Helene Finidori

Reassessing What Value Means

The New Capitalist Manifesto by Umair Haque

I have been following Umair Haque’s work for a while, and I must say that everything I read from him just hits home. He connects powerful dots and lays out the future of business and capitalism in sharp terms that I profoundly relate to.

For one because I have spent these last 15 years living around the world, literally watching from a ringside seat several bubbles inflate and pop (1997 in Indonesia - monetary crisis, 2000 in Sweden - IT Internet crisis, 2007 in the USA - housing bubble seen transformed in the GFC in 2008 from Australia…).

And also because I have been convinced for many years as a marketer and strategist that the most effective way for a business to make a difference, thrive and grow, is through vision and meaningful interactions based on trust between empowered employees and an organization’s stakeholders, the brand being the expression of the culture that enables it.

The New Capitalist Manifesto confirms that this type of approach spans far beyond the realm of marketing and branding and touches the very essence of doing business.

The end of the industrial era

The New Capitalist Manifesto starts with the realization that the industrial era capitalist model has long lived. We cannot deny that the 20^th century, mining and burning its way into mass production, mass consumption, mass agriculture, has brought some form of prosperity to many areas of the world, and provided access to food, health and comfort to a significant number of people… At the same time it has produced an economy based on what Umair Haque calls thin value: value that has generated unpaid debts of harm to people, communities, society and the natural world, not to mention future generations. This was reinforced by an exacerbated ethic of individualistic self-interest based on maximizing output and expectations that has overidden traditional values of togetherness, empathy and solidarity.

The 20th century industrial era business models hinging on exploitation, command & control, fierce competition, short term profit, leveraged growth, has left climate changed, resources depleted, markets commoditized, infrastructures in ruins, a finance system on the verge of bankruptcy, an unengaged and stressed workforce, and corporations struggling to maintain competitiveness under pressure of accelerating cycles...

Rebooting capitalism

The New Capitalist Manifesto is a call to reboot capitalism and reassess what value means. Because Umair Haque believes that building disruptively better businesses can change economics, he explores new paths for producing, interacting, and competing; striving to create authentic value and quality profit aimed at shared prosperity now and in the future.

He leads us through the design of constructive strategies based not on acquiring competitive advantage or finding unexplored niches, but on authenticity, interaction and mindfulness, the paths to making a real difference. The kind of strategies that help organizations and their whole ecosystems thrive by creating thick and meaningful value for all stakeholders while minimizing losses incurred by the community, society, the natural world and future generations. The old model is shifting while a new one emerges, based upon renewal and regeneration, participation and co-creation, interactions and collaboration, resilience and evolutionary edge, outcomes and meaningful growth. Umair Haque’s endeavor is to accelerate the emergence.

Constructive advantage based on sustainable value

Beyond the whole new vocabulary that makes business as we knew it obsolete, the book provides practical insight and examples: Apple, Google, Interface, Nike, Lego, Unilever, Walmart, Whole Foods, Nintendo… a few of whom have come back a long way from exposed unsustainable practices…

What Umair Haque develops in the book is a productivity and efficiency model based on what he calls constructive advantage and sustainable value. This is achieved through:

• Shifting focus from operational efficiency (minimizing internal costs) to socio-efficiency (minimizing external loss and replenishing resources). This includes the adoption of cradle-to-cradle value cycle approaches which focus on embedding the minimal use/replenishing of resources/reclaiming-disposal of the product at conception, and on moving production as close as possible to consumption.

• Giving up the principle of one-sided value proposition to adopt participation and co-creation, internal and external, involving customers and other stakeholders. The idea is to give a voice and ear to develop responsiveness, and the agility to come up with better decisions faster.

• Moving from strategies of competition and dominance of the market place to an intentional purpose based philosophy enabling the perpetual (re)discovery of value creation, ensuring resilience and an evolutionary edge. (Incidentally, this is what the best brands are made of!)

• Corollary to the previous, developing the capability of expanding the market place through creative disruption, rather than protecting one’s position and market.

