Elly: In the past, business was traditionally viewed as a means to achieve commercial success, without much thought given to the change corporations could create to social and environmental issues. Why is business the right avenue now to tackle looming global environmental and social crises? What is so effective about it?
Jerry: Adam Smith defined business as ‘leveraging labour to service customers’ need in order to generate wealth for shareholders’. And whilst there are still some large (public) companies who put their focus strongly on shareholder return, the relationship between people and corporations globally has been dramatically reshaped by a number of factors:
- The increasing global pressure from every angle to shape a concerted response to environmental issues like climate change, plastics, greenhouse gases.
- The emerging trend for consumers and employees to make purchase and employment decisions based on a brand owner’s stance (or lack of one) on important social issues. The 2018 Edelman Earned Brand report studied attitudes and buying behaviour in Brazil, China, France, Germany, India, Japan, the UK and USA. The study reported that 64 percent of those interviewed believe that CEOs should take the lead on change rather than waiting for governments to act. 65 percent of respondents had taken a decision not to buy a brand because it had stayed silent on an issue that it was felt there was an obligation to address.
- The escalating levels of employee disengagement globally. The latest State of the Global Workplace report from Gallup shows that worldwide, only 13 percent of employees are engaged with their work. This low engagement has a direct impact on business performance.
Low engagement and increasing employee churn (employee attrition in New Zealand is at the highest level since 2007 – Dr Harold Hillman) are compounded by the expectations led by millennials that there will be some commonality in values between them and their employer. Most want their work to have a sense of meaning beyond purely generating wealth for the business.
You said that business may be a bridge where humanity and the institution of business can realign in a healthier, more authentic and mutually beneficial way. Can you expand on what you mean by this?
Tickled Pink believes that in an era where large-scale change is needed to address the looming environmental, social and economic challenges, the institution of business represents the single most potent, organised force for change on the face of the earth. Driven by a new generation of belief-driven consumers and employees, championed by a new breed of CEO who genuinely feels a sense of wider responsibility, we will see more brands like Patagonia who recently donated $10 million to fight climate change.
Supporting this is acceptance that sustainability goes beyond just environment impact to include the wellbeing of people, communities and the economies that help them all function.
Business is now expected to be regenerative in a way that unites employees, managers, customers and communities behind defined goals.
Do you think a business with a clear focus to create positive social or environmental change can be more effective than governments and organisations’ efforts to combat this? Can they move more nimbly, or have more sway over consumers?
With very few exceptions, governments are hampered by red tape, process and layers of administration. When it comes to designing and implementing large-scale, authentically effective change, they’re held back by competing interests, inefficiency and a very limited time window in which to embed change.
In direct contrast, business has the ability to leverage a large connected network and drive change through an aligned body of professionals who know what they’re doing. Business has money and scale, and can enlist large bodies of people (customers and employees) as advocates for designed change.
How can businesses ensure they actually live and breathe this purpose, rather than it just being a marketing tool (like we’ve seen a few brands being called out for as of lately)?
Purpose has been a loaded word on the business scene for some time now. We’ve had marketing experts like Mark Ritson decry its validity as a driver of consumer behaviour. And true, some business have jumped on the bandwagon in inauthentic, disingenuous ways. ‘Woke washing’ defines a brand that is attaching itself to a social cause without demonstrating genuine congruence on the inside. But brands that align their strategic vision, workforce, internal activities and tell their stories in the right way capitalise on social media and other channels to align customers behind their purpose. Recent examples include Nike’s stand on Colin Kaepernick and Domino’s ‘paving for pizza’ campaign to fix poor quality roads in cash-strapped communities.
Potholes ruining your carryout 🍕🍕🍕 experience? Since flying cars aren't a thing yet, we invite you to nominate your town for a chance to be selected to receive funds for fixing potholes near you. Click the link in our bio to nominate your town now! • • • • • #pothole #road #driving #pizza #hungry #dinner
The key is authenticity. Beginning on the inside, turning executive vision into something that inspires, aligns and motivates everybody within the company – and retains relevance to business performance. Then planning how to share this in ways that enroll customers and other stakeholders.
From an employee perspective, is it motivating for staff to know that they’re working for a company that has a purpose and exists for a reason beyond just making profits?
The 2017 Colmar Brunton Better Futures report showed that 73 percent of New Zealanders say it’s important for them to work for a company that is socially and environmentally responsible. 64 percent would work for a company with strong social values, even if they were paid less. A 2015 US Purpose Index study found that purpose-oriented employees have 64 percent higher levels of fulfillment in their work. Deloitte research shows that ‘mission-driven’ companies have 30 percent higher levels of innovation and 40 percent higher levels of staff retention.
What does research tell us about businesses that invest in the wellbeing and fulfillment of their staff? How do they perform financially and in other metrics?
Research from Gallup and Robert Half (and numerous case studies) show that a business that intentionally invests in elevating the wellbeing and fulfillment of all employees see productivity increases of between 20 and 47 percent. And revenues grow an average of 22.2 percent. Plus, they experience lower employee churn and attract a higher quantity and calibre of new employees.
What are some New Zealand leaders or companies that are doing great work when it comes to bringing audacious change to the forefront?
I’ll point to Perpetual Guardian, which trialed and have now enshrined a four-day working week for all employees, with no increase in the length of work days and no drop in pay. When they announced the trial, it caused a lot of controversy. Results of the trial showed that staff had lower stress levels and higher degrees of job satisfaction. Company founder Andrew Barnes said the goal was to achieve improved productivity through greater workplace efficiency. In his eyes, there was no downside.
