Changing paradigms in business practices are putting principled ethics above profitability. Come along for the ride or get left behind.
There’s a lot of bad in business.
Many of these bad things can be traced all the way back to the industrial revolution. Some took hold just after WWII, at a time when the “downsize-and-distribute” regime of cost cutting justified questionable managerial practices.
And with the rise of elitist management consulting firms like McKinsey and BCG, the name of the game for corporations was simple: Deliver shareholder value above all else.
This governance philosophy has led to some pretty dodgy business practices over the years, contributing to employment instability, the culling of a middle class, income and structural inequality, and a slew of other questionable ethics, all culminating in the 2008 housing market crash. In fact, the crash, at its root, has been considered a failure of moral principles of corporate America.
But things are changing.
If you want to be profitable, you need to do good
Nowadays, people are becoming more and more adamant that brands and businesses abide by a set of principles, and that there are certain ethical standards outside of just making money. A set of shifting norms means the pendulum has begun to swing the other way.
Case in point: “The Stengel 50.” Using 10 years of research involving 50,000 brands, Millward Brown and Jim Stengel created a list of the world’s 50 fastest-growing brands. The common denominator? All of these brands serve a higher purpose with evidence of principled business practices. Incredibly, if you were to have invested in these companies — the Stengel 50 — you would have been 400 percent more profitable than with a similar investment in the S&P 500.
Then, just a couple years ago, in 2019, 181 high-powered Fortune 500 business CEOs convened to announce the new Statement on the Purpose of a Corporation. Carrying with it the marks of a true paradigm shift: Brands today, for the first time, have to think intentionally and genuinely about being principled and doing good — for all.
So how can you, dear leader, let your principles guide you as a brand and business? Here are the three things you need to continually consider:
1. Your discomfort is a positive sign
Truly understanding your brand’s mistakes requires you to do something that’s uncomfortable: confront your ignorance.
Regardless of how much you may try to avoid it, it’s inevitable — things will go wrong. That’s OK. Your customers and employees don’t require perfection from you, but they do value an authentic desire to make things right if they’ve gone wrong. The formula for doing so is simple: Reflect on where things went wrong, own the mistakes, and work to repair them.
As businesses, we put so much passion into our ideas that it can be hard to let them go if they aren’t working out the way we’d envisioned them to. Don’t let your customers suffer as a result.
Building creative tension into your process is a healthy practice that will help you eliminate the blind spots where these oversights live. With every decision you make, consider your brand’s purpose and then think about the reality of where you stand today in comparison. That self-awareness will keep you fighting for your principles as your business changes and grows.
2. Your customer is your judge
This part is customer-centric. The conscious consumer sees brands in a totally different light now. And the leaders in the market are able to differentiate themselves because they listen to the needs of their customers. Today, the customer is a discerning buyer who has more power than ever before, and she will happily drop your brand if she catches any whiff of bad acting or dishonesty.
Take Uber, for example. From its horrible treatment of employees to its Orwellian data privacy malpractices, the rideshare giant has, on numerous occasions, had to deal with #deleteUber trends, as it watched millions of users leave in favor of the more “decent and ethical Lyft.”
And, as social creatures, we tend to jump aboard the moral bandwagons. So, in the era of social media and influencer marketing, where virtue signaling trumps any sign of customer loyalty, all it takes is a single screwup for the Gen-Zers of the world to collectively decide that your brand is morally bankrupt. And that can’t be good for your quarterly earnings.
3. Your brand is a person
A growing body of research shows that “consumers have relationships with brands that resemble relations between people.” According to the Brands as Intentional Agents Framework, people look at the actions of a brand and judge those actions as they would another person.
Let’s go back to our Uber example. The contempt one will have for Uber is the same moral disapproval one will have for someone who’s behaved poorly in a person-to-person context.
Your brand is not just a brand in the abstract sense. It’s a psychological entity that has a distinct personality. So be sure yours is the hero and not the villain.
The post 3 Ways Your Business Can be More Profitable by Being More Principled appeared first on Inc.
Original source: Inc.