and leaning into that. For others, it’s about being more strategic around their CSR efforts and trying to move beyond CSR to something more integrated into their business. And so we work with all kinds of companies to do so, which is a ton of fun and very rewarding.
Brooke: Sounds very interesting. And you’re very well positioned to scratch an itch that I’ve had for a while now, especially around this notion of impact. So let’s unpack that. What is impact? How do we measure it? You had mentioned social impact; environmental impact also comes to mind. And if there are other dimensions that you have kind of rattling around in your concept there, then please feel free to open up on those as well.
Phillip: Sure. I generally talk about it as ‘social-environmental impact’ because I sort of feel like it covers the gamut. And really, what we’re talking about though, is how, in this particular case, how do companies create positive, social environmental change? And do that, as you said, measurably. So this isn’t about sentiment, it’s not about nice actions that you feel good about and you give some money to charity. That was sort of the old approach, not to suggest there isn’t a place for it. This is much more about saying, “As a company, we have a vested interest to solve X problem,” whether that’s carbon reduction, food insecurity, pick your issue. “We have a vested interest to solve that problem, because if we don’t, it’s actually going to have a really negative impact on our business.” Or, “We need to solve it because it has a very big positive opportunity for our business.”
I’ll give you a concrete example of this to make this real. We did some work with Converse in the US as they were launching a new upcycled/recycled product line: shoes, bags, T-shirts, et cetera. They were projecting, because of climate change, that there would be a 2000% increase in the cost of cotton within the next 10 years. And so there’s a very concrete example of, ‘Why do you need to start thinking about upcycling and recycling a product? Because you’re going to blow your price point out of the window when people are used to paying X dollars for a Chuck Taylor.’ That’s an example of that. So it’s not driven by a charitable mindset, it’s driven by a need to solve a problem because it’s going to impact your business.
So measurable is, you actually see that there is a reduction in the use of plastic. There is a reduction in people who are food insecure, there’s a reduction in reducing the gap between the rich and the poor. And how you can measure those things, ultimately, is the long term change that I’m talking about. But there’s a number of metrics along the way. One of the things we find in thinking about this work is, it’s really important to differentiate between outputs and outcomes and impact. And outputs are good proxy measures, but they need to be connected to the outcomes you’re trying to create, which you believe are on the path to that longer term impact. And that’s hard work.
So if you’re doing episodic work with a company and you’re doing a campaign, which we often do, then we need to think about outputs. But they have to be connected to those kinds of outcomes. And outputs can be a number of people you engaged in the campaign, educated them on an issue, got them to take an action like signing a petition, that kind of output. Outcomes, where we’re saying, ‘Actually, if we could get X amount of people to take action and drive X amount of dollars towards this issue, would that lead to these program implementations, which we believe would reduce food insecurity in a seniors population?’ So we can get into it more. But that’s how we sort of think about social-environmental impact through the lens of, ‘How do we create truly measurable change, knowing that change takes time?’
Brooke: Right. So in a previous life, I worked in some audit and evaluation functions. When I hear you talk about that, the ideas that come to my mind are things like theories of change. That’s just starting to scratch the surface. Can you talk about how companies are embedding these impacts into their business models? Maybe a theory of change is one place to start, but wider corporate strategy is perhaps something to think about. You mentioned a lot of hypotheses that go into that as well. So maybe there’s kind of an innovation and testing angle that you can explore there, too.
Phillip: You bet. That’s a great question. I want to tackle it from two different angles. For the first angle, I want to pick up on ‘theory of change.’ And then I’ll come to different ways in which companies could truly embed this work and think about how that leads to measurable impact. I would say, at least in our experience, that some companies are quite sophisticated when they think about the kind of measurable impact they’re creating, and others are really nascent in terms of where they are in the process. So for some companies, we are thinking about their theory of change and working with them on a theory of change. And I’ll talk about that in one moment. And for others, it’s just, they’re not there yet.
