Many years ago, companies thought that they were adding value to an economy by employing people to make good products and services. They added brand thinking later, which strengthened the company’s appeal to customers. More recently, companies see their reputation as having to possess an additional layer drawing customer respect for the company. As Professor Kash Rangan of Harvard observed: “It is no longer sufficient to compete on quality, price or product innovation alone,” to which Dr. Joseph Plummer of the Advertising Research Foundation added: “The brand is what you buy. The corporate reputation is what you believe in and trust. It’s not an either/or. You need both.”

Though unreported on most balance sheets, brand value and reputation still remain two of a company’s most important assets in today’s hypercompetitive globalized marketplace. In this Marketing 3.0 world, successful modern brands need to reach out not only to the customers’ own hearts and minds, but also to their concern for the hearts and minds of others—and for the sustainability of the planet. We talk increasingly about companies striving to achieve a Triple Bottom Line: People, Planet, and Profits.

Now we have to ask: What benefits and growth come to companies that improve their reputation? We list the following:

•The company is better able to attract and retain world-class talent.

•The company has created an additional level of customer-valued differentiation.

•The company may benefit by attracting more socially concerned suppliers and distributors who are aligned with the company’s values.

•The company has mitigated its risk of being criticized or slandered.

•The company has attracted an additional class of customers who care about the planet.

As wealth and education increase, customers are becoming increasingly aware that their own well-being is tied to the environment’s sustainability and societal harmony.

A while back, I read this interesting article in The Huffington Post, by Matt Browne. Titled, “Pro-Logo: Can Global Brands Become a Force for Good?” it suggests that global brands are more accountable now than they once were, and possess the potential to change the world for the better. Given that Millward Brown works with so many global clients, I hope he is right. It makes me feel that my job is more worthwhile than it might be otherwise.

I think Browne’s argument can be boiled down to two key quotes:

Global brands are the only ones who will ever have any incentive to improve environmental sustainability and labor practices, precisely because they are the only ones who will be held to account for their actions.

And:

In an era of subcontracting, outsourcing, and increased competition, CEOs are well aware that brand reputation is one of the few capital assets a corporation possesses. If better working conditions, sustainable production, or ethical supply chains are ways in which a brand can enhance its reputation, appeal and value, then doing good globally can be good for business.

As I have noted elsewhere, the value of acting responsibly is not always apparent. In the short-term, a company may make more money by acting irresponsibly or turning a blind eye to supplier practices. But in the long-term, these acts can have a very negative effect.

Nike learnt that global brands are held to a higher standard the hard way (read more on that here). And recently, Apple has been subject to scrutiny over working conditions at the Chinese factories of suppliers like Foxconn Technology.

And sometimes, even the most well-intentioned acts can result in negative outcomes. Victoria’s Secret’s commitment to buy organic fair-trade cotton from Burkina Faso, has recently been criticized for failing to safeguard against the use of child labor.

All three companies, Nike, Apple and Victoria’s Secret, are well-known, international brands. As such, they are of interest to many people and inherently newsworthy. Their fame is both a strength and a weakness, not shared by lesser known brands. Fame forces premium brands into what has been referred to as the “lonely leadership position,” because most consumers are not willing to pay for a company to act responsibly. Their primary interest is to get a good product at a good price.

The good news, however, is that savvy corporations use their clout to share the load across all companies in their industry. By publicizing how they are either addressing past problems or working to a higher standard than others, they can create a positive perception with their customers and differentiate their brand from the competition. In many cases the competition are compelled to follow.

So what do you think? Do global brands have the potential to improve the world we live in? Can a company create competitive advantage out of doing the right thing, even if customers are not willing to pay for the additional cost? Please share your thoughts.

Contributed to Branding Strategy Insider by: Nigel Hollis, Chief Global Analyst Millward Brown

Sponsored by: The Brand Positioning Workshop

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Beyond the transaction/marketing driven model of brand building, enlightened brand owners are building the value of their brands around aligning social good with business good. These organizations realize the foundation of their competitive advantage will be based on a higher purpose — social good.

In the marketing driven model of brand building, the focus is on awareness and communicating better features of the product. Consumers and customers simply exchanged money for a product. When the performance of the product matched up to customer expectations the brand promise was delivered. End of story.

That’s not good enough for consumers/customers today.

Apple’s on-going saga of complicity in the harmful working conditions in the Chinese supplier factories is a recent example of the deeper scrutiny placed on brand owners. Apple’s circumstances makes the point clear — consumers not only consider the products you make, or the services you provide, they’re also looking carefully at your entire value chain–where your stuff is made, what it’s made from, how it impacts the environment,  the community, who your suppliers are, how well employees are treated. Consumers are scrutinizing the value of brands based on the social good they do in the world.

Brand owners must ask themselves “how can we align our business good with social good”?  The answer to that question needs to come from the very top of the organization, not from marketing or PR departments. The answer to this question must be the very reason or purpose the business enterprise exists in the first place. The relationship of social good and business good must be the core value proposition of the enterprise — above money-making.

Breaking down the barriers within organizations

Traditionally the siloed nature of organizations would have one group of people thinking and acting on corporate philanthropy and community, while other groups are developing and marketing products with the greatest margins possible. These functions rarely if ever are coordinated by a vision to maximize social and business good. Business good and social good being “functions” rather a unifying principal of existence.

Enlightened brand owners are breaking down the functional barriers in their organization and converging these interests into a common social purpose driven brand value.

Patagonia is extraordinary in this regard. The higher purpose of Patagonia is not to make and market more technically driven outer wear, rather Patagonia’s leadership has aligned their core values and mission around stewardship and sustainability of the planet as a whole. They are a leading voice and advocate for the greater good. This is not a brand strategy, or clever marketing– it’s who they are as an enterprise. It’s the reason their employees come to work everyday. It’s also the reason the brand has unquestioned relevant differentiation in their customers minds and competitive advantage at a premium price point in the marketplace. Patagonia is a brand that represents social good and business good as two sides of the same coin.

The deeper principal that brands like Patagonia are based on is simple — social good is highly valued (relevant) to its customers and drives business performance (competitive advantage). Patagonia then walks the talk everyday. For Patagonia, there’s no difference between advocating for greater sustainable and stewardship of the planet and making money.

Doing good is not good enough

Doing social good simply for a business gain is a fool’s errand. It’s not enough to “do good”. The aspects and activities of social good is not something added to the brand’s purpose — it is the purpose! Enlightened brand owners are employing the brand strategy principal of relevant differentiation to align social good and business good.

Three critical factors need to come seamlessly together to make your brand’s social purpose have relevant differentiation.

First, you need to know without question, what the brand is the very best at doing.

Secondly, whatever the brand is best at must be something customers really care about.

Finally, whatever the brand is best at, and highly valued by customers, must serve the good of community (planet) at large.

With these insights brand owners and managers can more easily identify activities of social good that your brand can own in unique and authentic ways.

Doing good is good business.

Sponsored By: The Two-Day Brand Positioning Workshop