A Better Strategy Model for a Better World

When BlackRock CEO Laurence Fink issued his clarion call, he elevated societal purpose from a topic that was bubbling under the surface to one that erupted onto everyone’s radar and was pushed to the top of many company agendas. Many forces have converged to make this our new reality: a complex world with complex problems, a lack of faith in government to address 

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those issues, and the loud voice of consumers, who increasingly call out for companies to demonstrate stronger values and contribute to society. Study after study prove that today’s consumer—millennials in particular—prefer to buy products from and work for companies that are doing good for the world, underscoring that moral purpose drives long-term value. Without a doubt, this is the Zeitgeist of this era.

Organizations today will rise and fall based on their ability to deliver on these new demands. It’s no longer enough to have a strong balance sheet and to create innovative products and services. Companies that succeed today will be those that find a path to become profitable through a purposeful mission. And while this concept has certainly started to take root, many are still holding tight to the old strategy model, which is in dire need of disruption.

“In an environment of constant change, rapid technological advances, social and demographic diversity, leaders can no longer rely on the toolbox of the past,” said Nanette M. Blandin, a leadership scholar and president of the Nexus Institute, based in Washington, D.C.

This landscape calls for a new strategic framework incorporating the new criteria necessary for success. The model proposed in this chapter is one where profit meets purpose, where technology fuels excellence, and where marketing becomes authentic—amplifying the good a company is doing and, along the way, creating deeper engagement with today’s diverse constituencies, who can be bound together by purpose.

This landscape calls for a new strategic framework incorporating the new criteria necessary for success. The model proposed in this chapter is one where profit meets purpose, where technol

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ogy fuels excellence, and where marketing becomes authentic—amplifying the good a company is doing and, along the way, creating deeper engagement with today’s diverse constituencies, who can be bound together by purpose.

Shortcomings of the Current Model

Before we get into the new model, let’s take a quick look at why the existing one is ripe for change. Historically, companies begin by developing an overarching business strategy. It is often a very linear, time-intensive process: research, develop plan, implement, measure, rinse, repeat. Once this plan is in place, companies then develop separate strategies for other key business functions like marketing, HR, manufacturing, etc. These efforts are often siloed without the benefit of integration. Even the physical space in offices often separate these functions, with HR in one hallway, marketing in another, and finance in yet another. In best-case scenarios, these siloed functions work to align with business strategies, so they share common goals. Software applications have forced horizontal integration across functions, but we must go further than that for true integration. In worst-case scenarios, they work as completely separate entities with little commonality and no integration. In all cases, it’s a dated process ready for change.

I spoke with Mark Fuller, chairman of Rosc Global, co-founder of Monitor Group, now Deloitte Monitor, and former assistant professor at Harvard Business School. He shared his vast insights on the shortcomings of the current business strategy and how the new model delivers the type of framework necessary in today’s business climate:
I’m going to make two primary points about where today’s approach to strategy falls short. The first is there’s a nontrivial sin of omission with the concept of moral purpose. The collective service industry is very active in three of the four pillars of your strategy (business, technology, and marketing), but doesn’t deal with moral purpose, so it’s defective in that realm. There has long been this issue between the client and the consultant not talking about moral issues because they are somehow not businesslike. They’re embarrassing. And there are all kinds of reasons why. Numbers are okay to discuss because they’re businesslike. So it’s easy to show the client how much more 

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Higher Expectations of the Private Sector

Higher Expectations of the Private Sector

As our government fails to step up to solve many of the world’s complex problems, consumers also have made it clear they expect the private sector to not only operate with strong values, but to move out of being agnostic or neutral and take a stand to address world issues.

A 2017 study showed that 70% of Americans believe companies have an obligation to take action to improve issues that may not be relevant to their everyday business.Millennials, in particular, are more judgmental about the company they keep. This massive purpose-driven audience, one of the largest in history that is just reaching its prime spending years, is forcing organizations to take a hard look at their moral purpose to ensure they are making 

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positive contributions to the world. Today, companies must not only create great products/services, but also behave with greatness—with a generosity of giving back to mankind. I’ll bring it back to Aristotle: they must act with eudaimonia in mind.

The demand for this comes not only from customers, but from employees as well. Today’s top talent, especially millennials, seek to work for companies with a mission to do good for the world and to make a personal contribution to that effort. According to Covestro’s survey on business and purpose, 68% of Fortune 1000 CEOs say it is important for their companies to empower employees’ sense of purpose. They predict that employee demand for purpose will increase over the next 10 years, primarily due to millennials and their mindset.