• Last, shifting from differentiating products or services (as output) to making a meaningful difference (in outcome) to people, communities and society in human terms, through value that makes people better off. Socio effectiveness is about a shared interest in better outcomes in terms of physical, social, mental, economic wellness.

Sustainable value is one that lasts beyond production and consumption, that creates meaningful and positive impacts on people’s lives, empowering people. This generates greater loyalty, credibility, legitimacy and ultimately is the driver for growth, profits and economic value.  

Umair Haque believes, like me, that the power to act and change the world resides in each and all of us. It is our call to create the future. Let's do it!

How to stop the treadmill and create thick value?

cartoon: http://www.polyp.org.uk/ see animated version

Umair Haque’s New Capitalist Manifesto is all about building disruptively better businesses that create thick value by focusing on social effectiveness based on trust, purpose and meaning: the new levers of constructive capitalism.

The majority of CSR and transformation efforts concentrate on convincing CEOs, boards, marketers. But not much is changing at the coalface. Same old, same old discourse… unengaged employees and executive: no one believes much that corporations can change, or that there is a way out.

Many books, reports are published with a positive note and suggestions of effective solutions with solid rationales, but how do you bring the message to coffee machine and cafeteria conversations in offices, universities, schools?  How do you start one-to-one empowering conversations showing possibilities and achievements?

Please share your suggestions, start the buzz and keep me posted here or @HeleneFinidori   

The Story of Stuff - We can do better!

That's old stuff but... well, at the scale of economic models and management theories longevity, it's still quite a new provocative way of seeing things, and worth repeating here and again. And it doesn't look pretty. It seems that what we have learned as the recipes for success need to be unlearned.

This video is an animated documentary on consumerism and the life cycle of consumer goods. It connects the model of consumption-based growth to a huge number of environmental and social issues, and underlines the absurdity of running a linear process of extraction, production, distribution, consumption and disposal on a finite planet.

It seems that the founders of micro economics, by taking the "economy as a science" route have dehumanized economics, divorcing it from its ethical component and reduced it to a mere triggering and reinforcing the weakest sides of human nature. Imagine our businesses had a conscience, imagine if rather than playing on humanity's weak sides we started looking at how "virtues" create more effective, meaningful and durable value. Look at this animation as a wake up call.

What can each of us in our companies do to stop being the bad guys and continuing this nonsense that is joepardizing the world our children will become adults in? We should know and do better than that!

There are solutions to make things better without putting the whole system down!

Movement for engagement

The British NHS Institute for Innovation and Improvement is bringing social movement thinking to healthcare improvement.

NHS’ movement view of improvement focuses on unleashing and sustaining energy through imagination, participation, mobilization and momentum. This perspective operates on previously unseen levels of depth and scale and outperform the traditional “rational view” which concentrates on effectiveness and efficiency through control and standardization of work.

The decision was made after realizing that only 20% of NHS 1.3 million staff were engaged in quality improvement work to try and meet the goals as set out in the NHS Plan, while achievement of these goals required 80 or 100% of staff engagement.

To achieve this, rather than multiplying the number of change programs, NHS transformed concepts and ideas from social movement thinking into principles for radical change aimed at engaging with the individuals’ core values and mobilizing their own internal energies and drivers for change.

For the whole story, read the two articles by Helen Bevan, Director of Service Transformation at the NHS Institute for Innovation and Improvement.

• Social movement thinking: a set of ideas whose time has come?
• What NHS leaders can learn from social movements

Close-up on Identity

The connection between identity and performance is coming into light. And that’s good news.

In a new book, Identity Economics, released in February, Nobel Prize economist George Akerlof and Rachel Kranton describe how identity helps explain why people, facing the same economic circumstances, make different choices. In their view, an organization works well when people personally identify with it. Jim Heskett dedicates his March HBS Working Knowledge column to the topic, wondering to what degree identity affects economic performance and whether US corporations are not going through an “identity crisis”. A recent research survey led by the Identity Circle measures the impact of organizational identity strength and the awareness thereof on employee engagement and performance, and establishes identity as a key performance driver over any other engagement boosting activity. Paradoxically, the study suggests, most employees are hardly aware of their company’s identity strength. This leaves quite a lot of room for improvement.