So you’re really at the point of just thinking about, ‘Well, let’s define an issue that makes sense for your business. Let’s define where you can play in the market, and who you can engage and what set of outputs you can create towards outcomes.’ And it’s really that. We worked with Maple Leaf Foods on creating their impact platform, which is around food insecurity. And we did develop a theory of change. And the theory of change that we started to create for them, what we did is we started by looking at the ecosystem. We knew we wanted to reduce food insecurity. We asked ourselves, we actually started backwards in a sense, is that we asked ourselves, ‘Could we cut food insecurity by half?’ And I say backwards only because it wasn’t grounded in the starting point of sort of empirical science that said, ‘If you do these sets of things, you’ll get to a reduction.’ We sort of set a goal the same way that famously, President Kennedy said, “I’m going to put a man on the moon.” And then you work back to figure out how you’re going to get there.
So with them, it was about saying, ‘Could we cut it in half? What would that look like?’ So if there’s roughly four million people in this country who are food insecure, if you could cut it by two million, that’s significant. And so then we worked back to say, ‘Okay, well, where does a company like Maple Leaf Foods play in that?’ And so knowing that one of the biggest issues, of course, is poverty reduction, I mean, food insecurity is about poverty. And yes, there are food elements to it, but ultimately, it’s about that.
So we looked at the ecosystem and said, ‘If a company like Maple Leaf Foods could actually play a role in convening, supporting through innovation funding, the research of what’s working, and not working, learning from those various types of exercises, and then sharing that broadly to try to scale, and then find what’s really working, and then actually find bigger pots of dollars within the ecosystem to scale – especially because governments are willing to do that – once it’s been proven, that would be an interesting place for them to play.’
And the reason we came to that was that when we looked out at the food insecurity system, we looked at all the players, what we found was highly localized, not particularly measurable. Most of them were not measuring in any material way, were not sharing their results with each other, and a lot of replication without any true learning from it. And that’s not, in any way, to disparage the people working in this area. They’re doing incredible work. They’re just under resourced. And so we said, well, what if Maple Leaf could play that role? So I won’t go too much further, I know we can, if you want. But just to say that that was one where we actually started with what we call a North Star, like a big impact goal and said, ‘If we work back from that, what’s happening in the ecosystem? Where can we play? Why do we believe that they would be well-suited to do that?’
And then importantly, ‘Where do we start? And what are the assumptions about where we start? Why do we believe if we take these next three, five steps over the next few years, we believe that starts to move the needle toward where we’re trying to get to?’ And that’s how we started thinking about that one. So when we’re working with companies on theory of change, and thinking about impact, it really does start with understanding the full ecosystem – understanding who’s doing what, where are the gaps. And then, where does a particular company have the best place for them to play tied to the assets and resources that they have? And then, how do you deploy that in a very collaborative way with others to move the needle on the issue? So that was the first part, and I’ll stop there, and then I’ll come to the other.
Brooke: I want to ask a devil’s advocate kind of question here.
Brooke: So someone who’s determined to take a really uncharitable interpretation of what you’ve just described, says, “Okay, great. So what you’re talking about here is Maple Leaf Foods saying, ‘How can we expand the size of the market, because we’re a dominant player? So if the market grows, then our bottom line grows.’” Someone who’s got that really pessimistic interpretation says, “This is strictly utilitarian activity, that Maple Leaf is undertaking.” This is something that I’ve encountered before, and we, at The Decision Lab, have encountered before, where you have this kind of conflict between the utilitarian arguments and the justice argument. You say, “Well, either I can argue that this is the right thing to do.” And people who are saying, “But the right thing to do doesn’t pay,” you turn them off. Or I can say, “This makes good business sense.” But then everyone who’s focused on the justice angle will say, “Well, then you’re being too utilitarian, you don’t actually care about people. All you care about is the bottom line.”
So these two arguments seem to really box each other out, they preclude one another. But that’s a really difficult situation to navigate when you want to create these kinds of win-wins. Ideally, you get both of those things, and you’re not forced to choose. How do you help to manage the conversation to get people who are perhaps a bit polarized on the kind of utilitarian versus justice camps, to actually see that they can work together, and that doesn’t have to be a bad thing?
