Tuesday, 10 September 2013 00:00
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By Ruchi Gunewardene and Tiara AnthoniszSynopsis
Today, organisations are experiencing increased pressure from their surrounding environments to act as good corporate citizens while still being profitable. Being socially, environmentally, and ethically responsible operating capability is now a required standard for business legitimacy.
By aligning branding with corporate responsibility, organisations can establish a strongly differentiated strategy, and can create significant value through an integrated approach, in what has traditionally been seen as two different business disciplines.
Strategic CSR
Over the past several decades, the corporate world has experienced an increased focus on organisations’ ethical behaviour and their responsibilities. This is evident in the shift in focus from shareholder value (i.e. maximising profit) to stakeholder value, where companies are striving to balance their interactions with people, planet and profit.
This new tendency is a consequence of the fact that progressively, more power has been vested with stakeholders, who demand transparency in organisational communications and expect companies to be accountable for their impacts, as they tap into human, natural and material resources to run their businesses. These societal expectations have pressured companies to act responsibly with regard to their external as well as internal environments.
Thus, CSR cannot be bolted on to organisations through ad hoc philanthropic projects or environmental initiatives. A better option is to adopt a holistic approach, which when integrated into the daily functions of the company, enhances its ability to create economic, environmental and social value.
To do so, companies must look at CSR – a term which encompasses both sustainability and good governance – in a fully integrated manner. By taking ownership of their impacts they can minimise negatives that occur as a result of their daily operations to a great extent, whilst maximising the positive factors that they create.
They must do so in a transparent manner giving stakeholders all the facts, (whether positive or negative), so that all parties are aware of what is being done, and more importantly, of what more needs to be done, in order to ensure a sustainable future for all.
Being responsible has moved from the margins of the “nice to do”, to become a central focus in the drive for sustainable business and competitiveness.
Clearly, there are multi-faceted implications within a networked society, which businesses must now navigate and contend with. Whilst there are potential risks to all companies, it is those who fail to take pre-emptive action that run a significantly higher risk of something going unexpectedly wrong, even after decades of success. The past is no longer an indication of continued success in the future. This is why strategic CSR, responsible business, and greater accountability play a critical role in ensuring sustainability of the business for tomorrow.
Adopting a strategic approach is key to protecting the business. At the same time, this also represents sources of potential opportunity for those companies who are responsive to dramatically changing business conditions.
Strategic branding
The usual starting point for a brand is to have a trademark, which is the name and the associated design (commonly known as the logo) which must be registered to establish ownership for a specific product or service. A trademark however, is not a brand. The trademark becomes a brand only if there are additional tangible or intangible associations attached to it, because a brand- and this is the key to the definition of a brand- is essentially a set of expectations, memories, stories or relationships in the mind of customers and other stakeholders.
All these taken together, account for a consumer’s decision to choose one product or service over another. So, it is about what the brand stands for. It is not a brand, if the sole objective is to sell at the lowest price. If that is the sole purpose, then it is a commodity.
If there is no meaning or purpose behind the product or service, and if the brand owner is unable to define or articulate what it stands for, then, in essence there is no brand. In such situations, there is a name, but not a brand. If the consumer or customer doesn’t pay a premium, if he or she does not make a specific selection or spread the word in favour, there is no brand equity or value that exists.
So, brands essentially reside in the minds of customers. If there is a distinct offering or position in the mind, then, that can create considerable value to the business.
Branding is all about finding ways of creating this value. In an environment in which the functional differences between products and services have been narrowed to the point of near invisibility by the adoption of total quality management; brands provide the basis for establishing meaningful relationships. This requires detailed market information and customer insights to build a successful brand.
In this branding process, being socially responsible is a fundamental tenant for success. Thus, strategic CSR is at the very foundation of building a successful brand.
The key considerations for branding and CSR
If being responsible is the base of building a successful brand, then strategic CSR has to be an integral part of the way the business is run. Being responsible ensures accountability, dependability and is a core value of being honourable.
