Roddy Millar:    Hello, and welcome to this podcast from Ideas for Leaders, I am Roddy Millar. I’m delighted to have with me as my guest today, Anne Bahr Thompson. Anne is founder of the brand consultancy 164th, and former executive and director of strategy and planning at InterBrand. In 2007, she started a client research project into millennials, called Culture Q, that has since involved into her company’s ongoing research program. Culture Q today synthesizes both quantitative and qualitative research on millennials with Generation X’s and baby boomers, and forms the basis of her new book Do Good, published in February this year.
The central idea behind the book, and Anne’s wider business, is that people are increasingly drawn to companies that have a higher purpose, and reward them with their business. This is a concept that is clearly gaining momentum these days, and is being driven by many different factors, from the shift to longer term reporting horizons, to millennials’ apparently greater motivation from intrinsic rewards than their parents’ or grandparents’ generations. So there’s much to discuss here. Anne, welcome to the Ideas for Leaders podcast.
Anne Bahr Thompson:    Well thank you for having me, it’s a pleasure to be here.
Roddy Millar:    Doing Good, long been seen at being at odds with the making profit agenda, but now the two are coalescing, and the phrase “doing well by doing good”, is regularly trotted out. Nonetheless, there’s still a sense that doing good is not enough, and merely icing on the cake. Do you recognize that fear and what do you see as being the main factors behind this move towards doing good?
Anne Bahr Thompson:    I absolutely do recognize the fear and I think it’s an important issue to raise, which we can pursue afterward, because for me, the notion of doing good is about building an eco-system in a company, and my research showed that that is what people are looking for, not just about having independent cause-marketing efforts, or things that look like self-aggrandizement for companies.
So the factors actually that have led to this are pretty fascinating and it’s more than one thing. With any cultural shift, it’s typically not one change in people’s views that cause it. There’s multiple things, a confluence of events that come together. And I would say the thing that has been accelerating it, and why the notion of purpose has been spotlighted, has a lot to do with bipartisan politics, and whether you’re in the UK or the US, or pretty much anywhere globally these days, bipartisan politics are impacting what people are demanding for business. And so that’s one of the primary factors that’s accelerated the current situation.
Now, what I would say that’s actually also important, is that the notion of businesses’ role in society and aligning purpose and profit has been debated for decades. It seems as if it’s a new concept, but it’s not. Just think back to the industrialists, and how they realized that happy workers would produce more, and whether it was purely from a sense of them selling better and more product, or for some of them it was really for concern for individuals, and you think of John Lewis in the UK and how the John Lewis partnership started, that was based on that premise when it became a partnership.
In my research beginning in 2011, which was not focused on developing a model around purpose, people started telling us that they wanted businesses to step in and start reforming society, and that’s what caused me over the next few years to deconstruct Brand Leadership from good corporate citizenship, and from favorite brands which is a proxy for brand loyalty, which led to the model brand citizenship. So the first factor is this notion of bipartisan politics. The second factor, I would say, simultaneously what’s been happening in the investment community is that there’s a greater shift to long-termism from major investors after we had a very long focus on short-termism. Now, short-termism and the notion of a business’ only purpose is to maximize shareholder value, actually originated in the 1970s, or I should say became predominant in the 1970s when Milton Friedman published an article in the New York Times, and that set a whole series of things in motion, where business schools started focusing on this notion of shareholder value.
Anne Bahr Thompson:    And that is very important. Clearly, you have to reward the people who are funding your business. However, people are realizing more and more, you cannot just reward shareholders at the expense of other stakeholders. Long term investment is suffering and long term investment fuels the economy. And so a lot of investment managers, most notably, recently Larry Finke of Black Rock and Jaime Diamond of JP Morgan Chase are starting to say, we really do need to invest into long term returns, not only short term returns for shareholders, and stakeholders are becoming more important. And in today’s world, corporate social responsibility is part of that.