Identity has long been a central element of branding and its definition, the specialty of branding agencies, in particular B2B. Because of the frequent disconnect of marcom with strategy and HR in decision making or resource allocation, traditional branding approaches, although capturing a whole wealth of collective knowledge and insight on identity and potential, have concentrated their focus on serving the external dimension of the Brand -the formulation and communication of the promise to the outside audience- but overlooked how this insight could be leveraged towards internal dimensions -such as strategy and people engagement. In worst case scenarios, strategy, brand and HR are developed independently along three separate processes that hinge on different premises and therefore generate mixed priorities and messages, widening the gaps between strategy and execution, perception and reality, promise and delivery, effective marketing and positive outcomes.

Identity is the substance of what characterizes an organization, the set of unique capabilities and characteristics that brought it where it is and that enables it to create value and formulate a promise. It contains the seeds of what will take an organization to the next level. Larry Ackerman from Identity Circles provides a good definition here.

It constitutes a good platform from which Strategy, Brand and HR can be developed in concert.

In two other posts I elaborate on why Strategy formulation should start with identity and why the Brand has a role to play in aligning strategy and execution.

Strategy. So, where do we start? Identity don’t you think?

 

Strategy? It’s all about defining how you will create and sustain (more or better) value: value for your customers, value for your shareholders, value for your people, and ultimately value for all your stakeholders and for society, whether at the local, national or global level.

By the textbook, your strategy should derive from your organizational vision, position your organization or product portfolio so it can ensure a sustainable competitive advantage, and result in the attainment of your strategic goals. You have several tools and templates at your disposal:  SWOT, PEST, 5 forces, Value chain…; several strategic models: cost leadership, differentiation, Blue Ocean, resource based… as well as planning methodologies that ensure the whole strategy is spelled out and ready for implementation…

But where should you start? What is going to drive your strategic thinking? How will you formulate your vision so it can serve as an inspiration and guiding idea and set you apart as a unique organization? How are you going to define your strategy’s content? And once you have formulated a strategy, how do you ensure that it contains enough impetus to energize your people to make things happen and to navigate through volatile environments?

Many of the models out there are outside-in… and based on a prescriptive and almost “mechanical” approach –strategy as a science- where environment shapes strategy, strategy shapes structure, and structure determines outcome. The major focus is on collecting and analyzing hard facts and data, with little room for intangibles and people factors –more difficult to quantify and modelize- and little attention to leveraging the organization's knowledge… 

Just as the theory of efficient financial markets is now disputed because it leaves out matters related to human behaviors and cognitive processes, theories which claim that with equivalent resources and strategies and in similar environments companies would perform equally have long lived.

Ultimately, all else being equal, it’s in the intangibles – an organization’s capabilities and the way it combines its capabilities and resources to create value- that lies the difference. As much as the niche or breakthrough opportunities that you seize, or the competitive advantage obtained through your positioning or product portfolio, it’s who you are, what makes you tick and how you do things that set you apart. It’s your ability to do it better, faster, consistently, adaptively, relevantly to both your audience's current and future needs and wants -whether customers, employees or other stakeholders- and your ability to nurture relationships in the long term that count in the end.

So a good place to start, at the intersection of business strategy and branding is probably to define your identity. Your identity is much more than the form under which you appear as an organization to your audiences. It is the substance that characterizes you, who you are, who you are not, what is important to you. It is the set of unique capabilities that enable you to create value, that brought you where you are, that shaped your culture, image and performance; your potential to reach the next level, and the roots from which your strategy can grow.

Vision, purpose or mission, are the produce of your identity. Defining your identity is being able to answer the questions: why are we in business, and what does the world need most that our business is uniquely able to provide? The brand, your culture and image are its expression.

Defining identity is central to any branding process. Doing it in an integrated approach to branding and business strategy creates better conditions for a successful formulation and execution of business strategy, in particular when it comes to providing purpose and mobilizing people in operations around shared values and goals.

For more information on brand business integration, read my post Aligning Business Strategy and Execution around the Brand and go to JDBBN website.