Firstly, building this requires knowledge and information not only from a customer’s purchase considerations point of view, but also in the broader context of being a stakeholder of the brand or company. There could be multiple roles that customers play as a stakeholder, which must be recognised. He or she could reside in the near vicinity of where the business operates, could be an employee of an NGO that can impact the business, or a regulator that is responsible for the sector, etc. Therefore insights and information from a customer as well as a stakeholder perspective, is key to developing the brand and establishing a responsible business system.
Secondly, there has to be relevance to customers and other stakeholders. The way in which this can be achieved is by adopting a holistic approach to CSR and branding, which means the brand and CSR become a part of the way the entire company goes about doing its business. This way, neither branding nor CSR is “bolted” on. They both become integrated into a single system – which becomes the culture of the organisation, fully in-tune with its customers and stakeholders.
Thirdly, the way in which the company approaches its customers and other stakeholders, needs to be unique. This involves looking at where the company can innovate from a product or service offering perspective (which will benefit the brand) or in the way it goes about doing business responsibly (which is strategic CSR). This can set the stage for long term value creation.
And finally, the company must consider this duel approach as a long term commitment and not a short term stop gap measure – thus the entire approach to branding and CSR is linked to business sustainability with a long term view.
In this manner, branding and CSR become strategic tools, and once integrated into the business, can result in long term initiatives which complement and support one another. This is the basis of creating a greater business value.
The synergistic effects of Brands and CSR
CSR establishes the halo on a responsible business, which is all about trust, caring, being ethical, transparent, and helpful. It provides a base of being morally correct, which is absolutely crucial for brands to attract and engage with customers continuously. Successful brands have this genuine commitment to improve the societal well-being through their business practices, whilst contributing to corporate success.
As brands go about carving their own point of differences in the markets they operate within, this foundation of committing to improve aspects that they influence provides an even greater impetus for customers to interact with them.
CSR therefore contributes to the brand through a feeling of genuine believability that emanates through all aspects of the business – the processes, systems, the culture, employee behaviour and the way it goes about engaging and communicating with customers and all other stakeholders.
Some global examples of organisations that have successfully achieved this include IBM, Starbucks and Body Shop.
Locally, Brandix is a very good example of a company that has established a strong corporate brand in a relatively short frame of time through this integrated approach. Brandix was launched just ten years ago, although it has been in existence since the 1980’s as Phoenix Ventures. The brand building was done essentially through its internal 40,000 employee base, each of whom understood and carried the essence of the brand. In addition, the company invested heavily in terms of lean manufacturing systems and processes, and environmentally friendly state of the art workplaces, which are of global standards.
The company continues to enhance its R&D expenditure over the years. It has a focused corporate philanthropic initiative under the “Water is Life” theme, where it encourages collaborations with other like-minded corporates to jointly implement, thereby bringing scale and greater impact to these initiatives. This approach to always challenge and look at opportunities differently has enabled Brandix to deliver on “Inspired Solutions” across all of its stakeholder groups.
Building corporate resilience
Corporate or brand reputation is only as good as it is today. There is much hard work that has to go into carrying on that reputation for tomorrow. And, as the business grows and gets more complex the vulnerability of the brand increases.
Once a strong brand has been built, ensuring it is maintained is as challenging as building the brand itself. This is where strategic CSR can play a vital role, in maintaining that reputation. When deployed correctly within an organisation, strategic CSR minimises the risks to an organisation, by understanding stakeholder expectations. It anticipates issues that could arise in the future, and sets up the organisation to deal with them before an issue emerges.
There are many local and international examples of situations where things have gone horribly wrong unexpectedly, which have severely damaged brands and even threatened the viability and sustainability of businesses as a whole.
Organisations need to pre-empt regulatory influences and pressures through their own systems and strict standards by looking outwards and even benchmarking other international companies and their world class practices. Even if the company is only serving the local market, unless it is internationally competitive, it is unlikely to survive in the long term.
Brand building and strategic CSR should therefore not be confined to any specific departments within an organisation. Instead, they must cut across it, and be a continuous process which should be actively managed from within. Brand building and strategic CSR should encompass all aspects of a business, from the way it goes about running everyday operations, down to the investments that are made in research and development to provide innovations for customers.