So in a way, as chapter two in my book, I talk about our changing notions of value, and as I was writing, I often envisioned a play that would be a debate between Milton Friedman and Peter Drucker, and much to my happiness, it looked like Peter Drucker and the notion of business being an organism in society is winning out. So we have bipartisan politics as one factor, the shift to long-termism and a greater stakeholder approach, and the one thing actually, before I get to the last factor that I see is pushing this, is more and more studies by Mackenzie, BCG, EY and other management consultancies have really demonstrated that a long term approach to investment does produce higher returns.
Companies that actually had a long term approach suffered more in the 2008 crash, but they also rebounded much faster and much stronger than those with short-term approaches. So if we get into the factor that I would say is the third that’s driving it, it’s technology. And technology is driving this notion of doing good and doing well in two ways. First, is the one people talk about a lot, and that’s the notion of transparency. Companies are caught out today. Anything you do wrong, someone will find out, and they’ll post on social media, and you will be found out. So even if it’s for self preservation, the notion of doing good starts becoming a greater, more important factor for business to be successful and to have a strong reputation.
So the other factor in technology, that’s to me, slightly more interesting and less spoken about, is the notion of how technology has reprogrammed our minds to an and world rather than an either or world. We used to be in this world of opposites, where things were black and white. It was power or love, doing good or doing well, and we can go on about those long term societal opposites that drove all of us. And with technology, we craft who we are and we mix and match things that we used to never mix together. We cut and paste. Someone now wears H&M and Chanel on the same day, where in the past they wouldn’t. And that’s because we’ve been allowed to cut and paste polar opposites side by side now.
So when you live in this world where this notion of either or is shifting to a notion of and, why shouldn’t businesses earn a profit, and do good at the same time? So I would say those are the three primary factors. Bipartisan politics, the shift to long-termism and greater stakeholder approach, and this notion of technology creating glass houses of every company, as well as moving us into an orientation of and versus either or.
Roddy Millar:    That’s fascinating. I love that idea around the infinite number of shades we can have between black and white there, and I think that as technology ads complexity, it also, through the amount of data and information we can receive, inevitably these gradations are going to come through. Are you seeing, we look at that middle point though, the one that you mentioned Black Rock and JP Morgen there, are you seeing more than just the talk about it? Are you seeing changes occur in the businesses, those large investment houses are working with that walks the walk as well as just speaks it?
Anne Bahr Thompson:    I think there is a change. I think we have to be careful what we expect out of the box, and I think that’s a challenging time we’re in at the moment, is there are no fixed business models for this new way of doing business. And for me, purpose is something that is not unilateral to an industry or unilateral to business overall. A purpose has to reflect both an industry a company is in, as well as the company’s ethos and culture. And so every company has a unique purpose, and what that does is lead them on a unique journey and pathway to embrace what I would call brand citizenship.
And in my research, I have five steps, and what I learned is that there’s no single notion of what a company performing good brand citizenship is. Everybody has to do it in a way that reflects them and reflects them in a sincere manner. And it is a journey, it’s not something you can do where you have a checklist and you check everything off the box, and okay, we’re done. So every company has to figure out how to do this in their own way that’s right and that reflects who they are. Now there’s going to be mistakes, you can’t, day one, fix your supply chain as well as embed higher order purpose into a brand you’re marketing. You can only do so many things at once, and the expectation that everybody should be perfect now is something that actually hampers a lot of business.
So to your point, some businesses get scared to move forward because they’re frightening that if they’re moving forward, all the things they’re still doing wrong are going to be called out, rather than being supported in the notion of doing good. Now, I believe companies that behave irresponsibly should be called out all the time. But companies are run by people, they make mistakes, and they have to learn from their mistakes. And in the book, for example, I talk a lot about IKEA, or IKEA, I should say, is one company I highlighted. I highlighted a significant number of companies. And what IKEA does that amazes me, is every time the bar is raised in society, and someone calls them out on something that has suddenly been identified as wrong, which previously hadn’t be wrong, IKEA finds a way to fix it. And sometimes, in finding a way to fix it, they change the entire industry and the notion of particle board and glue comes to mind, because they were being called out for a glue in particle board that had formaldehyde and was causing illness.