Phillip: Yeah, it’s a great question. I really appreciate the challenge. Please keep challenging, because I think that’s the only way this work really advances. So, there’s a lot to the question you’re asking. And so let me try to unpack it in a bunch of different ways. The first, I would say, is that the two camps, to me, is the wrong way to look at it. And I think we actually have to get beyond it. Because it is, in my mind, and this might seem a bit judgmental, but it’s a bit old-school. Because it premises that companies only care about the maximization of shareholder value and profit. That embedded in there, is this notion that social justice advocates have sort of the cornerstone on doing good in the world, or fighting for what’s right. And I just don’t buy that dichotomy anymore. It’s imperfect. If people are looking for beautiful clarity and purity of heart, it’s not going to happen.
The argument that I’ve been making for a long time since I started Public in 2008, and – this was a very hard argument to sell in 2008 and 2010, even 2012; today, it’s a much easier argument to sell – is we call it ‘profit with purpose’ for a very intentional reason. If we want to scale solutions that are going to make the world a better place, environmentally, socially, et cetera, business has to be integral to those solutions. Not to the exclusion of nonprofits and governments in a coordinated and integrated way, but businesses have to be. If we think that we can take the profit motive out of that equation, we’re never going to get there. Therefore, it’s really important that we stop attuning bad motives to companies, and good motives to people who dedicate themselves to an issue where there isn’t a profit motive.
And actually get ourselves past it and evolve and say, “Actually, what we’re talking about is a more conscious form of capitalism.” Some people call it stakeholder capitalism, some call it social conscious capitalism. Michael Porter talks about a shared value, we call it profit with purpose. But the point is, we need to evolve to the point where those two arguments can co-exist. There’s nothing wrong with making money by doing the right thing. And that’s actually the only way we’re going to get to scale. And so I would say, “Why does it matter if a company actually makes lots of money in creating and helping to solve a problem?” And not every issue and every problem can be solved in the most profitable ways. But I think that’s the mindset. So I say it’s sort of wrong thinking in that it’s old thinking. It doesn’t absolve companies.
I understand why people are critical, because up until fairly recently – and still, there’s lots of egregious things happening – companies maximize shareholder value. And CSR came about because it was an offset mentality and behavior for the bad things that they were doing. Now, we’re saying there’s a cost to everything that you do, internally and externally. What it’s doing is it’s starting to transform how companies behave. So I love the challenge, but I sort of feel like we have to get past that as a society if we really are interested in this idea of a purpose-based economy. These things can co-exist. And in fact, they’re going to transform each other.
Brooke: I really like that. So if we harken back to our good old friend Gordon Gekko, greed can still be good, but not to the exclusion of everything else. So this idea that everything other than greed must be bad, because it just kind of hampers profit and that sort of thing. This idea that, ‘It’s not enough for me to win, others must lose.’
Phillip: Right. The zero sum game, to me, doesn’t work. And so to me, it’s not about greed. Here’s my hope, actually: as we evolve towards a more purpose-led economy, the level of greed will reduce. Because how much do people actually need? How much profit do companies need? I mean, there is a point in which you say, ‘Why do you need more of that?’ What I think is happening – just starting, early nascent days – is when you start to lean into this, when you start to say, ‘Okay, we believe in… X,’ and you start to think about things like product innovation. So, for example ‘How could our products have a net positive impact on the world versus a negative impact?’
And you’re seeing that with things like, every shoe manufacturer who is leaning to sustainability. Adidas teams up with Parley and they take plastic out of the ocean. Danone is a B-Corp, is now creating yogurts with less sugar or traceability. We work with fashion companies like Theory, where their supply chain, same kind of thing. Because look, these things are happening, the whole movement to net zero. So there’s a product innovation piece, which is super interesting that’s happening, where ultimately, I think we can get to the point where products, at worst, will just be sort of zero, sort of net equal on the harm. And then at best, you’re actually creating positive. You’re seeing interfaces with carpets that actually reduce carbon from the environment, that kind of thing. So that’s one aspect. When you start to embed this, you start thinking about things like, ‘How do I green and humanize my supply chain?’, which is happening all over.
You get into things like social procurement. So, we work with the LCBO. We’ve created this platform for them called the Spirit of Sustainability. Well, they’re a wholesaler and a retailer, so you can imagine their buying power. Now they’re starting to lean into this and say, “Well, if we care deeply about sustainability,” which they do, “we can start making greater demands of the people who want to put their alcohol on our shelves.” That has a huge impact on the kind of change you could create. You think about hiring practices around diversity, equity, and inclusion and employee policies. That starts to change from the inside; engaging your employees and community to corporate activism, we can talk more about that. We’re seeing companies that are investing, thinking about their investment funds, and obviously with the ESG lens, but going even further.
