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Proof Points

Corporate leadership and the power of a good story

It has not, on the whole, been a good month for global political leadership. Commentators and NGOs were sharpening their knives even before the worlds’ heads of government – or rather, their deputies’ deputies – convened at Rio for an underwhelming Earth Summit. Meanwhile, the still-unresolved Euro crisis illustrates that even when the crisis at hand is more immediate, prevarication and delay can still seem more appealing than bold and potentially controversial measures to politicians faced with fearful electorates. The irony is that in shrinking from offering leadership, they start to look irrelevant to the people they represent. A dangerous development.

But if we no longer expect politicians to lead, what about business? The bad news is that, as we saw in last months' column, GlobeScan’s global polling shows that the corporate world fares little better, with many consumers, particularly in the world’s industrialised economies — disinclined to trust it. And yet business is seen as having a pivotal role to play in solving the world’s problems. It joins an unholy trinity of three institutions — the media, government and companies — whose potential impact in solving global problems is thought to be significant, but who lack public confidence.

Of course, this is not the whole picture. Corporate leadership exists. Writing in May’s Proof Points, my colleague Eric Whan looked at the companies that sustainability experts view as leading the charge towards a more sustainable world with, for different reasons, firms such as Unilever, Interface and Walmart all faring well.

Each year, we ask a similar question of citizens around the world: Which companies people see as being socially and environmentally responsible?

Among the global public, a plethora of different names are mentioned, but no clear global leaders emerge. More to the point, around half of those we ask are unable to cite any company that they see as a leader in corporate responsibility.

For whatever reason, the efforts of businesses around the world to project a responsible message are failing to connect with large swathes of citizens. This problem of public inattention illustrates the main barrier to responsible business leadership for companies. The names at the top of the list globally — such as Coca-Cola and Microsoft — start at the significant advantage of having hundreds of millions of consumers who already know and trust their products.

Other factors are also at work, however. National "flagship companies" — Ford in the U.S., Samsung in Korea, Petrobras in Brazil — are continually cited positively by large proportions of consumers in their home markets, even if their names sometimes mean little elsewhere. They have managed to identify themselves in people’s minds not just with corporate success, but with national success, creating jobs and wealth, bolstering pride and making people feel optimistic.

Beyond these names, though, what sort of companies are cutting through to public consciousness?

When we group perceived leadership companies by sector, we can see that the largest cluster — 13 percent overall — come from the food industry. Why does it fare well? More than any other, these are companies with which people have a personal relationship; it’s hard to think of a greater signifier of our faith in a company than a willingness to ingest its products. Accordingly, it’s no surprise that when asked, the products and services themselves are the primary reason given for considering these companies as socially responsible, or that people most frequently cite their own personal experience as the source of their positive impression.

Other sectors do well for different reasons. Electronic equipment companies are the fourth most cited as socially responsible, and the third most cited as environmentally responsible. Here, in a sector where non-stop innovation is the norm, people have picked up on companies’ efforts to deploy this innovation to produce more environmentally friendly products — those that use less energy, for example, or that are recyclable. But this is another example of the way that people find it easiest to judge a company through the prism of its products. We also see sponsorship and charitable giving being cited by many citizens as reasons for seeing a company as socially responsible, particularly in North America.

But perhaps the reasons that are not given are as important as those that are. Overwhelmingly, consumers do not cite the evidence contained in sustainability reports as reasons for viewing companies as leaders. For example, they rarely cite a company’s success in meeting its emissions targets, its enlightened management of its supply chain or its responsible water use. We know from our issues tracking that citizens see these issues as serious — but while they are followed closely by a highly engaged and passionate minority, they seem to struggle to connect this meaningfully to corporate activity. This is not surprising, given that most of this information is presented by companies in a way that is often partial, dry and inaccessible to the layperson.

Which is why the case of BP is illustrative, at least paradoxically. Only two years ago, as we all know, the company was responsible for one of the most significant corporate environmental disasters of modern times. And yet this year, BP emerges at or near the top of list of companies most frequently cited as "environmentally responsible" in the UK and U.S.

How can this be? What this appears to illustrate is both the low expectations of companies and the power of a narrative.

Looking at the reasons people give for regarding BP as a leader this year, the company seems to be the beneficiary of an unstated assumption that companies will not clean up their own mess — which BP is seen to have done — and of a media spotlight that has highlighted BP's efforts in an area that is not helping their bottom line. It would be wrong to overstate the rehabilitation of BP’s public reputation — without a doubt, many still see it as a villain. But the story is simple and compelling: here is a company that made a very large mistake, and this is what it is doing to help put it right.

The political class, particularly in the West, may no longer be seen to be capable of offering a coherent and credible narrative with which citizens can connect. But if companies aspire to fill the leadership vacuum left by government, they need to start by finding a way of telling the story of the whole spectrum of their activities — linking their products and services to their social role — in a way that people understand and believe, and that they find interesting and relevant to the world around them.

It shouldn’t take a crisis to force the issue. Our research suggests they have some way to go.

Image by dervish11 via Shutterstock.

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