Roddy Millar:    Right.
Anne Bahr Thompson:    And they went out to try and find a solution to fix this, and find a new supplier, and they could not find a single supplier that did not use glue that did not have formaldehyde in it. So what did they do? Instead of saying, “Sorry, we can’t do this”, or “We’re going to have to produce products that are more expensive, which means more people can’t access them”, and there’s this notion of people accessing their products and services and living a better life through that, is embedded in what the company is about and was what the founder set out to create.
So instead, they went out to chemical companies, and said to me, “You work with us to create a new glue”, and when they did, they changed the entire industry. So you have to see this notion of doing good, the notion of what I call brand citizenship, as a journey where you will get some things right, and you won’t get everything right. So it requires courage, and you see a lot of brave CEOs stepping up and starting down the pathway. And you have companies like Uni Lever that are highlighted that are doing it. In my research, I discovered Kimberly Clark is an amazing silent leader that’s been working on this journey pretty much since it’s founding, and now is embedding it in its products and services as it sells it out in the same way Uni Lever is doing. Although, Kimberly Clark isn’t as spotlighted or highlighted in the media, because they do it in a slightly more silent way, and their CEO isn’t as much of an advocate for this change unilaterally as someone like Paul Polman is.
Roddy Millar:    Sure.
Anne Bahr Thompson:    So there’s a lot of different ways companies are going about doing it, and I do see change happening and I do see it on the agenda of companies. Some are doing it very sincerely, and others are doing it because they have to. But at the end of the day, if it changes how they do business, does it matter that they’re doing it because they have to to remain in business? Probably not.
Roddy Millar:    But it’s interesting, that Kimberly Clark example though, isn’t it? Because they’re not shouting about it, or at least the external stakeholders are unaware of it. Then it is, to an extent, lost value, isn’t it? Presumably, there is a cost in enacting this which could be, hopefully outweighed by the benefits of people, the brand awareness and the brand association that happens because of it. But if you’re not making that clear, then you’re just experiencing the cost, aren’t you? Rather than having the brand benefit.
Anne Bahr Thompson:    I would say yes or no, because the thing is, they live it and have always lived it in their product and services, and I think people inherently pick up on it. It’s why a brand like Andrex in the UK is the number one toilet tissue brand, and when Andrex went out there and added a social mission which had to do with toilets in Angola, they even had increase in sales.
Roddy Millar:    Right.
Anne Bahr Thompson:    So I think people inherently knew about it, but yes, highlighting it in their marketing, or highlighting an initiative, I should say, in their marketing, brought their sales up higher. So what you’re saying leads me to one of the things I would love to see have happen. Can you imagine walking into your local pharmacy or your local grocer and picking up a package, and on the back of it, we have a new system-
Anne Bahr Thompson:    Let’s jump backwards. Imagine if you walk in your local pharmacy or your local grocer and you pick up a package, and in the same way you have in the UK, for example, red, green, yellow, or in the US they have certain ways that they highlight nutrition elements. Imagine if we had a series of things that had to do with energy footprint, water usage, supply chain efficacy or something like that, and we developed a system where you as the purchaser, and I don’t like using the word consumer because I think sometimes when you say “consumer”, it takes business people out of the realm of realizing they themselves are their own customer. Their neighbors are their customer or their family. So I like to think of it as people.
And imagine if a person picked up a package and was able to make a decision based upon some sort of grading or coding system. Now granted, that’s excess regulations, which I’m not always a proponent of, but as a purchaser, I do want to know that stuff to your point. And I think in the B to B space, a lot of that stuff is often highlighted in an RFP. But I think it should be something that becomes the norm of people talking about these things and having some sort of system that you as a company, even in the B to B space when you choose your suppliers and manufacturers of different goods and services, you should be able to find companies that actually have the same philosophy as you do, in that sustainability and supply chain efficacy, the way you treat employees.