And then now, companies who are putting money in funds, like, Patagonia is down with 20 million in change. Actually sorry, they changed the name of it, Tin Shed, I think. And Unilever has it, and a bunch of companies have it where they’ve got these investment funds. And they’re investing in social enterprises, different then the charity model. So all of these things, when you start to really embrace this idea that your company can create net positive impact in the world, and it doesn’t have to come at a cost of your financial bottom line, all of a sudden, it opens up all these channels inside of your company and outside to create positive change. And if we can get there, and all companies have become sort of what all companies must do, it’s going to have a transformative effect on the world, I have no doubt about it.
Brooke: I want to dig into corporate decision making and specifically, one of the things that you touched on a little bit there is incentives, so, profit maximization, shareholder value maximization. Those are still extremely clear incentive channels. In your work, how are you seeing corporate decision making changing, to start to adapt to the kind of model that you’re talking about here? And as a kind of corollary of that, how do you see the incentive ecosystem shifting to support that kind of change?
Phillip: Yeah, it’s a great question. So, not surprisingly, you know this, it’s all over the map. Because as soon as I get challenged with [the idea that] I’m painting a panacea that doesn’t exist today. And I can tell you that these things are happening all over the board. But we have a long, long way to go. A couple of things I guess I would answer. One is, and this is so obvious, but it’s very germane to this conversation. If the leadership of a company doesn’t fully believe in this, if they don’t believe that they can create – that they must create – positive impact inside their company and outside, in a way that is completely aligned with where they want to drive their business, it’s really hard then, to live this in any material way. You’re just fighting. And even though your employees are asking for it, and even though consumers have a heightened expectation around it, they don’t really do much.
I mean, there is corporate greenwashing, there is woke-washing. People are very good at making commitments, but then not following through on them, all that’s happening. But to those that are doing it, one of the things I’m seeing is they were writing them into their KPIs – their key performance indicators, how they’re going to be measured, and how they’re tied to compensation. You’re seeing that now. You’re seeing it on things like hiring practices, and getting more diversity in their hiring practices. You’re even seeing it on target – this is small, I don’t think a large percentage of companies are doing this – but targets around your environmental commitments and matching those. So the moment you tie these outcomes and impacts to your compensation, that’s where the rubber hits the road.
I’ve read about some boards of directors actually doing that with compensation paid for the CEO and the executive team. But I don’t think it’s there. So what’s one is, put it right into the KPIs, it’s how you’re being measured, it’s how you get bonused. That will change behavior in a nanosecond. That’s one. The other thing that I think is also happening – and this is more sort of influential in nature, and sometimes positively coercive – but if you look at what Larry Fink is doing at BlackRock. And now this expectation that, because they have, I think it’s like 8.7 trillion of assets under management, they can start to dictate the terms of where they’re going to invest. And so they’re saying things like, “If you don’t have women on your board, at least one one woman-,” which is pathetic in 2021, “-we’re not going to invest. If you don’t have climate targets, we’re going to start to put pressure on being an activist investor in that.” So, those kinds of things are happening, too.
So that’s another way to incentivize, either with carrots or sticks. And then I think the third way – and this is less direct, but I think it still is valid – it’s more persuasive and it’s recognition. CEOs pay attention to what other CEOs are doing. They obviously pay attention to direct competitors, and when they’re being recognized out in the world, for the actions that they’re taking. What’s really interesting, too, is we’re seeing – because the consumer and the employer are kind of coming together, because the private and the public are coming together – actions that you take inside your company today, now become front page news.
And so when you’re getting positive or negative recognition for your actions, take an example: Marc Benioff at Salesforce has actually been a real advocate for thinking about things like equal pay. And getting a lot of positive attention for that. Or Microsoft has come out with it, Starbucks has come out with it, where they talk about benefits and maternity leave. Because in the US it’s six weeks, and they’re saying, “We have to extend that and we’ll pay for that.” Or, “We’re going to send our baristas to college.” Those are decisions they’re making internally, but they’re getting all kinds of positive recognition externally. On the negative side, you take an example, like a year or two ago, Wayfair had contracts with ICE, when they were separating – under the Trump regime – kids and their families at the borders.
