5 lessons for businesses from 2014
These hard realities highlight why corporate purpose will be paramount in the new year.
As 2014 comes to a close and we launch into the new year with new ambitions challenged by changing operating realities, we share our most important lessons of the past year for the sustainable business community. The implications extend far beyond, of course.
We live in a VUCA world
It is ironic that a 1990s military acronym has come to encapsulate the context in which business now operates, but the evidence is undisputable that we live in a volatile, uncertain, complex and ambiguous world.
The global public’s declining trust in companies to act in the best interest of society proves the point. Business’ license to be bold has been suspended. While the period between 2012 and 2013 saw a recovery from very low levels in trust in companies as the financial crisis and the Great Recession receded, GlobeScan Radar polling across more than 20 countries in 2014 returned the lowest ratings ever (see chart below). The Rana Plaza tragedy (which occurred between our 2013 and 2014 soundings) was surely one symbolic cause of the erosion of trust. The event screamed an absence of corporate responsibility and kept companies in the media discourse over an extended period of time, some for the better and many for the worse.
Ubiquitous unpredictability and the current lack of trust in companies is material to organizations that strive to advance the sustainability agenda. Skepticism runs rampant, and the lowest common denominator prevails. Think of trust as a form of capital. It is difficult to invest in bold positions without any cash. And in the absence of stakeholder trust, accumulating capital is impossible.
Consumers are anxious
Trust alone is not the only problematic characteristic of the VUCA context. Consumers are increasingly anxious about broader societal issues, and all they see is a lack of leadership among traditional agents, especially governments. Even our global panel of senior sustainability experts long since has given up hope on transformative leadership from government, continually rating government lowest on sustainability leadership compared with other actors such as the scientific community and NGOs.
So it is no surprise that, while GlobeScan Radar shows the perceived seriousness of several societal issues to have declined over past years (see accompanying charts), GlobeScan’s polling with National Geographic finds that personal concern about these same issues almost universally has increased across 17 countries.
In a volatile environment characterized by low trust, ineffective government and anxious citizens, 2014 was a golden opportunity for sustainable business. But the obstacles were plenty.
Companies need internal alignment
GlobeScan annually surveys the Business for Social Responsibility community about opportunities and obstacles facing corporate change agents. Juxtaposed against our emphasis on volatility, one constant in our findings has been that corporate members continually believe the lack of internal alignment, prioritization and integration is the greatest obstacle to greater advances in corporate citizenship.
Emerging sustainability practitioners agree. For the first time, GlobeScan partnered with Net Impact in 2014 to compile the thoughts of the up-and-comers on the same dimensions as the aforementioned BSR study. Unexpectedly, the two (or three) generations are aligned, which bodes well for the future. But we must hope and help emerging young professionals to do a better job of reorienting their companies’ trajectories than we have. One of the best conference quotes of the year came from Paul Polman at Net Impact 2014 in a conversation with GreenBiz’s Executive Editor Joel Makower. In response to a question about the dearth of leadership figures, Polman said that potentially 5,000 people of his caliber were in the room.
Aspiration equals opportunity
Few will dispute that progress will not happen without demand-side pull and a compelling business case. In 2012, GlobeScan and BBMG offered that up through our innovative Aspirationals market segmentation; by approaching people as people rather than as activists or consumers singularly, we found a great deal of concurrence between people’s sustainability values and their material desires. In 2014, 38 percent of consumers surveyed across 22 countries identified as Aspirationals. These people are combining their love of style, materialism and social influence with new definitions of quality and innovation that welcome closed-loop systems, the sharing economy and environmental and especially social ambitions generally.
Thirty-eight percent is a big market opportunity. It is no surprise that the Aspirationals' framework is bridging the gap between CMOs and CSOs more powerfully than anything before, driving purposeful investment, innovation and collaboration. See the Collectively platform as a case in point.
On to corporate purpose
All of the above explains why the framework of corporate purpose went mainstream within the sustainability community in 2014. It was heard loud and clear at every corporate sustainability event we attended this year. Risk management, eco-efficiency, responsibility, citizenship and sustainability are no longer compelling or differentiating offers. Effective companies are telling authentic stories about how their core businesses make the world better for the long term. Ineffective companies are not.
We look forward to seeing you in 2015.