One of the things my research highlighted that’s the most important factor in step three of brand citizenship, which is responsibility, and that’s the pivot point between being a brand that solves me problems and a brand that has a greater contribution and solves we problems. Responsibility is a lot of the old notions of typical sustainability and corporation responsibility, but the thing that emerged in the research, the things real people were asking for, were for a company to first treat its employees well and fairly, before me as the purchaser will give you credit and reward you for having an ethical supply chain and being sustainable. If you’re not treating your employees well, you can do that other stuff and it’s good, but I’m not going to credit you for it.
Roddy Millar:    It starts at home basically, that good behavior, good citizenship. I love that notion of what we have here as the traffic light system on nutrition being expanded to, I don’t know how you describe it, but the ecosystem that the product or service has come through. Is there any movement towards that? Have people-
Anne Bahr Thompson:    Not that I’m aware of. I’ve been talking about it for a few years now and I would love to see it. Walmart in the US has a very extensive program to feed hungry Americans, and wouldn’t it be interesting if someone starting putting on the bottled milk, “This milk helps us donate XYZ amount of money to help feed Americans”, then you would know which brand to go after. It would help you be a more informed consumer, and I think the fear of doing some of this is the fear or being seen as aggrandizing or self-aggrandizement, but to me, as a purchaser of goods and services, I would like to know that. And the more and more I speak and get invited to talk to my book to various organizations, the more and more I’m starting to hear people say, “I would like to know that”.
So I don’t know how it will happen, but someone will step up and start doing it, and at that point, once they start doing it, others will follow.
Roddy Millar:    Sure. It needs an external framework for these companies to click into, otherwise they can’t just do it themselves, it needs to fit a model. But I think that’s really interesting. Now you mentioned this sort of me to we framework in passing, just earlier. There’s a strong focus in your book on the creation of corporate purpose, clearly. So do you want to just explain a little bit more about that me to we framework that you described?
Anne Bahr Thompson:    Yes. So as I said, when I began the research on this, it wasn’t that I intended to develop a model for brand citizenship or for doing good, or for corporate social responsibility, however you want to look at it. It was something that emerged in the research. And what happened in the research is that people were telling us, and this was 2011, as I said, it was another election year in the US. It was an election year strung by partisanship, but by no means did we know what bipartisanship would come to look like.
Roddy Millar:    What lay ahead.
Anne Bahr Thompson:    Exactly. But at the time, people were frustrated because they were being told that the economy had gotten better and their lives were getting better, yet they didn’t feel it. And they felt that government was at …. and the research was done in the US and the UK, all throughout the three plus years of developing the model. And in addition to them telling us that they wanted business to step in and start fixing these problems, we asked people what brands they thought would exhibit leadership in the coming years, what brands they thought were good citizens and what brands they thought were bad citizens, and we asked why.
And typically, when you’re doing a quantitative study and you have this open-ended “why”, someone in a back room at a research supplier codes it. So in other words, they take your five sentences and turn it into three words, which sometimes takes the color out of those three words you’re telling the researcher. And we actually read every single open-ended responses, we did not have them coded. And in reading them, we got a sense of sentiment, and we started reading things that people were telling us that we wouldn’t have otherwise known. And so that sense of sentiment was what alerted us to the fact that people wanted business to step in to help start progressing society and deal with issues government wasn’t, and the other thing it alerted us to were why they chose brands as good corporate citizens that were surprising.
So typically, when you see these studies that are posted, there are a single set of brands being questioned. We left this as, you just tell us. We’re not asking you what you think of any of these brands, you tell us which brands you think are good and which brands you think are bad. Over 2200 brands were name. And what’s interesting, in this 2200, Apple rose to the top not only as the number one leader, which we sort of expected, but they rose to the top as the best good corporate citizen, which completely floored us. Because Apple, at this time, was in the middle of a FoxConn crisis and things with chips and bad supplier chains, et cetera. But real people were telling us that Apple is the normal one good corporate citizen. And the why was what was important, and this does get into the model, so it’s important this context.
