Exponential power only unfolds if and when the right individuals, organisations, agents or brands collaborate in synchrony for the right reasons.
Insights and thoughts from our Partner Markus Kramer on core branding principles with broad applicability for any marketer, communications professional or business leader. Views are subjective and our own. January 2nd, 2020. © Brand Affairs AG.
Dig deeper and you will undoubtedly notice subtle shifts in 2020. Above the ‘everything digital’ canvas we can see a new silver lining on the horizon: a slow but steady movement towards a more conscious approach to growth. Driven by mostly young voices rallying for change, it’s a crusade of the 21st century. A plea for more clarity, integrity and a genuine craving for healthy growth and real meaning. Here are ten non-obvious tendencies that will underpin the theme of Fueling Positive Growth in 2020. All of which combined will have the power to shape and direct emotional and unconscious consumer behavior – and hopefully our world for the better.
#1 Blurring Boundaries Are Good
#2 Purpose Beyond Words
#3 Culture Drives Competitive Differentiation
#4 Self-Realization Goes Viral
#5 Blockchain Builds Trust
#6 Positive Reputation Moves Up
#7 The Need for Divine Design
#8 50 Shades of Data
#9 Transparency Turns Radical
#10 Guilt-Free Consumption On The Rise
Systems analysts call it equifinality: all roads lead to convergence. In other words, boundaries continue to blur as the various spheres are moving ever closer together. Organizational, corporate, regulatory and consumer spaces overlap evermore.
As actors inadvertently get closer, this tendency is likely to spur more and better communication, triggering more companies to do well by doing good, to put more thought in their entire value chains, to take not only shareholders but also extended stakeholders into account etc. According to the Edelman Trust Barometer 2020 “84% of institutional investors believe that maximizing shareholder returns can no longer be the primary goal of the corporation, that business leaders must commit to balancing the needs of shareholders with those of employees, customers, suppliers, and local communities.”1 In this context, we can expect to see the strengthening of the bridge between public relations and investor relations. This also means that the private and public spheres will come closer to each other. Governments, transnational corporations, and non-governmental institutions will find further touchpoints. As Manfredi Ricca and Andy Payne wrote: “Among the most widely used phrases in articles, conferences and meetings nowadays are variations on the theme of ‘the lines between sectors are blurring.’ While this is indeed happening, it is a loose and partial view of the full story. What is actually happening is that brands are replacing sectors.”2
The rise of consumer activism to advocate conscious capitalism and boycott irresponsible brands is becoming a macro-economic development that businesses can’t ignore. Shopping has become a political voting process. It will not remain just ‘cheaper is better’. Consumers demand and choose that which is cheaper still must be ‘good’ in its broader sense. So, the need to build a more responsible corporate capitalism will deepen further, which is both a social and an economic challenge and opportunity for everyone.
Technological shifts, a more conscious consumer base, and continued acceleration will push more companies to crossroads: transform or vanish. Purpose-driven transformation is no longer soft, but increasingly seen as an instrument to trigger and convey change from within. However, in order to make the transformational power of Purpose work its works organizations need to evolve from talking about purpose to actually living it on cultural and behavioral levels. Real transformation happens only when a company walks the talk by shifting from merely appearing as a purpose-led company to actually be one. Such is the way to authentically harness the power of Purpose that drives culture and results in sustainable growth for everyone.
Companies that want to see results from purpose-led transformation must go beyond words. Last year has shown what can happen when superficial Purpose and rapid scaling go hand in hand. WeWork’s lofty and catch-all purpose statement ‘to elevate the world’s consciousness’ resulted not only in sheer craziness of diversification (from co-working to kids’ nurseries to wave pools) but ultimately spiraled from a $47 billion valuation to talk of bankruptcy in just 6 weeks.3
Patagonia, on the other hand, is a brand that leads by example when it comes to going beyond words. For this brand strategic corporate social responsibility and sustainable value creation are about aligning brand, purpose, and culture. Patagonia’s reason for being is about exploring nature without exploiting it. It is capitalist but not consumerist. Its mission is stated as “Build the best product, cause no unnecessary harm, and use business to inspire and implement solutions to the environmental crisis.” The annual growth rate of Patagonia sales has been well above industry-averages for most of the past 40 years.4
Purpose transformation is powerful but talking about it alone is not enough to steer positive transformation. A broken promise and not walking the talk results in pretentiousness as opposed to authenticity of brand purpose, accelerating negative dynamics. Positive changemakers will make sure Purpose transcends all boundaries to become truly transformational.
