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Practicing Purpose: How to Turn Social Purpose Into Growth

Image credit: Terry Tan De Hao

Launched during SB’17 Detroit, the Practice of Purpose Project seeks to drive the widespread adoption of social purpose by identifying the differences between traditional marketing and marketing based on purpose-drive brand strategies.

In a partnership between Sustainable Brands and The Ray C. Anderson Center for Sustainable Business, Omar Rodriguez-Vila, PHD and Ricardo Caceres have led a study across almost 50 companies to explore the marketing practices necessary for successful social purpose programs. Their study identifies crucial changes that need to occur across all levels of the marketing management processes — from research to planning, execution and measurement.





 
Omar Rodriguez-Vila and Ricardo Caceres
will discuss
Turning
Social Purpose
Into Growth

at New Metrics '17.

Ahead of their talk at New Metrics ’17, during which they’ll present the findings of their newly published white paper, I spoke with Rodriguez-Vila to learn about what it takes to effectively integrate purpose into brand strategy.

What gave rise to this project?

Omar Rodriguez-Vila: I’ve been doing research on sustainability and marketing for many years, but over the last two years I’ve become more interested in the organizational factors that sometimes prevent great ideas, and good intentions that managers have to integrate social benefits into their brands, from actually happening.

At the end of last year, my colleague, Ricardo Caceres, and I had the idea of sharing our work with Sustainable Brands, proposing that organizational factors are important enough to require special attention. We thought the timing was right to do a study on the barriers that managers face and the practices that enable them to effectively integrate social benefits into their brands for the purpose of achieving their growth goals. Ricardo presented our work to the Sustainable Brands board and they got excited about it. We formed a research team with two renown academics, Dr. Sundar Bharadwaj and Dr. CB Bhattacharya. The Ray C. Anderson Center for Sustainable Business at Georgia Tech, where I’m an assistant professor, also provided a lot of the resources we needed to do the work, including funding to hire students as research assistants. We also were fortunate to have five pioneers of social purpose work in leading companies join our Steering Committee and provide input on the work along the way.

We typically hear from the usual-suspect companies that the business case for pursuing purpose does exist, but so many others are late to the game. Why do you think this is?

ORV: I totally agree — if there’s so much evidence that exists that suggests investing in social benefits can be good for your business, then why isn’t this more prevalent? But this goes to show that the business case is not enough. It could be that managers trying to initiate these changes within their organizations are too focused on proving that social benefits work, rather than clarifying how a social benefit could create value — focusing more on the business proof instead of the logic.

Can you elaborate on that?

ORV: If I’m trying to get buy-in within my organization to create social benefits within my brand, I’ll probably bring examples from other companies, an industry report or research that says something like 90 percent of customers care about these topics. I’ll use these to prove that social benefits have merits. But in our research, we found that this isn’t enough. In a lot of cases, the people who sign the checks want something that is very specific to their brand, the conditions of the market and their consumers. For this, you need business logic.

Business logic requires demonstrating how integrating this social benefit into your brand activities will create value for your customers. Traditionally, there are two ways to answer this question: Does it create new or strengthen existing attributes or create adjacencies? For example, say that you’re not now distributed in Whole Foods, but if you launch a new product line that is all organic, Fair Trade and has recycled packaging, you may be able to enter Whole Foods. That’s a new channel expansion and helps you achieve growth in a new segment, so that’s an adjacency argument. An attribute argument would be if you made changes to your supply chain. Say you switch to sustainable agriculture as a way of generating ingredients and as a result of doing that, are able to create greater naturalness in your food offerings. Now, imagine that I’m a restaurant chain, so I compete on great taste and quality of ingredients. By using sustainable agriculture, I can strengthen the attribute of great-tasting ingredients.

That’s what we mean by business logic — the overall idea of where your value is going to come from, whether it’s new benefits or reduction of costs. It could also be removing obstacles and reducing the costs that people associate with your category, such as bottled water. The choice is yours, but ultimately, business logic helps clarify for internal stakeholders why these investments are going to translate to value for the company.

So, it’s less about evidence and more about the potential to create value by addressing a given issue or need.

ORV: Yes, and this is how you would describe other types of investment. For instance, if you wanted to launch a line extension, you would argue for that in the same way. We believe that the more you argue for social benefits using the same language and structure of argument that you already use for other investments, the more likely you are to succeed. If, when you talk about social investments, you say you’re going to create an emotional bond with consumers that is going to lead to loyalty, well, that’s a more ambiguous route to growth — it’s less measurable, less precise.

In your work, you mention that competing on purpose is at an inflection point. Why is this?

