Last week Larry Fink, chief executive of the world’s largest asset manager, BlackRock, sent a warning to brands around the world. He urged them to demonstrate their contribution to society or risk losing its support.
Acknowledging that customer expectations had never been greater, he said the time had come for a new model of shareholder engagement. Delivering financial performance is no longer enough. To prosper today every company must also show how it creates benefits for stakeholders – from employees and customers to the communities within which they operate.
Fink isn’t talking about woolly commitments in an annual report or CSR box ticking, siloed from the commercial strategy. He means embedding within the business a requirement to deliver broader societal impact.
Forward thinking companies have already woken up to this new reality. Take the rise in profile of B-Corps as case in point. These for profit companies, including Ella’s Kitchen, Patagonia and Danone, are certified by the non-profit B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency. Think the business version of Fair Trade certification for coffee.
All this is clearly a good thing. But behaving in a responsible way and not causing problems for society or the environment is only running half the distance.
The full opportunity to differentiate your organisation in the eyes of consumers, investors and policy makers requires going one step further. It lies in solving societal problems. Why?
To solve a problem, you have to identify a problem. And in identifying a problem you automatically show a deeper understanding and awareness of people’s lives and the world today. That creates relevance, the holy grail of powerful and profitable brands.
But you can’t just talk about the problem. People want to see leadership through action, not thinking. Companies actually need to do something that has a commercial edge – not just altruistic intent.
Taking action to solve a problem makes news. The problem-solution dynamic is the classic constitution of news stories. It’s also what inspires sharing. Think about the content that fills your Facebook or Instagram newsfeed: eat here, make this, sign this petition. The millions of people who use Google searches everyday are all trying to answer problems.
So, if you solve a problem you are more likely to generate meaningful news headlines and drive sharing on social, which means you are more likely to increase your share of voice.
Share of voice matters because it is directly correlated to market share. As every advertiser will know, the IPA has long proven the relationship.
In his letter Mr Fink urged board members to “articulate and pursue its purpose”. Companies can best answer that rally cry by developing a strategy of emotional and rational storytelling to communicate the action they are taking to solve a problem.
In doing so they can increase brand value, protect their licence to operate, attract investment and above all, make the world a little bit of a better place.