Over time, lasting differentiation hinges on a company’s ability to continuously innovate and perform. This is isn’t about a unique product or service, but about building strength through a company’s unique configuration of people – or in other words, its culture. Whilst distributed IP and globally connected markets allow for ever more rapid replication and scale of products and services, a company’s culture cannot be copied easily. As Prof. Peter Drucker put it: “Culture eats Strategy for Breakfast”.
In today’s globally connected and complex economy, true differentiation on a product or service level is getting ever harder to achieve – not everyone is Apple. Even Tesla is starting to struggle as the incumbent automotive players are catching up to produce similar, if not better, electric cars. For most businesses and brand leaders, the recognition is one of consternation: most products and services today are identical or marginally differentiated at best. The age of creating truly unique selling propositions (USP) is long gone. But while true differentiation is ever harder to achieve, the opportunity of creating unique value propositions (UVP) is much more realistic. Adjusting your focus on UVP vs USP might appear subtle, but it’s a powerful perspective to adopt. To illustrate this dynamic, take the asset management industry: over 4000 Asset Managers in Europe alone offer over 50000 funds to select from. Their single-minded focus: generating better monetary returns for their investors. These companies all have access to the same market information and the same systems, tools largely at the same speed, thereby eliminating information arbitrage. In order for them to survive and indeed thrive, they have to compete and offer products and services where value is re-configured, rather than differentiated. However, re-configuring value propositions on a product and/or service level alone is not enough. In times when acceleration is the norm, complexity increases and boundaries continue to converge, building robust bonds within will yield the strongest and most durable competitive advantage.
For the workforce of today, self-realization is not something that is left for retirement anymore. The evolution of needs runs at an unprecedented rate. Younger and older generations see it as the new normal to realize themselves: taking a sabbatical at 28, leaving asset management to take up work at a vinery at 45 or kicking the boots in a startup at 62. Maslow’s hierarchy of needs hasn’t changed in terms of order and sequence, but it radically transformed in terms of speed.
When talent is recruited, they want to move up much quicker than previous generations. They are not willing to wait two years. It’s up or out. There are more young professionals who leave the corporate world earlier to create their boutique companies and realize their dreams than ever before. “Founders who have won TechCrunch awards over the last decade, the average age at the time of founding was just 31. For the people selected by Inc. magazine as the founders of the fastest-growing startups, the average age at founding was only 29.”6
Social or professional self-realization entails the vertical direction. For an organization to be self-actualized, vertical growth is the only mode of growth that will work. It is one of the most viral and contagious states of being in society. It spreads from one individual to another and from top to down faster than ever. Young professionals don’t wait for their 60s to fulfill their dreams and aspirations, the new (real) artists don’t wait for their celebrity status. Socio-economic signs indicate that 2020 is the year when self-realization goes viral.
2019 year was the year when Central Banks used Blockchain for the first time to swap currency. According to Bloomberg, the Bank of Canada and Monetary Authority of Singapore have sent each other digital currencies using blockchain technology, marking the first such successful trial between two central banks.7 Bitcoin is just the beginning of the blockchain-driven paradigm shift. It’s only the visible tip of the iceberg. Were Dr. Marshall McLuhan alive would he call Blockchain the extension of the internet? In the words of Don Tapscott “Blockchain is ushering in a whole new era of the internet — one centered around value rather than information.”
It’s known that decentralized ledgers have the ability to instill trust. Blockchain can provide the trust layer where there is a potential trust issue, providing the glue and transparency in value chains to address issues related to sustainability, transparency, and privacy. For instance, the global luxury conglomerate LVMH has developed a blockchain platform called Aura through which it is possible to track luxury goods’ supply chains to prove their authenticity or verify that they were manufactured by the original source.8 Lamborghini too is planning to implement Blockchain in supply chain operations.9 Whilst it’s only the beginning, key improvements in this area indicate that Blockchain’s mainstream adoption becomes be more realistic in 2020.
According to a report by Clutch, recent data suggests that businesses aren’t doing enough to proactively protect and build their online reputation.10 Despite knowing the impact of reputational damage, indicators point to the fact that many organizations still invest in managing reputational crises rather than in preventing it.