So the why Apple was a good corporate citizen, was because Apple changed the way I communicate with others across the globe. Apple has brought joy into my life, by bringing music into it 24/7, and Walmart in the US and Tesco in the US were also in the top five. And they were in there because each of these brands affords me a better lifestyle because of their pricing structure. Because their pricing is less expensive than other shops, I have a better life. So this was a very much a “me” proposition, and here we were expecting corporate citizenship to be all about we and bettering the world.
Now we had a lot of those we brands, but they were really fragmented. So the ones that rose up to the top as the number ones, the number twos, were generally those that were serving me, and that’s what led me to go down this pathway of deconstructing what was going on. So what we discovered is, the first step, step one is trust. So you have to foster trust and do what you say you do. And whether that’s keeping your promises to your customers or keeping your promises to your employees or your stakeholders. Trust is the starting point, and what’s interesting about that, is historically, for marketing and reputation management people, trust was the end game. Once you had trust, you had loyalty. But what we learned, is in a cynical world where there’s so much media proliferation, people want to trust you as a starting point for fostering a loyal relationship.
So after trust, you then move to step two, which is enrichment. And this is about making your life, better, faster, stronger. And enrichment is interesting because people name brands like Ms.Meyers in the US, which is a household cleaning product.
Roddy Millar:    Okay.
Anne Bahr Thompson:    And they would talk about, Ms.Meyers has its efficacy of its ingredients. Not everything is 100 percent natural and they’re pretty honest and open about that. And they have these beautiful scents, and when people clean, they told us they felt like they were in a lavender field in France, so cleaning wasn’t so bad anymore. So Ms.Meyers made their life more inspiring, it made a daily task better and easier. And so that’s what enrichment is about. It’s about IKEA enriching your life by bringing things into your home, that again, you couldn’t otherwise afford. It makes your home feel better and more like a home.
So we go from trust to enrichment. Step three is the pivot point between being a me brand and a we brand. And I must confess, even though it seems obvious now, I actually didn’t realize that until I was writing the chapters in the book, and I suddenly said, “Oh wait, step three, responsibility, this is the pivot between being a me and a we brand. And it makes perfect sense that it is responsibility”, because responsibility is this notion of behaving fairly and respectfully to your employees, to the environment, to your suppliers. And as I noted before, what’s really important with responsibility is that people will not give you credit for doing good for the environment or in ethical supply chains and things of that nature, until you first treat your employees well and fairly.
So you have companies that are challenged by this, because they have long term reputations of doing being good to employees, and they’re not getting credit for some of the amazing things they’re doing in supply chain management and things. So we go from trust, enrichment, responsibility, and the one thing I do want to note, is clearly one of my favorite examples in responsibility really is John Lewis, because what’s amazing about John Lewis and whether it’s the department stores or Waitrose supermarket, is John Lewis has always been about this. And what’s interesting is, what surprised us in the research was, they didn’t rise to the number one brand in corporate responsibility, being a good, responsible citizen, but that’s because when you started exploring it, people just expect it. Now if they stop behaving in the manner they do, they stop treating their employees well, they stopped having this amazing, fair, local, ethical supply chain, people would notice it.
Roddy Millar:    There’s a real sense of integrity about that].
Anne Bahr Thompson:    Exactly. And that’s the notion of brand citizenship being embedded in the ethos. So after responsibility, we move into this notion of community, so StepForwards community, and it’s about joining people through shared values, and whether it’s joining your employees to a value’s jam like IBM did in 2004, before Facebook existed, where they asked all their employees to contribute to re-defining what IBM’s values are about, or if it’s GifGaf, a UK mobile company that’s moved into the top that doesn’t even have a customer service department. Customers answer each other’s questions and form a community around the shared values of how a mobile telephone company should work and how it should price and how you should be able to interact with other people.