And the employees of Wayfair said, “We don’t think we should be taking that contract. But if we must, then let’s at least take the profits from that contract, and give them to organizations that are trying to create reunification and so on.” And the response from Wayfair was very interesting and quite tone deaf, which was essentially, “That’s not our business. We’re in the business to create furniture and make money.” And they just basically ignored the employees. And it created a huge [controversy] and employees staged a walkout. And they had a very measured response to what they thought they could do with it. And Wayfair just didn’t bite. And they got a lot of negative attention for that. So recognition in positive and negative ways is also a way in which I think it influences the behavior. Those are some of the ways that we’re starting to see that it starts to materialize to drive the right set of outcomes.
Brooke: Let’s think about those consumer side incentives. Obviously, there’s been an activist crowd for a long time that engages in impact-driven purchasing. That’s not new. But there seems to be renewed energy around that kind of behavior, perhaps especially in response to COVID and Black Lives Matter. Even a few years ago, actually, the MeToo movement, I think, also sparked a lot of conversation about this. So, how does the consumer perception side play into this broader incentive system of the kinds of actions that corporations are trying to lean into, in order to resonate strongly with their consumers? Maybe Wayfair is a good example to explore there – like, is there some kind of measurable, negative impact that they sustained as a result of all this bad press? Or is this just kind of more anecdotes? And how does the more formalized incentive structure get set up for people to move from, “There are anecdotes about these kinds of things resonating badly with our consumer base,” to, “These things actually limit the amount of activity we can have in the market, because consumers just won’t get on board?”
Phillip: Right. So, just specifically on the Wayfair case, I don’t know, but I don’t think it had any sustained impact. I think their business is just as strong as it was. But I haven’t seen the data points to support that.
There’s a few things here. One is that there’s no question that the consumer expectation of companies has increased significantly, according to all polling data that I’ve seen, which I think you have to put in a little bit of parentheses, because these questions get asked without trade-offs. And so people’s purported behavior based on attitudinally what they say only gives you a sense for where the market’s going and what people believe, not really their actions. And I want to come back to that in one second.
But I think it is true, because there’s just so much data to support it now, that consumers want companies to behave well. They want their companies to treat their employees well. They will frequent, they will buy from, they will choose your brand, your product offering, your service offering, if they believe you are a good company that actually cares about its people and cares about the world. And there’s just tons and tons of data to support that. Porter Novellis just came out with a study that talks about impulse purchasing. If you have a positive sentiment towards a brand because of what they do in the world, the likelihood that you’re going to choose them in that impulse moment is actually much higher. And they researched that. So there’s no question, as a starting point, that there is a heightened expectation. And therefore, brands have to pay attention to that, because they know their consumers want it. So it forces them to say, “We can’t just ignore this stuff, we have to at least pay attention to it.”
The second thing I would say, though, is – and I would love to quantify this in a big study, and it hasn’t been done, and we’ve got to figure out how to do it – I do believe that there is a gap between what people say and what they do. Now, that’s not some big ‘aha,’ I mean, it’s human behavior, we’re all hypocrites. Most people want to do the right thing most of the time, but then if you have to go way out of your way in which to do it, it’s going to fall down. But, as it relates to consumer purchasing, there is a big safety gap, and that’s because there are variables involved that influence your purchasing decisions. So that’s the problem that I have with a lot of the polling, is that they never force the trade-off. There’s a small percentage of people who will pay a lot more for a product because it’s vegan, it’s got a super clean supply chain, et cetera. But the majority of people still won’t do that. So they’re not going to pay more. If I have to go and find those products that are way outside the realm of what I normally do, I’m probably not going to go out of my way.
The third thing is, if I believe that that product is not as good as the competitive product. So let’s take paper as an example. We’ve worked in this category: facial tissue, bathroom tissue, et cetera. We worked on a line that was 100% recycled, and only 7% of Canadians buy 100% recycled paper products, bathroom tissue. That’s because, oftentimes, it’s not on sale, so it’s not as cheap. And they’re worried that it’s not as good. So perceived value is actually a big part of this equation.