Smart organizations learn from their failures. But minimizing risk is first and foremost about preparation and prevention. Building, strengthening and protecting reputation requires thinking ahead. As Benjamin Franklin said: “By failing to prepare, you are preparing to fail.” Companies such as Boeing, Bayer, Danske Bank or Facebook learned this the hard way in 2019.
In order to avoid suffering from reputational damage in 2020, it will be necessary to implement Preventative Reputability (PR) to analyze and minimize reputational risks. It is not about crisis management. Pro-active reputation management is more about making crisis management unnecessary in the first place by building a strong foundation for the future. It is about thorough constructivist consideration beforehand (pro-active, preparation, prevention etc.). Good growth needs to be anchored in a positive reputation: more companies will start doing good and showing results vs just talking about their good intentions.
Getzels and Csikszentmihalyi empirically demonstrated the central role of problem framing in creativity. In a survey of C-suite executives across 17 countries, “85% strongly agreed or agreed that their organizations were bad at problem diagnosis, and 87% strongly agreed or agreed that this flaw carried significant costs.”11 Many industries still lack design thinking in solution finding processes. Cultured consciousness rather than cultural consciousness, humanities or psychographics will need to be integrated into decision-making in order to balance analytical and creative competencies.
Mass consumerism is where humanization and qualitative factors are missing. The market will demand enlightened personalization, which is an outgrowth of humanization. The luxury industry carries the anti-dote to commoditization and can be considered as a meaning-oriented sphere in this regard. Quality over quantity continues to pay off: the industry outperform across all sectors again in 2019.12 Tech seems to follow suit, with Instagram testing the removal of the quantity of likes in seven countries to make its users focus on the creativity of what they share rather than on how many likes the post will get. Thus the signs indicate that in 2020 there will be a stronger need for cultured capitalism over capitalist culture. A retune to conscious quality in all we build and do. Those that respond to this need will win.
The original purpose of gathering data was to reduce complexity, gain confidence about the future and optimize decision making. But it’s no longer about ‘Big Data’ – lots of data is hygiene. Tomorrow is about creative data, deep data and original data more than ever, fueling a significant part of positive growth. As the very variety of data keeps growing exponentially, it is the branching out of different shades of data that offers the key.
Improving the state of the world economy will not depend on the amount of data but on the ability to interpret it and finding meaning in it. Big data can identify many correlations but is weak at determining what data is meaningful. In the findings of recent research called ‘Beyond Big Data’ by HBR analytics small data integration is the key to customer experience management success. According to the report “15% rate their organization as very effective at integrating small data with big data to create a holistic view of the customer. That 15 % are more likely to have seen significant improvements in business results including revenue growth, profitability, the successful introduction of new products and services, and operational efficiencies.”13
Data is still not sufficiently ‘humanized’. It isn’t the quantity of data but the quality of data that will boost a brand’s excellence in the year ahead.
Total connectivity and radical transparency are changing the very nature of competition. When value chains become totally transparent, power is increasingly decentralized, making way for rapid, aggregated exchange of opinions – for better or worse.
Increased visibility is a function of technology, speed, and data. Consequently, the opinion economy won’t just be a part of the overall economy, but it becomes an economic force in its own right. The internet made the world more transparent; transparency creates credibility, credibility increases reputation – and a good reputation is an essence in today’s’ age of the internet.14 The formula of this cycle is easy to understand. Transparency enables business as much as it complicates it.
The real opportunity lies in mastering the ability to be a totally transparent organization that is fully aligned to a deeper Purpose. Repairing a negative image will become irrelevant as the new strategic approach focuses on preventing negative reputation in the first place. This is where the opportunity is long term. Brands that are aligned with their higher Purpose will stand the test of time, as they connect with their audiences and build trust from within. In keeping a solid consumer rapport, transparency is enabling a better future.
The number of people displaced by the climate crisis is predicted to reach up to one billion people by 2050, according to UN agency International Organization for Migration.15 The European Environment Agency’s (EEA) latest ‘State of the Environment’ report states that “Europe faces environmental challenges of unprecedented scale and urgency. But the report also says that there is reason for hope to be found in increased public awareness of the need to shift to a sustainable future, technological innovations, growing community initiatives and stepped up EU action like the European Green Deal.”16
Being an eco-conscious corporation should no longer be a rarity; being environmentally responsible should not be about a status play aiming to bolster a near-angelic positioning. When looking at the collective implications of the subtle trends underpinning change in 2020, we cannot but conclude that this is perhaps the most significant shift taking place. Slow but steady, the pressure on firms to do ‘the right thing’ will only intensify. Millions of consumers will increasingly choose goods and services that help them feel guilt-free. And it’s on brands, businesses, and leaders to make sure they can indeed do so.