Aligning Business Strategy and Execution around the Brand

Few business strategies, even when effectively formulated, are effectively executed. Research shows that in most cases failure is due to the absence of a coordinated approach to strategy and execution, and to an improper planning of the required implementation steps to put the strategy into practice, in particular when it comes to:

• Focusing on what really matters
• Aligning strategic and operational goals and priorities throughout the organization
• Creating an understanding of strategic goals at the operational level, of their impact on operations and of the changes they require
• Allocating and aligning resources (people, processes and technologies) adequately
• Providing evaluation and correction mechanisms
• Allowing flexibility and fast decision making

See Forbes Insights and SAP survey reports on aligning strategy and execution.

In a time of increasing economic volatility and changing market conditions, what is crucial to ensure long term success is not only the value proposition of a business but also how this value is actually created and delivered, and ultimately its capacity to attract and retain, and to create a long lasting bond with the customer, employee or other stakeholder.

In this process, the human factor -interaction, engagement and experience- plays an increasingly critical role that is often neglected or reduced to a collection of hard data; or dealt with in a siloed and prescriptive way.

Companies who develop and execute their business strategy in close relationship with or around their brand and who associate the organization’s stakeholders in the process create better conditions for fostering human dynamics and achieving outcomes.

The brand is the personification of an organization. It is made of both the promise -which drives the value proposition- and the actual fulfillment of the promise through strong delivery at each point of encounter -which ensures long lasting differentiation-. In this respect, the brand is more than just the image projected to the outside, it influences the business just as much as it is influenced by the business, and the internal implications are essential.

Integrating brand and business in the strategic process provides direction and purpose that draw from the organization’s identity and shape in return the vision, culture and the way things are done, thus building up the image. The approach focuses on aligning the brand components and business’s internal capabilities, tangible and intangible, on the triggers and touch points that matter the most, and on assisting in the implementation of the changes required. In particular it seeks to bring together sales/marketing/communications (external focus) and HR (internal focus) to identify and feed capability and to deliver the brand promise along the value chain.

The effective brand is at the same time the connective tissue that reaches every corner of the organization and holds constituents in relation to each other, and the energy fuel that mobilizes the whole organization and stakeholders around shared priorities and goals.

Brand business integration involves that the brand strategy be endorsed if not steered at the executive team level. It requires a transversal approach to strategy implementation that breaks functional barriers  and the valuation –even if hard to quantify- of intangible assets such as employee moral and customer satisfaction, effectiveness of internal processes or quality of output, strength of relationships, corporate values and culture which are the drivers for sustainable differentiation and future earnings and value.

Aligning the Brand

However inspiring, a promise is not enough to build brand value. Ensuring an optimal delivery of the brand promise and the engagement of the people within the organization to make it happen are probably as important as the image built to support positioning and provide customers with buying incentives. This may seem obvious… but too few companies actually go through the process of aligning their brand and business or even realize that the way they conduct their business may impact their brand.

The relevance of brand alignment and the need to “live the brand” internally is however starting to become more generally recognized. A number of branding agencies have taken this on. Having worked on both sides of the client/agency and client/consultant relationship for more than 15 years as a strong advocate of integrating business and brand, I can only rejoice to see this eventually making it at the top of corporate agendas. The activity is still in its infancy though: offering and practices are rather heterogeneous, and there is no standard terminology –call it brand alignment, integrated branding, internal branding etc…-. Here are a few things organizations and branding agencies should have in mind to successfully bring branding to another dimension:

• Brand alignment involves not only the tangibles of the business – the way things are done, deliverables and outcomes- but also the intangible –perceptions, relationships, behaviors- that affect the tangible and performance. It involves not only the external, but also the internal. In all these dimensions, the human component is key. Systems and processes alone can’t shape a culture or foster people engagement. Getting everyone on board is a critical factor of success and must find its place in the process. 