Google is one example of a company that has moved forward with an initiative that gives Internet access to cities across Africa. CVS also made the bold move of taking cigarettes off of its shelves to help its customers quit smoking. It was a step that further established CVS as a wellness company. Larry J. Merlo, president and CEO of CVS Health, said, “Ending the sale of cigarettes and tobacco products at CVS/pharmacy is the right thing for us to do for our customers and our company to help people on their path to better 

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health. Put simply, the sale of tobacco products is inconsistent with our purpose. As you read on, you’ll learn about scores of other companies that are embracing this new modus operandi.

Technology Innovations as a Force for Good

The plethora of technology available today holds so much potential to make our lives easier, more fulfilling, and more entertaining, to enhance our health and well-being, and to stay connected to new friends and old. Although there are also potential negatives with any technology, this underscores the importance of being vigilant to ensure it delivers more good than harm to the world. This is the intersection of technology and morality.

The “move fast and break things” mantra of Silicon Valley must adjust to find a balance between hyper-fast movement for the sake of breakthrough innovation and thoughtful consideration of any potential negative ramifications new technologies might have on society. This is particularly true as innovations come to market that can literally reshape our society and economy.
An article on MarketWatch summed up the critical questions technology companies must ask themselves today: “These challenges won’t be

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strategic, financial, or technical, but instead will be more focused on philosophical, societal, and ethical questions. Questions like: What role does our technology play in society, and what responsibility do we, the creators of these innovations, have in shaping the societal and economic consequences that accompany them?

Companies are stepping up to address this higher purpose. For example, at the Viva Technology conference in Paris in May 2018, IBM CEO Ginni Rometty articulated her company’s philosophy and principles around AI, which include “ensuring companies remember that data belongs to the person who created it, AI must be transparent and explainable, and it should be used to augment human intelligence, not replace it.

The company also announced a “Call for Code” initiative, which is “the largest and most ambitious effort to bring startup, academic, and enterprise developers together to solve one of the most pressing societal issues of our time: preventing, responding to, and recovering from natural disasters.” Its goal is to unite the world’s developers and tap into data and AI, blockchain, cloud, and IoT technologies to address social challenges.

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The Era of Social Consciousness: Where Technology Meets Humanity

The Era of Social Consciousness: Where Technology Meets Humanity

The past few decades have been defined by a relentless stream of innovations in technology, many of which have blown in like a bomb cyclone, churning up industries and companies, creating new ones, and destroying others in the process. Never before in history has the cadence of change been so swift or dramatic.

In just a few short decades, technology has evolved from a back-end solution to a ubiquitous element that is as engrained in our lives as the air we breathe. Earlier waves (think mainframes, PCs, client/server computing, the Internet, among others) were primarily about enhancing business productivity and providing information at your fingertips. More recent innovations (social media, IoT, voice recognition, search technology, and the second coming of AI, as examples), however, brought about dramatic new dynamics in communications, connectedness, convenience, personalization, security, and automation. This wave of technology largely focused on individuals, with offerings that made life richer, easier, more convenient, and safer.

When you think about it, it’s astonishing. It wasn’t all that long ago that the idea of carrying a device in your pocket that would enable you to access every kind of information imaginable, take photos, quickly communicate in real time with people anywhere in the world, measure your heart health, and adjust the temperature in your home, would sound more like an episode from The Jetsons than a possible reality. But, on January 9, 2007, Steve Jobs launched the iPhone at Macworld, giving the world “a widescreen iPod with touch control, a revolutionary phone, and a breakthrough Internet communications device.”

Social Media, Cultural Game Changer

Without a doubt, one of the biggest impacts on our culture has been social media, changing everything about how we communicate as a society, how companies engage with customers, and who is in the driver’s seat. Although Facebook has certainly had to confront serious issues related to data privacy, no one can deny the universal connectivity this platform has brought to the more than two billion people around the world who use it.

Think back only to the late 1990s/early 2000s and the powerful role advertising played in companies’ marketing communications strategies. It seems absolutely archaic now to think that organizations relied so heavily (and invested so much) in that one-way, megaphone form of communication that involved virtually no listening or conversations whatsoever.
Social media shifted the focus to dialogue and, along the way, has given consumers the loudest, most important voice in the mix, putting them 

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squarely at the center of everything—where they should be. As social media shifted the power to the hands of consumers, their wants, needs, likes, dislikes, passions, opinions, and concerns about the world have taken center stage. Because of this, technology has helped set the scene for the era of social consciousness, which at its core is about humanity.

Let’s take a closer look at some of the driving forces behind this. 