ORV: In our interviews, we got the sense that despite the presence of external communications about efforts companies are making to align with the Sustainable Development Goals or integrate purpose or sustainability, internally companies are under a lot of pressure to meet their growth objectives. We are sensing that the momentum is slowing down and that there is a risk that the integration of social benefits and sustainability might actually be seen as a barrier or distraction to achieving their business goals.

They’d rather leave those investments on the side as CSR or as sustainability in the backend, but not integrate them into their brand-customer relationships. That’s why we say it could be an inflection point: If we don’t collectively figure out how to do this more effectively to drive growth, then these investments aren’t going to be a part of brands’ activities — and that’s going to lower their impact in creating value for society.

Part of this slowdown is attributed to the fact that integrating sustainability into your brand is really difficult and it can be risky. Quoting Jonathan Atwood, Unilever’s VP of Sustainable Living and Corporate Communications, it’s hard work.

A lot of companies are investing in digital transformation, which is easy to quantify and see the impacts on your business — it can reduce costs, improve customer service and easily be communicated to investors. But this is much harder to do and the case is less clear. Without more clarity on the practices, the desire to integrate this into brands may just run short because the pressures that run against it are pretty big.

And that’s where the Practice of Purpose Project steps in — you’re creating value for the corporate sustainability space by providing a way to help bridge this gap.

ORV: Our goal is to see more brands embrace a social purpose. For that to occur, we need to collectively figure out ways to generate more growth through [that approach]. Ultimately, companies have to find effective ways to link their social purpose back to their business objectives.

What we’re proposing isn’t going to be the be-all-end-all, but we believe it will contribute to ongoing efforts within the wider community working towards this goal. Our contribution seeks to identify what specific practices enable a more effective integration of social benefits into brands. In order to do this, we had to go beyond what we see brands do in the marketplace. We needed to understand what changes they made internally to successfully pull it off — what issues they overcame and how they overcame them. This is why we decided to do interviews with managers that had been on the front lines of these issues — whether they had succeeded or failed in trying to integrate purpose into their practice.

This approach — contributing to the conversation as opposed to worrying about finding the solution — it’s a paradigm shift that in your work you suggest companies should undergo as well. Why?

ORV: We started the project with one question: Is competing on the basis of social purpose the same as competing on the basis of traditional benefits, or is it different? We believed the latter, but we didn’t realize just how different it really is. In our work, we try to clarify the distinction between the two. There are, however, some things you still need to be good at and we don’t believe the fundamentals of marketing should go away, but there are things that need to be viewed differently. For instance, you need to do research slightly differently, internally communicate the objectives of this initiative differently and partner with different people.

In what areas did these similarities and differences emerge?

ORV: One similarity was that customers need to see the value in these types of investments in order for them to be successful and spur growth. Just because a social benefit may create a lot of good will, it may not create ‘buy will’ because if the claim doesn’t matter to people or feel relevant to that particular purchase. Making the social benefit relevant to the drivers of choice in your category is not a trivial activity — and this is not new. You have to make your claims and your benefits relevant to your customer group, no matter what it is they are looking for. However, how you research some of these claims needs to be different.

Often in marketing we use claim preferences as a way to understand what people want or need in a category. But when it comes to social benefits and issues, consumers are not as reliable when answering questions about product or attribute preferences. There is an inherent bias. For example, if I ask you if you’re going to buy a t-shirt because it is Fair Trade, you’re likely going to say yes, of course, why not? But when it comes down to you being at the store, you might chose differently. We see this all the time. The problem is not that people are behaving inconsistently with the research, it’s that the research is wrong. We need derived methods in which we don’t as people directly if they will choose a product because of a social benefit. You need to observe their choices and derive their preferences. You need a different type of research toolkit when it comes to competing on the basis of social purpose.

In the white paper we’re releasing at New Metrics, we identify some more areas of similarities and differences, but our biggest focus is on the new areas that are important to take into account.

It seems that with embracing social benefits you run the risk of potentially alienating some groups of consumers. How can brands frame the story right so that it aligns and resonates with the target audience?

ORV: You’re getting to something really important, which is that social benefits can, in some cases, be a liability. For instance, if I tell you that I have an environmentally friendly cleaner for your kitchen, you may think that it won’t clean as well. There is a segment of the market that really cares about eco-friendly ingredients and believes they do work, but there are many who believe sustainability is going to come at a tradeoff — efficacy of performance. So, if you compete on the basis of that, you may actually turn off some important parts of the market.

A lot of people think of the Dove ‘Real Beauty’ case or the Always ‘Like a Girl’ case as the model for competing on purpose, but there are many models being used. In fact, in our research we ended up creating a database over 70 different programs. One of the things that we’ve done in our work is to map out four different models that require different sets of skills, resources and ways of competing on purpose. You don’t have to do it like Dove to be effective.

How does an organization decide which model is best suited for its needs?

