Business results are increasingly driven by the perception of your brand: call it a first-world problem, but in developed markets the primary driver for purchase has shifted from price and availability to the perceived alignment between what you firm stands for, and, the personal values of consumers. To be sure, there are regional layers to this (not everything is available everywhere, though Amazon has fundamentally changed that) as well as economic (families enduing protected wage loss, for example, have less purchase-flexibility than those who find themselves more fortunate.) To see this in action, consider a handful of recent examples, all centered on strategic business planning: in other words, these brands did what they did largely for business reasons.
This past month, Chipotle announced that it would no longer use serve food containing genetically modified ingredients. This follows the firms’ earlier (2013) initiative to label foods containing GMO ingredients. Steve Ells, founder and co-chief executive of Chipotle, said this was “another step toward the visions we have of changing the way people think about and eat fast food,” or, more simply, changing the way people considering the question of “lunch” think about Chipotle.
Of course, it’s not always that simple, as the similar case involving Starbucks makes clear. Disclosure: I am a long-standing Starbucks Gold Card holder. Starbucks — for a variety of reasons including Neil Young, found itself entangled in the GMO food labelling initiative and resultant lawsuit. Disclosure: I am (also) a long-time fan of Neil Young. While Starbucks is an affiliate member of the Grocery Manufacturer’s Association (one of the parties bringing the lawsuit), it is not directly involved in the lawsuit itself, stating that, as an organization, “Starbucks has not taken a position on the issue of GMO labeling. As a company with stores and a product presence in every state, we prefer a national solution.”
Here’s the problem: Starbucks customers — who can generally be described as having at least some degree of economic choice and therefore are likely to be motivated by a values alignment higher than price and availability — expect Starbucks to be involved, and more to the point to be their advocate in helping eliminate GMO ingredients. Whether GMO is truly harmful or is instead the “Fluoride of the 2000s” is beside the point: Starbucks’ customer base likely tips toward non-GMO, and Starbucks stated non-involvement is therefore a problem. Personally, I was motivated to send a note (to-date unanswered) saying that “until you take a stand, and I expect you to do that, I’m drinking elsewhere.”
Flash forward to the most recent Starbucks’ annual shareholders meeting, during which Starbucks’ founder and CEO Howard Shultz responded to a floor question regarding Starbucks’ stand on gay marriage, to which he responded, “Not every decision (we make) is an economic decision,” continuing, “The lens in which we are making that decision is through the lens of our people. We employ over 200,000 people in this company, and we want to embrace diversity. Of all kinds.” Turning directly to the questioner, Mr. Schultz added, “If you feel, respectfully, that you can get a higher return than the 38 percent you got (here) last year, it’s a free country. You can sell your shares in Starbucks and buy shares in another company. Thank you very much.” Unlike the GMO position, Starbucks position on respect and appreciation for diversity in the workplace is absolutely clear. That’s the clarity that customer expect.
So guess what? After roughly six months of disuse, I went back to Starbucks: I can avoid GMO by choosing an Americano rather than my preferred soy latte, and can support an organization that is otherwise strongly aligned with my own personal values. As a professional involved in strategic planning this basic values-connection between business and customer feels more important than ever.
A couple of final examples drive this home: Walmart is part of a group of companies that publicly oppose “religious freedom laws,” triggered in part by the contentious issues around Indiana’s “Religious Freedom Restoration Act.” Having a clear policy at the organizational-level articulating views on larger issues is no longer an option: more and more, the views of the company are public and therefore part of the consideration factors influencing purchase decisions. More importantly, and as anyone who has ever visited Snopes.com to fact check an online assertion knows, a distanced lack of involvement is not sufficient. The conversations around these issues are happening whether your firm participates or not. In fact, to not participate is akin to handing your opponents a victory in the social PR wars.
The latest flash point? Corporate taxes, and legal tax avoidance. There is a fine line between “what’s legal” and “what’s right” and nowhere is this more an issue than with the revelation and/or perception of involvement in tax avoidance schemes by tech firms. Apple was recently cited as having reduced its tax bill significantly through the use of loopholes and other measures. Apple’s response, from CEO Tim Cook, included the notation that Apple has “paid ‘every single dollar’ of the taxes it owes and that it supports ‘dramatic’ changes to the tax system that will likely mean Apple will pay more in taxes.”
Most striking is that Apple is an American innovator, depending in some real degree on American (and global) innovation that depends on national infrastructure, which is of course paid for with…U.S. taxes. So, rightly or wrongly, more than a few U.S. consumers considering Apple products are asking themselves “if Apple pays less taxes, am I better or worse off? Should I therefore support Apple?”
So, instead of “claiming adherence to legal tax code while pressing for change (which may well mean paying more in the future)” how about simply paying more right now, by discontinuing the use of practices that Apple itself ascribes to “a tax code has not kept up with the digital age.” In other words, be the same innovative leader in corporate finance and economic matters as it is in its brilliant marketplace innovations. Act in ways that would directly benefit the improvements to national infrastructure on which Apple (and other tech firms) depend for future capability and innovation. It seems like that would be a lot easier to explain in the court of public opinion.
Want to read more to learn how to build values-based strategic thinking into your social technology plan? Consider reading It’s Not What You Sell, It’s What You Stand For by Roy Spence and Haley Rushing. It’s an amazingly clear look at how purpose and values underlie successful, long-lived businesses.
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