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Pay Products and Services Forward

Pay Products and Services Forward

Think about your core offerings. Perhaps there is a way to put your products or services to work for people in the world who need them most. For example, Microsoft is on a mission to “empower every person and every organization on the planet to achieve more,” and is putting forth a variety of lobbying and partnering efforts to bring Internet access to the 24 million Americans who don’t have it. Called the Rural Airband Initiative, it will also bring software (such as Microsoft’s own) to those who have no access. Other examples are TOMS’ One for One^® program in which the company donates a pair of shoes to children in need for every pair it sells. Warby Parker’s Buy a Pair, Give a Pair, which involves giving a pair of glasses to people in need for every pair sold, is another great example. Finding creative ways to help mankind or the planet with your offerings is a powerful, natural extension of your business.

 Feed Your Audiences’ Passions

If you are truly engaged and listening to your customers, you can easily identify what they care about most. I’m talking about concerns and/or passions they have about the world, whether it’s climate change, family, education, nutrition, equality, or caring for those less fortunate. Your moral mission may involve putting your organization and its products/services to help in those plights.
Patagonia is a great example here. The company’s customers are passionate about the outdoors and the environment, so creating sustainable materials that are good for the planet was an obvious and natural path. Another great example comes from Nestlé. The company has a robust nutrition effort in place with a goal of helping 50 million children lead healthier lives by 2030. As part of 

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this effort, the company conducted a ground-breaking study on the biology of growing children to understand who is at risk for certain diseases and how nutrition might help prevent the onset of those conditions. As part of this exercise, think about issues impacting your customers, and perhaps this can guide your moral compass.

 Take a Stand

Perhaps you develop a product or service offering (or are in some way associated with products or services) that has a potentially negative impact on society. These situations can present an opportunity to take a stand to ensure your products or services are used in a positive way rather than doing harm.Today, companies can no longer be agnostic. They are expected to step up, take action, and address issues. For example, as I write this book, Facebook is at the center of a privacy scandal 

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The Call for Action-Driven Businesses

The Call for Action-Driven Businesses

So why this and why now? It’s simple. The world needs more good. People can no longer rely on government to solve some of the planet’s thorniest problems, like world hunger, climate change, public health issues, and poverty . . . the list goes on. Yet, our planet has more complex problems than ever before. Because of that, people are looking to the private sector to step up, take action, and address issues that matter most to them. This is the thrust of Fink’s message to CEOs.

Many companies are doing this, some in unexpected ways. One example that stunned the business community and struck a nerve in the health care arena was the January 30, 2018, announcement that Amazon, Berkshire Hathaway, and JPMorgan Chase & Co. are partnering to form an independent health care company for their U.S. employees.This new organization is being formed to address a pressing issue in health care—helping people find “simplified, high quality and transparent health care at a reasonable cost,” according to the press release. This unprecedented move illustrates how companies are moving into nontraditional territory, taking on bold 

Another example is a company taking action following the devastating Parkland, Florida, shooting in February 2018. Dick’s Sporting Goods was among several companies that took an anti-gun stance and changed its policies. The company announced it would stop selling assault-style rifles and high-capacity magazines and pushed for gun control measures in Congress. The stock market showed its approval with shares closing up.

A New Strategy Model for a New Era

For purpose to be a great transformer in any organization, it requires not just new thinking, but an entirely retooled business model involving a broader definition of strategy.outlines the elements of this tightly integrated model. This model will disrupt the highly siloed approach, in which a company develops a business strategy first and then separate strategies for all other departments, an approach that has been in existence for decades. The new strategy fuses a tight integration across all of these critical pillars of business with purpose as the glue that binds them.

While the concept of purpose is in vogue right now, this is by no means a flash-in-the-pan trend. I believe this is a core strategic driver that will become a permanent element of business strategy. Simply put, it is now an ethical responsibility for companies to integrate good into their overall strategies.

Soul Searching: Exercise to Find Your Moral DNA

In my work to help companies identify their moral purpose, I’ve found that people have very different reactions. For some, an obvious answer will surface immediately. For others, the concept feels overwhelming. In both cases, the exercise outlined below will provide clarity. If you think you have a great idea, this process will serve as a reality check. If you aren’t sure how to start, it will put you on the path of discovery.

Key to this process is remembering this: the purpose you identify should be a natural and logical extension of your business—something embedded in the DNA of your organization. I bring this up again because when this purpose is truly at the heart of your company and its values, something that’s a natural fit, it will take hold, have staying power, and deliver as it should, impacting both the success of your business and of your mission to do good.

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IBM: Legacy Values Working for Good

IBM: Legacy Values Working for Good

Technology giant IBM was also spotlighted on Fortune’s list for its stellar efforts to close the STEM skills gap in public schools, addressing the shortage of highly skilled employees in America. Recently, I had a fascinating interview with Jon Iwata, IBM senior vice president and chief brand officer, who currently chairs the company’s newly created Values and Policy Advisory Board, which recommends policies and principles for IBM.

