During most of my marketing career, I believed the measure for success to be market-share and bottom-line. Recent global developments have faded this belief and new perspectives on business are emerging. In summary, my conviction is that shareholder value has to shift from a 'finance' to an 'emotive' orientation. Assuming that we in the end we all wish to create a better, more beautiful world. Over the past decades, corporate leadership has become obsessed with maximizing shareholder value. Nearly every measure taken in the corporate boardroom was justified by shareholder value. At the end of 2011 the Western world is sunk deep in a recession, which started in 2008 with the meltdown of the global banking system. And today, corporations driven by their financial greed, quite rightfully face a widespread distrust. This distrust cannot any longer be ‘repaired’ with positive brand communications, as it will backfire through powerful social networks.
Most senior managers will agree (just as I did) that these beliefs drive corporate decision-making: - Leadership team is focusing on maximizing shareholder value. - Bonus schemes align the interest of management with shareholders and steer employee motivation. - Senior management is appointed for 3-5 years to show hard results. - Brand marketing drives customer demand. - Societal concerns, if recognized at all, can be addressed with CSR programs.
These belief systems have had their best days. Shareholder value thinking and bonus schemes lead to short term financial focus, which by definition ignores the long term continuity. Furthermore it has been proven over-and-over again that people are not motivated by money, but by development of their talents, autonomy in their actions and meaningfulness to others. And lastly, shareholder value ignores the consequences for the community nor does it develop the emotive capital of the organization.
From greed to great by unleashing the emotive capital.
Continuity and growth of an organization will be maximized, when profits are not taken, but instead re-invested to add even more value to society. Most companies are not started by their founders for mere profits. They exist to innovate, make the entrepreneur’s dream come true and help other people.
Autonomy, meaningfulness and talent development are more powerful motivators than obscene financial schemes. Financial bonuses work best for lowly educated workers with simple and repetitive jobs. Even worse, higher educated people with creative jobs and a higher fixed income are demotivated by financial schemes, as it reduces their autonomy, makes them risk averse and kills their creativity to add value.
Addressing meaningful social issues and helping people to better their lives, has to be the fundamental existence of any organization. As soon as these things are seen as separate CSR initiatives, it becomes clear that it is not part of the existing ‘dirty’ business. In this context the (corporate) brand has to be repositioned as the ‘meaningfulness’, the compelling framework which links people with the organization's emotive capital.
Brands which depend in their existence solely on clever consumer insights, without linking to an intrinsic social purpose, will cease to exist. Such brands will increasingly be recognized as a fake trick of the marketing department and their advertising agencies.
by Alexander Koene, BR-ND The appeal company