Those are really important variables as to whether or not a consumer is going to really do what they say. And I think that that plays into it. So the reason I’m saying all this is because when you think about well, ‘What’s the incentive for companies to play here?’ It’s like, well, the expectation is there, the actions that people do, I think, is hit and miss. But there’s enough proof points of what everyone is doing, and the recognition that companies are getting for doing these right sets of things, plus the fact that it feels good. And as long as it doesn’t cost you more, and you believe that over the long term it’s actually going to make you more money, it sends everything sort of headed in the right direction.
One last point: Unilever has leaned into sustainability, purpose extremely well. And when you look at their top performing brands in their portfolio, – and this is a company that touches 2 billion people on the planet every single day with their products – their top performing brands are all purpose-driven. And they’re outperforming their other brands by 30%. So something’s going on. And then we have to keep unpacking it. But that’s a real proof point.
If you rewind the tape 10 years ago, this ESG thing was happening on reporting and measuring, and ESG funds, and they were seen as inferior. I remember being part of those conversations on a foundation I used to be a part of – the Laila Foundation. And these ESG screenings, that was a thing that people didn’t believe in. And now there’s so much proof to show that when your portfolio has more sustainable businesses, they outperform the market. So there’s enough proof points now that companies are saying, “You know what, we need to do this, our consumers care about this. Will they punish us? Sometimes. Will it sustain? Not sure. But it’s heading in that direction.”
Brooke: So, in opening the conversation, you said this whole impact thing is, it’s more than just sentiment, there’s substance here. What we’re coming around to now is that, certainly there is a lot of substance, but sentiment is not nothing in here, either. It really does matter how people feel about it, too. So obviously, I hear the echoes of why it is that you designed your business the way that you did: having both this kind of impact component, as well as the creative component, to be able to tap into that public image and visibility. So there’s a public facing component. And as much as greenwashing can create a backlash, because you’re trying to capture impact value that you only pretend to create, so too can a PR fumble lead to other kinds of problems.
So if you’re doing a bunch of great impact work, but you’re not managing to kind of communicate that effectively, you’re creating value that you’re then not able to capture. So brands need to be messaging their business changes effectively. If they don’t, they risk not being able to capture the value they’ve created. And that makes them less competitive, especially in a marketplace, as you say, that’s kind of moving more and more to include these kinds of considerations. What are some of the keys to ensuring that a company’s work on their brand helps them to capture all – but not only – the social and environmental impacts that the company creates?
Phillip: Yeah, great question. We often say at Public that it’s both what you say and what you do. And actually both matter. And that’s really your point, right, in your question. You can’t just say things and not do them. And I think that sounds obvious, but I can tell you that three years ago, a lot of brands embraced purpose. And you saw all these brands leaning into it, telling stories about purpose. And I remember, Heineken did Open Your World. And there’s all these sort of like, quasi faux social experiments that they did at the camera, [with] people from different walks of life and different perspectives, and the guy who was homophobic, but then he sits down with someone and all of a sudden, his world opens up. And it’s all kind of nice, but bull-shitty at the same time. And people love that.
What’s changed though, is – and I think it’s partly because of COVID, and I think it’s partly because of the reawakening around social justice that happened with the murder of George Floyd and Ahmaud Arbery – there is a greater craving, I would argue, for real impact. You can’t just say stuff. And people are asking the question, “What are you really doing? And if you’re asking me to give it cash, what are you doing about it?”
Let me give you an example: at State Street, and when they did the Fearless Girl. Their ad agency came up with this. They basically created this statue of this young girl on Wall Street, staring down the bowl, if you’ve been there. [It] won all these awards at Cannes and so on. And then it comes out after, we find out that they weren’t paying their female employees as well as their male employees. And you just think, what a load of BS. How can you do that? So what I think has happened today, in terms of your question is, you have to both do real things, because people will call you out on it. But at the same time, you also have to market it. You have to be really clever about how you market it. And it’s that combination that really, I think works well.