ORV: That was the very same question our steering committee asked us. It basically depends on two things: your motivation for competing on purpose — is it stakeholder pressure or consumer demand — and why people buy products in your category. In terms of the latter, is it because of performance or image? The combination of these factors creates the conditions that make one model work better than another.

The engagement model — the Always/Dove model — is most appropriate when the opportunities are driven by consumer demand and when you are selling or want to move into selling a product for image purposes.

If your product is performance-driven and the need for purpose is related to your stakeholders, you fall into what we call a nudging model. With this model, you don’t talk about social purpose or benefits with your consumers. You nudge them towards more sustainable behavior. For instance, the work P&G did with their cold water laundry detergent in Europe helped reduce energy consumption, but the product was not promoted as being good for the environment, despite it innately resulting in more sustainable behavior. The focus remained on strong performance.

Ultimately, it’s a tailor-made process, largely dependent on what the company does, the resources it uses, the services it provides and who its customers are.

ORV: Spot on. That’s why we need the four models: Because there may be some practices that are relevant for one model, but not another. And there are even some things that may be relevant across the board. For instance, how do you actually brief your agencies if you’re going to engage them in a purpose-related project? Based on our study, it needs to be different and we make some recommendations for how that can be done better. And that’s the type of insight that could be applicable across models, but then there are some practices that are model-specific as well.

You recommend that companies look beyond their CSR program to build their purpose-driven brand strategies. How can relying solely on CSR programs potentially be limiting?

ORV: The umbrella idea of our research program is “competing on social purpose”. The moment you say competing, you are actually competing in the marketplace for growth. But how does growth happen? When people see the value in your offering and consistently choose you over the alternative. Therefore, when you’re in the mindset of competing, you are thinking about your customer, their needs and how you meet their needs better than the alternative.

CSR does not start with the idea of the customer. It starts with the needs of the company and the desire to contribute to their community in a specific way. It could be that you have a CSR initiative that’s also highly relevant to your customers and you can transition that to make it part of your brand proposition and platform. But the red flag we’re raising is that this shouldn’t be the only path. You shouldn’t stop there. You want to start there, but then look at other things, as well.

Where there any other themes or trends that emerged during interviews?

ORV: When we have a social purpose on a brand, we think that it should be present in everything the brand does. But when we spoke to pioneers of purpose, they indicated that it’s really more about finding out when in the customer experience journey purpose should be communicated. And it’s not something that should always be present. The timing of the story really matters. If you break apart the word storytelling — it’s not just story — it’s the telling. And the telling is the location, the occasion, the moment — and that cannot be ignored.

That’s intuitive to all of us, but sometimes we get so excited about the story that we feel like we just want everybody to hear it. But we are forgetting our customer in that moment. We have to stay customer-centric and think about when they will care about this — and that’s when you should really be talking about it.

You’re in the process of creating an online benchmarking tool. What can you tell us at this stage about how it will work?

ORV: The first aspect of the tool will be to help define what it means to compete on social purpose. Out of our white paper, we are going to publish seven criteria that we believe are good indicators on whether brands are competing on social purpose or not.

Eventually, if enough companies respond to the tool, then we can issue benchmarks to help marketers better assess their strengths and opportunities. We want to help managers identify how far off they are from this strategy and what gaps may exist across different phases of marketing work: understanding the market, designing the offering, bringing it to market, and measuring and learning.


The Practice of Purpose Project will pilot the new tool in two phases, in November and December 2017 and April and May 2018. The team intends to make the tool fully available for brands at the Sustainable Brands ’18 Vancouver conference.

The Practice of Purpose Research Project

Research Team
Academia
Omar Rodriguez Vila, PhD
Assistant Professor, Marketing
Scheller College of Business
Co-Leader: The Practice of Purpose Project
Faculty Member - Ray C. Anderson Center for Sustainable Business

Sundar Bharadwaj, PhD
The Coca-Cola Company Chair of Marketing
Terry College of Business
University of Georgia

CB Bhattacharya, PhD
H.J. Zoffer Chair in Sustainability and Ethics, and Professor of Marketing and Management
Katz Graduate School of Business
University of Pittsburgh

Industry
Ricardo Caceres
Former Global Director of Marketing and Sustainability
The Coca-Cola Company
Co-leader of The Practice of Purpose Project

Steering Committee
Gabriela Hernández Galindo : Danone
Margaret Morey-Reuner : Timberland
Whitney Mayer and Jeff King : Hershey’s
Kathleen Dunlop : Unilever
Nelson Switzer : Nestlé


Libby MacCarthy is an Editorial Assistant at Sustainable Brands, based in Maine and France. She is a former urban planner specializing in sustainable cities, and an urban farming and film photography enthusiast. She holds a BA in Environment, Society and… [Read more about Libby MacCarthy]


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