In recent years stakeholder capitalism has been the subject of much discussion among companies and in media. However, as I have written before, the idea was first introduced by Klaus Schwab of the World Economic Forum way back in the ‘70s. Still, it seems its time may have finally come, as a result of the impact of the 2008 financial crisis and the Covid-19 pandemic.
The idea of stakeholder capitalism has at its core, the belief that businesses must do more than merely sell products and services and make profits. It is about companies valuing purpose as much as, if not more than, profits. I must immediately clarify that I do not mean what is bandied about nowadays as “brand purpose” which is nothing more than a marketing gimmick. Unfortunately, too many marketers have chosen to pander to millennials and Gen Z in the mistaken belief that these consumer cohorts would like to transact only with purpose-led companies. This doesn’t always make sense since millennials and Gen Z might not even be the right consumers to target for many brands.
In this piece I explore purpose through organisational culture and how purpose might be built into a company’s culture. I have written before on how culture is an important determining factor, though not the only one, in how societies and countries develop and grow and also about its influence in how countries responded to the pandemic. I have also written on LinkedIn about brands having their own cultures, in which I referred to Pepsi’s advert which caused outrage on social media because it was seen as trivializing the Black Lives Matter movement and I said that consumers sometimes seem to understand a brand’s culture better than folks at the company.
Here, I attempt to bring together these two strands of thought to argue that organisations are distinctive cultures, and are therefore, also brands. The “purpose” aspect starts to feature when we begin looking at the core values of businesses and the practices they engender.
Why do organisations need to have or define a culture for themselves, in the first place? To start with, it helps to lay down a few principles by which the organization conducts its business, so everyone working there knows the rules of the game. Second, as companies scale up and start to expand across several industries and geographical markets, an organization culture acts as both, guiding principles as well as social glue in the professional context. It binds people together, and as we can see it is already giving the organization a sense of purpose.
In the national context, culture is a set of attitudes, beliefs and customs that its people live by. In the business context, it is a set of attitudes, beliefs and customs an organization’s employees live by at work. In the corporate world, it is often referred to as “the way we do business around here”.
In his book, Cultures and Organisations, Geert Hofstede writes about culture having two aspects to it: values and practices. As an ex-Ogilvy advertising and brand communications professional in India, I can completely identify and relate to this way of looking at organizational culture. Much of our company’s culture was created by David Ogilvy himself and was handed down the years and decades. Many of his beliefs about the business, what constituted excellence and how to do business became the advertising agency’s way of doing business.
In addition to this, sometime in the 1990s, Ogilvy & Mather also developed a culture statement. Perhaps the agency was trying to navigate changes in the market environment and needed to articulate a fresh statement of what the organization culture should be. What We Believe and How We Behave was the title of the corporate culture statement, which too had two dimensions that correspond with Hofstede’s. “What we believe” was the set of core values and “how we behave” was the set of practices that flowed from the core values. And while it was very carefully crafted and constructed, it also incorporated many of David Ogilvy’s beliefs and practices.
I also agree with Geert Hofstede when he writes that culture by itself is not enough, and that core values have to go beyond mere platitudes like “integrity”, “professionalism” and the like; it needs to be put into action by leaders in organisations. To that extent, he believes that culture is one of the four pillars of an organization, the other three being strategy, structure and control, with all of them related to each other.
What I would like to add is that because the culture of an organization is defined by its values, it is already on its way to becoming a brand. Cultures, as Hofstede says, emphasise differences, not similarities, and that is what brands too are all about. An equally important part of growing an organisational culture is communication. Leaders in companies need to believe in and live the core values. They also need to always communicate their messages within the framework of the corporate culture, so employees never lose sight of it. It is also the task of department heads, division heads and country heads to further cascade these principles down the line. This is one instance where “trickle-down” actually works, not in terms of a trickle, but a cascade.
Hofstede writes about strong and weak organization cultures and regular internal surveys as ways to measure the strength and weakness. A company with a strong culture will tend to produce similar answers from its employees, while a weak one will give us varying responses. I believe that a sign of a strong culture is also its unchanging nature over time, so longitudinal surveys too can be a good gauge of corporate culture, even if people have joined and left the company in the interim.
However, at the end of the day, culture is all about how employees think and feel about working for a company. Companies with strong cultures in my view, develop employee-created folklore about the company and its great leaders from the past. People feel compelled to talk about their former bosses or colleagues a lot, discuss their contributions to the organization and their handling of certain situations. Not merely as office gossip or anecdotes, but as learnings to be passed on. I also think that organisations with strong cultures put a lot of thought into hiring, and induction/orientation programmes for new recruits, irrespective of level. It is their way of investing in their employees and steeping them in the organisation’s culture.
Which brings me to how companies think of themselves and how they ought to position their corporate brands. It should always emanate from the core values of a company, and not be imposed by either the corporate communications department or the marketing department. Then, there is the additional challenge of managing an organisation’s culture across several offices in different countries around the world, because one has to also account for regional and national cultural forces at work.
When a company like Pepsi trivializes BLM even in an advert, it makes a larger statement about the company’s values. Or when Nike, on the other hand, stands by Colin Kaepernick and in fact fields him to urge consumers to believe in themselves, it says something about Nike as a company as well. In both these instances the brand communication was related to what the company’s core values should have been. In the case of Pepsi, unfortunately, it was the opposite of what the brand’s core values are, while in the case of Nike, it was spot on message.
Or take the case of Unilever in recent times. Because they felt they had to respond to the issue of racism, the company changed the brand name of their fairness cream in India, Fair & Lovely to Glow & Lovely. They thought it was adequate to signal their non-racist attitude; in practice they continue to make and sell the fairness cream in India, so how can it ever hope to be non-racist? I had written about their more recent campaign in India for Dove which, while attempting to be against “beauty tests”, actually perpetuated more nonsense by focusing on the marriage market. This, when I thought all these years that Dove was for the kind of woman who was educated, working and not pressured by the need to conform to anybody’s idea of beauty or marriage, even if she was married. And finally, how does all this square with the fact that both Glow & Lovely and Dove are made by the same organization?
If you ask me, I think where so many companies go wrong is in confusing their product brand benefit with brand purpose, and with trying to make a statement about the company. When in fact, it should start with the company’s core values and corporate brand positioning, with product brands each holding their own, but reflecting corporate values.
I have put my thoughts down on corporate brands such as JLR and Tata Motors, even though I didn’t attempt to articulate any core brand values for these companies. On their organization culture, as an outsider it appears to me that the Tata Group’s core values are about enhancing human capital. Yet, the Tata-Mistry fracas and the way it was fought out in the open left one thinking that perhaps their corporate culture is so strong that it doesn’t accept outsiders (one not moulded by the company and already steeped in its values) easily, at the highest levels.
And while the exercise of arriving at, and carefully articulating a company’s core values, must always be done in consultation with the top management of the company, I am attempting articulating core values along with a strategy and corporate campaign for whatever it is worth, for Pernod Ricard, a global wines and spirits company.
I should be able to share my thoughts and ideas with you next week, so do look out for my next blog post.