I’ll give you some positive examples, I’ll give you one other negative example: when Gillette came out with that campaign a year or two ago, when they tackled the issue of male toxicity. And they changed their tagline to, “The best a man can get to the best a man can be.” And people liked the spot, people hated the spot, it’s really not the point. The argument I was making at the time is, ‘You’re asking the wrong question. What are they actually doing about male toxicity?’ So the fact that they’re raising the issue is great, and they’re doing around their male brands and that’s fine. And if that’s something that they believe that their consumer really resonates with, then I think sparking a dialogue around it is great. But if you’re going to tie it into your branding and your marketing to sell product, then you better be doing something real about it.
Instead, they had this sort of throwaway where they gave $3 million over three years to the Boys & Girls Clubs. And so for me, that was like just a slap on charitable activity, not, ‘Do we have any male toxicity issues within our own company?’ When we think about the communities in which we serve, and what are we going to do materially to change that? So that’s an example where they didn’t actually get the do part right. Now, in fairness to them, I think they are moving in the right direction now, at least out of the gates.
But there’s lots and lots of good examples. I mean, I like what Chipotle has done for a number of years. They had listeria scare, which was completely separate from that. But they’ve got this thing about sort of big corporate farming and trying to get back to real ingredients. And they try to walk the walk with that. They’re now coming out with a carbon footprint on their ingredients. That’s the interface of marketing with actually doing something real.
I actually love what Nike has done for many years. They, once upon a time, as we all know, had major issues with their supply chain: slave labor, bad working conditions. They worked well over a decade to really clean up their supply chain and their human rights issues. And they’re actually a leader in sustainability today, environmental sustainability. They didn’t talk about it for the longest time; it was a very conscious choice. But if you see them now, they are starting to talk about it more. And if you look at what they’re doing around social justice and equality and using their star athletes, I mean, I actually believe that’s embedded in the core of the brand.
And so they can make decisions, like when they did the Colin Kaepernick spot, and they signed on Colin Kaepernick. Well, that has had huge positive impact for the brand and then translated to share price. Because the consumer who engages with Nike actually believes that it’s real, it’s not like they’re just jumping on the purpose bandwagon to sell more shoes and more gear. So the key ingredients here are, you have to know your customer, and you have to know that the values that you have aligned with their values, and that the issue that you choose, or issues that you choose to lean into, actually will resonate with them. And then you actually have to have a plan and a strategy for how you’re going to play in this issue long term. And then you have to communicate it in creative ways, the way that Nike does, the way that lots of brands do, that we do with lots of companies.
Because you can’t assume that the consumer cares, right off the top. And it’s also very hard to break through in the market. So you need to find clever, creative ways to reframe a point of view, make some noise in the market, but there has to be something really real behind it.
Brooke: Okay, so you’ve transitioned beautifully into this last question that I wanted to ask you, which is around getting started. So, if there’s someone out there listening, who’s just been eating this up for the last 40 minutes, or however long we’ve been talking, just like, “Yes, I totally need to be doing exactly what we’ve been talking about here.” Throughout our conversation I’ve picked up a couple of elements about the process for doing that. So, one of the things you mentioned quite early on is that corporate leadership is really, really important, like high level leadership. Some of the things that you mentioned kind of more recently in the conversation, were identifying those overlaps between the corporate values that you hold and the values in your customer base. There, I’d say probably, you want to be thinking not only about the customer base you have, but also the customer base that you want.
Brooke: And from there, building out a plan for how it is that you’re actually going to move that forward. So that plan is probably going to involve something around like what’s going on in our core operations that gives us a really powerful lever to act on the world. So building out that plan and starting to execute it. And then, as you mentioned, very importantly, having this effective communications piece. What happens at the very, very start of that process? You don’t necessarily have the corporate leadership that’s already there, or you are a corporate leader, but you don’t necessarily feel that you’re surrounded by kind of a strong will among your peers to move this forward as an organization, as a whole. How do you start?
Phillip: Yeah, it’s a great question. And the answer is, there’s lots of different starting points. So let me give some examples, because there isn’t a one-size-fits-all and there isn’t a formula for how you start. Because it really depends on where their company is at. Are you a B2B business, are you a B2C business? Is leadership sympathetic? Is leadership excited or is leadership resistant? Depending on where you are going to play, how advanced or not are you internally? So, different starting points.