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Iwata frames our conversation on IBM’s societal purpose by going back to the very early days of the company, demonstrating its deep roots of following a strong value system:
The company was founded on fundamental beliefs, which can be traced back to Thomas Watson, Sr., who became IBM’s first CEO in 1914. Like Steve Jobs, Richard Branson, and Phil Knight of today, Watson had deep beliefs about IBM’s purpose and what it should stand for. He institutionalized those as the company’s Basic Beliefs. Although that phrase has since passed out of our vocabulary for various reasons, the idea remains that our company is set apart by what it believes and stands for.

For example, IBM’s longstanding commitment to what most recognize as “diversity and inclusion” today goes back to the company’s belief in “respect for the individual.” That has always meant that we see an individual not as a man or woman. We don’t see an individual based on race, ethnicity, or disability. And, therefore, we demonstrate respect for each individual and work to help each person fulfill his/her potential in society and in IBM. We’re proud that IBM was the first major company to hire a disabled employee and the first to promote a woman to vice president.

 

Patagonia: Pioneering Sustainability

The term sustainability is almost synonymous with Patagonia, a true pioneer with a fierce dedication for the past 40 years to lead the clothing industry in the adoption of sustainable processes. On the company’s website, you’ll see its moral

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purpose embedded throughout every aspect of its business and articulated loud and clear in its mission: Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis. Its latest initiative, Patagonia Action Works, is an environmental activist effort to get supporters more involved in politics. As an outdoor gear retailer, Patagonia is an obvious fit for doing good for the world, but any brand in any industry can and should find its moral purpose.

Smaller companies are popping up all over that are launched with a moral mission. For example, on a recent trip to London, I walked into a store called Gandys. As soon as I entered, the sales person told me the story of the brand—a business created by two siblings who, while traveling the world with their parents, sadly lost them during the tsunami in Sri Lanka. These orphan siblings later formed Gandys in honor of their parents and to support their “Orphans for Orphans” foundation, which helps underprivileged children affected by the tsunami. The salesperson told this moving story before she mentioned the current sale or anything about the merchandise because it was—first and foremost—what the brand was all about. Guess how we reacted? We all wanted to buy a t-shirt, backpack, or sweater to support its mission.

 

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Authentic Marketing: The Driver of True Engagement

          Authentic Marketing: The Driver of True Engagement

What excites me most about this infusion of good into business strategy is that it creates a natural by-product of authentic marketing—the most powerful form of marketing I have witnessed in my entire career. Digital media and the Internet put us on this journey toward a more genuine form of marketing. These disruptive forces indelibly changed marketing from a one-way, shout-it-to-the-masses, no-listening environment, to a dialogue-driven, engagement-centric approach that put the power in the hands of consumers—where it belongs. The addition of moral purpose is the essential missing piece in this equation—the tipping point, if you will, that forges entirely new levels of engagement between companies and constituents.

Companies doing this new, deeper good will experience marketing that is far more transparent and organic, as it will be largely done at the hands of constituents who are eager to share positive stories across social channels. In this sense, they will serve to co-create companies’ brands. It unleashes the true power of earned (social and traditional) media—the most important media, in my opinion, and also serves up powerful narratives for owned and paid media. Most importantly, it helps companies establish trust

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with constituents—the fundamental component of engagement and brand loyalty.  provides the essential skills of an authentic marketing program.

Good Momentum

 Look around and you’ll see this form of good is starting to take hold across all industries—from agriculture to automotive—and all around the world—from Beijing to Bangladesh.

Fortune, for example, has been covering this business phenomenon for the past three years in its Change the World list (with help from its partners at Shared Value Initiative) profiling more than 50 companies around the globe that are “doing well by doing good.” These organizations use a profit model to solve a host of global problems, from climate change to world hunger. Companies are chosen based on three criteria: (1) measurable social impact on special societal problems, (2) business results of profitability and contribution to shareholder value, and (3) degree of innovation in its efforts and whether others are following the lead.
Among the companies in Fortune’s September 2017 list is Unilever, the $30 billion Anglo-Dutch consumer products giant. The article highlights that what CEO Paul Polman is most excited about is the 1.8 million people who apply for a job there

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each year, many of whom are millennials. What’s the appeal? You guessed it. Unilever’s Sustainable Living Plan and its “bigger purpose” as a business are the primary draws among roughly 60% of applicants, who feel it gives them an opportunity to make a bigger difference in the world than they could do on their own.

 This example highlights another critical outcome of having a social purpose. It has strong appeal to not only the population in general, but millennials in particular—an audience more than 80 million strong that accounts for an estimated $1 trillion of current U.S. consumer spending, according to an article in the HuffingtonPost.⁵ The article also notes that 73% of this generation is willing to pay extra for sustainable offerings. Moreover, a full 81% expect companies to make public declarations of their corporate citizenship.

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