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References:
1.“Investors Speak; Trust Matters.” Edelman, www.edelman.com/insights/investors-speak-trust-matters.
2. “Brands are replacing sectors (and what this means).” Interbrand www.interbrand.com/views/brands-replacing-sectors-means/
3. Campbell, Dakin. “How WeWork Spiraled from a $47 Billion Valuation to Talk of Bankruptcy in Just 6 Weeks.” Business Insider, Business Insider, 28 Sept. 2019, www.businessinsider.com/weworks-nightmare-ipo.
4. Schaefer, Wolfgang, and J.P. Kuehlwein. Rethinking Prestige Branding: Secrets of the Ueber-Brands. Kogan Page Stylus, 2016.
5. Blakely, Lindsay. “Patagonia’s Unapologetically Political Strategy and the Massive Business It Has Built.” Inc.com, Inc., 30 Nov. 2018, www.inc.com/lindsay-blakely/patagonia-2018-company-of-the-year-nominee.html.
6. Jones J, Pierre Azoulay Benjamin F., and Daniel KimJavier Miranda. “Research: The Average Age of a Successful Startup Founder Is 45.” Harvard Business Review, 14 Mar. 2019, hbr.org/2018/07/research-the-average-age-of-a-successful-startup-founder-is-45.
7. “Central Banks Use Blockchain for First Time to Swap Currency.” Bloomberg.com, Bloomberg, www.bloomberg.com/news/articles/2019-05-02/central-banks-use-blockchain-for-first-time-to-swap-currency.
8. Battrick, Ray. “LVMH Develops Blockchain Luxury Goods Authentication.” Business Blockchain HQ, 3 Apr. 2019, businessblockchainhq.com/business-blockchain-news/lvmh-blockchain-for-luxury-goods-authentication/.
9. Holman, Trevor, and Trevor Holman Trevor Holman. “Lamborghini to Implement Blockchain in Supply Chain Operations via Salesforce.” CryptoNewsZ, 20 Nov. 2019, www.cryptonewsz.com/lamborghini-to-implement-blockchain-in-supply-chain-operations-via-salesforce/52679/amp/.
10. Mts. “New Research Shows Businesses Aren’t Proactive Enough When It Comes to Managing Online Reputation.” MarTechSeries, 3 Oct. 2019, martechseries.com/content/new-research-shows-businesses-arent-proactive-enough-comes-managing-online-reputation/.
11. Wedell-Wedellsborg, Thomas. “Are You Solving the Right Problems?” Harvard Business Review, 18 Jan. 2017, hbr.org/2017/01/are-you-solving-the-right-problems.
12. Robins, Rebecca. “Opinion: Burberry, Gucci and Hermès Most Iconic Movers in Luxury.” Luxury Society, Luxury Society, 17 Oct. 2019, www.luxurysociety.com/en/articles/2019/10/opinion-burberry-gucci-and-hermes-most-iconic-movers-luxury/.
13. Beyond big data: Why Small Data Integration Is the Key to CXM Success Harvard Business Review Analytic Services https://hbr.org/resources/pdfs/comm/focusvision/Beyondbigdata.pdf
14. Reputation Affairs. “Transparency: Why You Should Be Transparent – and Why Not.” Reputation Affairs, Reputation Affairs Https://Www.reputationaffairs.com/Wp-Content/Uploads/2019/10/Transparency.jpg, 17 Oct. 2019, www.reputationaffairs.com/why-you-should-be-transparent-and-why-not/.
15. “Seven Sustainability Trends for the 2020s.” Resource Magazine, 27 Feb. 2019, resource.co/article/seven-sustainability-trends-2020s-13104.
16. “Europe’s State of the Environment 2020: Change of Direction Urgently Needed to Face Climate Change Challenges, Reverse Degradation and Ensure Future Prosperity.” European Environment Agency, 10 Dec. 2019, www.eea.europa.eu/highlights/soer2020-europes-environment-state-and-outlook-report.