Natora is a Brazilian cosmetics company that has on-ground sales people, sort of like Avon which is more known. But Natora is much larger, and they just purchased The Body Shop. And they have a community of their sales force, and they also form a community with nature. Biodiversity has been inherent to their brand since the beginning. So this notion of community is not necessarily social media communities, but connecting people, connecting companies through shared values.
And then you move to contribution, and contribution is bettering the world. So your brand that has better the world at your heart, now it’s easy to be socially conscious businesses and social enterprises in that, but you can also but a regular business in that. Lush, for example, has a social conscience mission from the start. Its founders had had many different faces of the company, and it’s an interesting story that I tell for them in the book. And they were just determined to make products that were animal-cruelty free, that had the best, most natural ingredients, et cetera naked packaging. So they had this notion of doing good, embedded in the heart of their business.
But then you also have another brand like Kenko, which is owned by Mondelez it’s just an average coffee brand, but yet Kenko has an amazing initiative about coffee and gangs. And Honduras, which is the number one or number two murder capital in the world every year, sometimes it’s number one and sometimes it’s number two, has a challenge for teenagers. When they hit a certain age, they either have to join a gang, leave the country, or be killed. So Kenko had given them an alternative, to learn to be a coffee grower and you can apply for a scholarship to join this program, and granted at the moment it’s only 30 or 50 people in the program, but imagine if Kenko created a community of coffee brands that took this program, worked with NGOs across South America, and allowed this notion of learning to become a coffee farmer, having an alternative life for teenagers. You could change the whole way South America worked and afford greater opportunity-
Roddy Millar:    And is it necessary to follow that through as an organization? Is it a Maslovian hierarchy that you have to get the first bits initially?
Anne Bahr Thompson:    No, and it’s a really important question, so I really appreciate you asking that. It’s not at all. What happened, what we learned in the research was people categorize a brand under one of those five categories. So for each brand that’s trusted, enriches my life, behaves responsibly, is about community or contribution. But a brand that is considered a good brand citizen glides back and forth and embraces the idea within each of the five steps. But it doesn’t move necessarily, sequentially across them. As I said, this is a journey that’s unique to what your company is about. So your starting point could be anywhere along those five steps, but what you have to do is align yourself from a single purpose to deliver benefits to me, and benefits to we. But that alignment is the essential thing, you have to have a purpose that encompasses both what your business is about and is broad enough to embrace a social mission.
Roddy Millar:    Fantastic. There’s a huge amount there, and obviously it’s effecting organizations at all different stages through their operations. It’s both a huge and also quite complex area, but I think you’ve shown some really interesting lights into how it can work for the organizations and clearly for the wider world too. Where can people go to find out a little bit more about this?
Anne Bahr Thompson:    Well, brandcitizenship.com is one of my two websites. The other one is onesixtyfourth.com which is a little harder to spell, but it is the fraction spelled out. Clearly, my book, Do Good: Embracing Brand Citizenship to Fuel Purpose and Profit is a great start point, and my Twitter handle is @AnneBT and that’s Anne with an E, and then I’m on Linked In as Anne Bahr Thompson, which, I’m assuming, you can see my name spelled out, ’cause that also would have some spelling errors. And I think that’s the easiest ways you can find me, and I respond to emails and phone calls. So I love hearing from people because that’s what helps us advance the research, and in the same way, it’s a journey for businesses. The model will keep it’s basic underpinnings, but how people embrace each of those five steps will evolve over time as business evolves.
Roddy Millar:    Sure. Fascinating, as I say. I’m thrilled, thank you very much. It’s really interesting, and I think exciting too as this is certainly an area that’s going to, as you say, evolve and grow as it gathers momentum. And thank you very much for speaking with us.
Anne Bahr Thompson:    Well thank you for having me.