• Brand alignment requires a fully supported cross-functional buy-in. The traditional point of contact of branding initiatives on the client’s side is typically marketing. Influence of marketing –or whichever function will lead the project - on other functions and the rest of the value chain is essential. The promoters of a project must have the power to cross functional barriers in order to obtain cooperation, resources and budget, and must be able to secure top management and organization-wide support for the execution of the project to ensure the outcome. An assessment on the likeliness of this support should take place quite early at the planning stage.

• Brand alignment operates at the confluent of strategy, branding and HR, and along the value chain at each point of contact of the brand with its stakeholders: it requires a broad array of skills. Traditional branding agencies are by essence in the best position to help their clients on the identity/relationships/perception part of the equation, and they are certainly very well placed to combine the use of creative thinking and design techniques with traditional research and data analysis to leverage collective knowledge and produce valuable insight and recommendations. For the alignment to be effective, they must make sure they can team up and coordinate all the required internal and external additional skills in particular in strategy and change management, and that everyone involved in the process has an understanding of the business, its processes, systems, value chain…

• Brand alignment must happen upstream and separately from brand execution, in particular from the scheduling of any physical deliverables. Positioning & revenue models of branding agencies and marcom purchasing habits on the client side may need to evolve. Many agencies pitch on the consulting service -strategy, methodology and outcome-, but ultimately tend to “sell” a product -design & look and feel… - especially if their history and revenue model is strongly dependent on design and production. As an echo to this –cause or consequence?-, clients tend to buy -are willing to pay for- the end product –website, brochure, etc- rather than the thinking. Consulting and strategy needs to clearly be unbundled from design and production.

Change or Die

Why is it that even under a death threat, humans can't resolve themselves to change their behaviors? In Fast Company's May issue, Alan Deutschman draws a parallel between health and corporate performance: whatever the perspective or the danger, the core of the solution is seldom to perform an operation -i.e. change the structure, culture or strategy- or to prescribe a medecine -new systems and technology-. Changing behaviors mostly happens by speaking to people's feeling and emotions, not just thoughts, and helping them adopt different frames of thinking. Change agents themselves need to learn how to change their style if necessary to get to the core. On the "change target" side, behavioral change ability, what we commonly call adaptability, is linked to our brain's ability to change, its plasticity. Everything we learn as a child is behavior based and maintains this plasticity. When the leaning stops, the plasticity decreases. This is why, the article says, continuous learning, by constantly rejuvenating the brain's plasticity, is so crucial to adaptability, not only to knowledge -not to mention living older and in a good shape!-.

See full article Change or Die.
Also see a detailed analysis of this article in Creating Passionate Users Blog

The Art of Management

What many in the academic world have been thinking in silence, or expressed behind closed doors in the aftermath of the Enron scandal, is now voiced openly and creates some turmoil in business education circles: Bad management theories are destroying good management practice!

In a 17 page article published posthumously by the Academy of Management Learning & Education, the late management education guru Sumantra Ghoshal explains how the sets of ideas that have shaped management theories for the past 30 years have freed students from any sense of responsibility, influenced social and moral behaviors, and have led, in a self-fulfilling process, to the worst excesses. Read full paper and related comments in The Economist, the Financial Times plus a second FT article.

The issue is highly political. For Ghosal, the desire to make business a science encouraged the adoption of Milton Friedman's oversimplifying individualistic and pessimistic vision of liberalism. In her response to Ghosal, Prof. Moss Kanter of Harvard agrees that these theories are "just too simple and leave out too much". She lays a great part of the responsibility for exesses on managers themselves and law schools and describes the predominance of maximizing shareholders' interests as a result of the victory of capitalism over communism. "Valuing all stakeholders, being socially responsible and caring about people, she adds, sounded a little 'pinko' to business managers when the world had so roundly rejected socialism in any form. Greed was legitimated as producing a better society, not just better companies".   

Ghosal claims that teaching ethics is not enough, and only a change of paradigm and the promotion of pluralism and alternative theories will reverse the trend. Unfortunately, he passed away and we will never know what alternatives he had in mind.

Harvard and many other Business Schools have introduced courses on Ethics in their MBA programs, and accreditation bodies are pushing to make them mandatory in the curriculum. Will this be enough? How will the Academy further take on the mission that Ghosal entrusted them with?