Instead of adopting this approach however, too many organisations resort to “green washing” activities which involve carrying out ad hoc philanthropic projects with communities, or short term environmental initiatives that are unrelated to their business, purely for public relations purposes! These have little value in building the resilience that organisations need, to truly enhance their reputations amongst stakeholders.
Driving sustainability
Whilst CSR primarily influences the behaviour of a company, once this is aligned to support the brand, it results in an extraordinarily powerful synergistic system that is ingrained in the culture, and is hard to replicate by competitors. It also ensures consistency across everything the company says and does, and moves it towards a long term path of sustainability.
Many organisations look at branding and CSR independently, and are therefore losing a significant amount of value through the investments that they make in these initiatives. There is much synergy to be gained by looking at them through an integrated lens, which can build an immense amount of equity for the business.
The organisations of the future
The only way such an organisation can be built is through the commitment of the most senior person in the organisation-the CEO, as well as the Board of Directors. The leadership of these organisations would be seeking to provide benefits to all stakeholders through a set of unique values that are intrinsic to the brand.
They would be focused on providing this through research, development, and innovation for customers, knowledge acquisition, process improvements, building employee capacity, developing partnerships across their supply chains, pre-empting and leading the regulatory environment through relevant initiatives, whilst also building lasting bonds within the communities they operate within.
This holistic and integrated approach is what unlocks value in businesses, leading to long term sustainability and value creation.
Starbucks
Starbucks believes that conducting business ethically and striving to do the right thing are vital to the success of the company.
The company’s Business Ethics and Compliance program supports the Starbucks’ Mission and helps protect its culture and reputation, by providing resources that help its employees make ethical decisions at work.
This program develops and distributes awareness materials, including the Standards of Business; facilitates legal compliance and ethics training; investigates sensitive issues such as potential conflicts of interest; and provides additional channels for partners to voice concerns. Employees are encouraged to report all types of issues or concerns to the program.
The majority of reports received by Business Ethics and Compliance involve employee relations issues. This alternative reporting mechanism is a part of a comprehensive ethics and compliance program of the company.
Chairman and CEO of Starbucks Howard Shultz visiting farmers in Rwanda
Body Shop
Body Shop is the quintessential ethical cosmetics company that pioneered natural and ethically produced beauty products. Inspired by nature, it shunned animal testing which was an industry standard at the time. The company actively advocated self-esteem amongst women (even shunning the overly thin female models), supports fair trade, defends human rights and is sensitive to the protection of the planet throughout its global operations.
IBM
IBM’s ‘Smarter Planet’ was launched five years ago, initially as an advertising idea intended to communicate the company’s intent to share knowledge, start a dialogue with customers, and inspire their 400,000 plus workforce to see value in their research and thinking. IBM wasn’t looking for a campaign as much as it was seeking an agenda, one rooted in making the world a better place.
The Let’s Build a Smarter Planet agenda was a call to such action, a commitment to sharing knowledge that would help, and a promise to all of its customers. More importantly, it was rooted in the company’s vision intentions, and on-going business practices. Smarter Planet was therefore fully integrated into the business.
IBM’s initiative seeks to highlight how forward-thinking leaders in business, government and civil society around the world, are capturing the potential of smarter systems to achieve economic growth, near-term efficiency, sustainable development and societal progress.
Examples of smarter systems include smart grids, water management systems, solutions for traffic congestion problems, greener buildings, and many others. These systems have historically been difficult to manage because of their size and complexity. But with new ways of monitoring, connecting, and analysing the systems, business, civic and non-governmental leaders are developing new ways of managing these.
IMB’s product offerings
[STING Consultants (www.stingconsultants.com) is a specialist marketing, brand and CSR consulting firm, established in 2002. The company has worked on over 120 projects with many of Sri Lanka’s blue chip clients on strategic initiatives for marketing, branding as well as enhancing corporate reputation through accountability and sustainability. The authors can be contacted via e-mail [email protected] and [email protected].]