One is, and I think this is true actually, no matter where you start, is to have real clarity on what issue are you trying to tackle? So previously it was, in the charitable mindset, it was like you gave to art and the environment and education and so on. It’s really hard to disperse your mind so far and wide like that, and deploy your assets against that. So the question becomes, ‘What issue does your business have a vested interest to solve?’ Because it’s either going to hurt your business, or it creates a huge opportunity for your business. And getting clarity on the issue is first and foremost.
Then I would say the next question is, – once you have clarity on the issue – well, where do you want to play on that issue? Because it makes sense for your business, you have a set of assets, resources that you could really deploy against it. And you believe that there is good to really good alignment with your consumers, your employees, et cetera. So that’s the starting point. The next sort of question in thinking about this is, ‘Well, can we walk the walk on that issue? Where are our liabilities on this?’
It’s really important for people listening to know that you do not need to be perfect. Do not let perfection be the enemy of good. It’s okay to have fallibilities in where you are. What you just simply need to do is set a direction, clearly mark where you would like to get to. And then be really honest and transparent about where you are in the process. Consumers will give you all kinds of leeway, so long as you actually are honest and transparent about where you are, and where you’re trying to get to.
The other piece of this – it comes back to our conversation earlier – is people are more scrutinizing today than ever, but they’re still somewhat lazy. Most consumers aren’t going and looking at whether you really walk the walk. And that’s a bit of a problem. It comes back to our discussion a minute ago around actions and communicating. Because a lot of brands are still communicating and making all kinds of claims. And they’re making the same claims as the companies who are doing really impactful work. And the consumer just can’t differentiate. So that’s when you get back to greenwashing.
So to do this in an authentic way, once you know where you want to play and why you want to play there, then it’s really an audit of ‘Well, can we really walk the walk, and where are our liabilities around it?’ And being honest and truthful about what those liabilities are, and then setting a path to change them. To me, that’s a really, really important piece of this. And then it’s about engaging key stakeholders in this and saying, ‘Okay, well, this has to resonate with our employees. So how do our employees engage and how do we leverage the talents of our employees in this? How could we engage our consumers? Or what do we want to communicate to our consumers? What about our supply chain, if you have one? What do we do with our partners along the supply chain? Who do we collaborate within communities to do it so differently?’
There are different starting points, but it usually should start with the issue, for sure. And then figuring out where and what you can do, and what are your greatest assets, and what are your greatest liabilities. And then figure out who are the right people to collaborate with to do this. Once upon a time companies wanted to own issues. It was always about, ‘We need to find the white space.’ There’s very little white space in the market today. So now it’s about, you can still have ownership and you can differentiate, but it’s more in the ‘how’ not the ‘what.’ So figuring out who you need to collaborate with, including other companies and even competitors, quite frankly, is where the world’s going. So differentiation can come in a number of ways. But differentiation doesn’t mean you must do something completely different than your competitors. It’s more how you do it. So yeah, lots of different starting points.
And probably the last thing I would just say is, just start. If everything has to be so perfect and so buttoned up, and you have to have the most iron tight strategy, you’ll never get anywhere. And I won’t certainly name names, [but] we worked with a few companies where [we] spent so much time and [it becomes] paralysis by analysis. And that can happen to some. And so you lose out actually, because in this day and age, especially with digital, I mean, get it out there. Let the market be your real test. The old days, the way that advertising used to work was, you spent all this money, you developed this whole thing, and then you focus tasks, but you put it out there and you’ve spent millions and millions of dollars. Well, the beauty of digital is you can put stuff out there and see what the market says. I think the same kind of prototyping and agility needs to come into how we think about impact across the business.
Brooke: So we need to move fast and break things with impact.
Phillip: I think so. I mean, it’s easy to say and hard to do, because there’s a lot of unintended consequences, and just can be a lot of blowback. And then back to the leadership question, unless you really are on a path and believe that it will make the executive team, the board, nervous. So probably a bit more deliberation than just the break things and move fast. But some version of that, yes.
Brooke: Phil, this has been excellent. Super, super insightful, really practical, tangible. I suspect that our listeners will get a lot out of this. So, thank you very much for your time and your insights today. And we look forward to speaking with you again soon.
Phillip: Yeah, thanks so much for the opportunity. It was a lot of fun.
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