It would seem that many companies, and many marketers, cannot distinguish between tactical, philanthropic activities on the one hand and corporate responsibility/sustainability initiatives on the other, that begin to shift the entire business strategy. Too often all these activities are lumped together under the heading ‘CSR’, with the assumption that a bit of activity at the tactical end of the spectrum will suffice as a CSR strategy.
One of the reasons why sustainability is tending to be adopted more often as a description of an all-encompassing business strategy is that it is very difficult to apply it to initiatives that are no more than short-term charitable giving or acts – often gestures – of good citizenship. Clearly, philanthropic initiatives – and their marketing counterpart, Cause Related Marketing (not to be confused with Customer Relationship Management), – are usually worthwhile activities in their own right; they do not, however, represent a strategy.
Many businesses have begun moving much further along a spectrum towards effecting fundamental change throughout the organization. Getting to grips with the supply chain, improving social impacts whilst reducing carbon, water and waste impacts, is clearly of a different order of magnitude from charitable activities. Nevertheless, it could be argued that even these initiatives, which can often be very piecemeal, are often substantially responding to growing pressure from a range of stakeholder groups. The initiatives become truly strategic, however, when they are the outcome of an overarching philosophy and direction for the whole organization. When a company such as GE or Marks & Spencer sets out on a widely publicised journey with a clear roadmap, there is not only no turning back, but every part of the business will be impacted.
The evolvement along this spectrum has clear implications for marketing. In the initial stage, any return for the business from its activities is likely to be fairly superficial and short-term. The implementation of more fundamental changes within the organization give the opportunity for the development of an enhanced brand reputation, but there is an ever-present risk of greenwash if the initiatives are not seen to be a reflection of a sincere change within the company. Once the sustainability strategy is fully in place, however, the potential exists via organizational changes and product/service improvements to secure competitive advantage in the marketplace.
Interestingly, there are a few examples of businesses which began life at the right-hand end of the spectrum – if not in terms of all we would now expect in terms of being sustainable, then at least with a clear set of moral beliefs that guided everything the business did. Modern businesses have tended to adopt the model of wealth creation leading to philanthropy, whereas these historical examples began with the belief systems of the founders. A recent history of the Cadbury company, “Chocolate Wars: From Cadbury to Kraft – 200 years of Sweet Success and Bitter Rivalry” makes clear the early sustainability beliefs in terms of the supply chain, employees and the community, as well as the honest approach to doing business. Paying appropriate taxes was an integral part of this ethical outlook, yet it would appear that Kraft’s restructuring of the company, with the creation of a Swiss holding company, will result in a much lower rate of corporation tax and the loss to the UK exchequer of millions of pounds in revenue.
The banking sector once upon a time contained companies that adopted an ethical and more sustainable outlook: it now seems to have completely lost its moral compass, however. The sector is also remarkable for its abject failure to apply the basics of marketing in terms of responding to customer needs: heavyweight advertising campaigns that say nothing of real relevance to customers, wasteful sponsorships and philanthropic giving disguise an inability to deliver differentiated and customer-focused products and services.
Sir Philip Hampton, chairman of RBS (and former chairman of Sainsbury’s), was recently quoted as saying: “At Sainsbury’s, the business model was centred on keeping the customer happy. In banking, it’s how we can get a bigger share of our customers’ wallets. The customer is an opportunity rather than someone to satisfy.” This remarkable statement demonstrates all too clearly, despite everything that has happened in the world of banking in the last five years, what a huge distance the banks still have to travel. No doubt Sainsbury’s see customers as an opportunity – but an opportunity that can only be accessed by satisfying them. By contrast the banks, by implication, have no interest in satisfying customers – only in finding whatever means they can to part them from their money. The result of this philosophy is precisely what we all experience day-in day-out at the hands of banks and has led to the whole industry reaching an all-time nadir in customer estimation.
Sadly, therefore, some organizations have travelled in the opposite direction to that so clearly representing the future. Businesses must learn from both the old and modern pioneers, placing a sustainable mindset at the heart of the business rather than in a peripheral function responsible for tactical activities aimed at securing short-term wins in the marketplace. Marketers similarly need to step back from the tactical in order to understand their critical role in developing the sustainable brand strategies of the future, where customer loyalty is based not just upon great products or services but a belief in the integrity of the organization providing them.