Other organisations with an innovative approach to creating a more pleasurable, fulfilling work environment include TradeMe, the Ministry for Business Innovation and Employment, Dunedin app developer Mixbit and Xero.
What about businesses in New Zealand that aren’t delivering on these fronts – how will they suffer in terms of performance, as well as staff retention and recruitment?
New Zealand businesses who still adhere to the old model, caring little for staff wellbeing and fulfillment are already seeing the consequences. The transparency brought by the internet now reveals the inside details on companies. Organisations with a poor employer brand reputation who are not genuinely adapting their practices to today’s sustainability expectations are seeing in impact in declining sales and negative social media comment. This cover specific issues such as employee diversity and gender rights, to damaging environmental practices.
What about on the innovation front? Do you think lacking this purpose hinders a company’s ability to create transformative services or products?
There is overwhelming evidence that an organisation that intentionally elevates employee happiness and fulfillment, and aligns everyone to a powerfully motivating purpose, experiences higher degrees of innovation. This is driven through increased self-confidence, healthier relationships across the business and a freeing up of the traditional aversion to risk of any kind. In a world of perpetual innovation, risk has to be baked into your business strategy and management mindset. But the key to all this is leadership!
This quote from Simon Sinek sums it up for me: “Leaders are the ones who run headfirst into the unknown. They rush toward the danger. They put their own interests aside to protect us or to pull us into the future. Leaders would sooner sacrifice what is theirs to save what is ours. And they would never sacrifice what is ours to save what is theirs. This is what it means to be a leader. It means they choose to go first into danger, headfirst toward the unknown. And when we feel sure they will keep us safe, we will march behind them and work tirelessly to see their visions come to life and proudly call ourselves their followers.”
Why do you think many New Zealand businesses are falling behind on this front? Is it a cultural thing? Do Kiwi businesses like to play it safe or conservative when it comes to risk?
Our experience over the past three to four years is whilst we do have many genuinely world-class, innovation-oriented companies (eg. Air New Zealand) and some very clever start-up businesses in tech, agriculture, finance and other categories (eg. Jude, Code Lingo, Sharesies), NZ’s broad business management culture is conservative and anti-risk.
The possible reasons for this:
- Leaders promoted beyond their abilities and struggling to stay afloat.
- Managers with insufficient understanding of the modern technologies they’re managing.
- Focus on short-term results cycles rather than long-term re-engineering of the business to capitalise on coming trends and opportunities.
- Disconnects between traditional managers and the shifting expectation of younger employees.
- Control from offshore markets like Australia that leaves limited scope for localised innovative thinking.
Steve Jobs prophesied that for a business to succeed in today’s constantly changing technological, social and economic landscape, they must be prepared to shape-shift. To have the vision and courage to hop categories, invent new categories, form counter-intuitive partnerships and be forever developing fresh products and experiences for markets hungry for ‘new’.
What should a modern New Zealand business aspire to be like and operate like, in your opinion?
Tickled Pink’s work with organisations and leaders is strongly informed by ‘An Everyone Culture – Becoming a Deliberately Developmental Organisation’.
Backed by working case studies, the authors encourage business leaders to fashion an organisational culture where support of people's development is woven into the daily fabric of working life and the company's regular operations, daily routines and conversations. In other words, rather than hierarchical pyramid-format management where decision-making is the preserve of an elite few, the business is shaped and run like a community where everyone embraces the responsibility for success. A systemised structure that ensures the prosperity of the whole by enabling the prosperity of all those within. We agree!
The culture you create throughout your company, aligned to a motivating purpose and a set of genuine behavioural values is your strategy – and the key to sustainable success is developing everyone.
What’s the most audacious change you want to see when it comes to New Zealand companies reimagining in their business model?
Pretty much as above. We train leaders and design ‘organisational ecosystems’ where companies grow by growing their people. As we’ve said before, organisations that intentionally elevate the wellbeing and fulfilment of all employees out-perform on every commercial and human metric.
Do you think we’ll eventually see a day where most companies are operating under a social-enterprise like model?
That’s hard to answer. In his breakthrough book Conscious Business, Fred Kofman coined the phrase ‘Building Value through Values’, which I think is a good summary of the new business approach. What I am certain about is that corporate social responsibility, social value and triple bottom line reporting are here to stay. They will influence everything from market share to investor behaviour to the ability of a business to attract and retain a new generation of socially minded employees.
Another wonderfully apt quote from management guru Simon Sinek that we regularly share with our clients: “The opportunity is not to discover the perfect company for ourselves. The opportunity is to build the perfect company for each other.”
Idealog has been covering the most interesting people, businesses and issues from the fields of innovation, design, technology and urban development for over 12 years. And we're asking for your support so we can keep telling those stories, inspire more entrepreneurs to start their own businesses and keep pushing New Zealand forward. Give over $5 a month and you will not only be supporting New Zealand innovation, but you’ll also receive a print subscription and a copy of the new book by David Downs and Dr. Michelle Dickinson, No. 8 Recharged (while stocks last).
Idealog is part of ICG. We work with clients like Woolworths New Zealand, All Good, Huffer, Liquorland, Resene, Citta Design, TVNZ, Spark and FCB on their event activations, in-store, in-office or out-of-home signage, content creation and vehicle wraps.