Listening: A Strategy and Change Blog | Hosfeld & Associates

The future of brand building “will involve all stakeholders (in a)… fluid, uncertain world where a brand evolves in dialogue with others. This in turn will require both openness and trust.” So say Nicholas Ind and Majken Schultz in an article from Strategy + Business.

Pointing to two examples – LEGO and Robobank – of companies among other examples, the authors comment on how brand building is slipping from arms of marketers into the hands of managers who are tending the total customer or stakeholder experience. “These organizations have understood that brand building (even if the terminology of branding is not used) is a participative process involving the whole organization and is the responsibility of all employees.”

Critical success factors for organizations creating brands in this environment, we predict, will include the abilities to align the organization on compelling strategies based on stakeholder dialogue, to foster and facilitate dialogue among multiple stakeholders, to channel greater flows of information into, within, and outside the organization, and to build authentic trust with stakeholder groups.

Strategy + Business Article: Brand Building Beyond Marketing

Think about the last strategic planning process you went through. Was it energizing? Did it create breakthroughs with lasting impact on the organization? Did it tap the creativity of the planning team? If it did, it’s likely that your process went beyond traditional planning techniques to tap the potential of the artistic mind. It was likely more like a strategy design session than a strategic planning session.

What’s the difference?

Effective strategy design calls on us to engage the artistic mind – capable of pattern recognition, synthesis, story, empathy, play and meaning-making – to create compelling futures that inspire adaptive change. In our Strategy Jazz workshop, we explore an archetypal pattern of human creativity through the eyes of jazz musicians to see ways we can get greater outcomes from strategy processes.

Strategy Jazz will be presented at the OSR (Organizational Systems Renewal) alumni conference at Seattle University, June 19, 2010, but can also be adapted for on-sites, retreats and other conferences.

Through this workshop, we invite participants to shift their mental model of strategy design from a linear “planning” model to an innovation-based approach that taps the artistic, intuitive mind.

Using conversations with jazz recording artists Greta Matassa and Jovino Santos Neto, we take participants on a guided tour of the elements of jazz improvisation, laying down an archetypal pattern that repeats itself in our approach to strategic innovation for businesses and other organizations.

The OSR Conference explores the emerging field of arts in the design and leadership of change. For more information about the OSR Conference or to register, please visit the event website. To find out about options for presenting this workshop for your own organization, please contact us. Additional information is also available here.

Terrific blog post at Harvard Business Review  by Umair Haque who is Director of the Havas Media Lab  saying the proof of the benefit of responsible business is in. Wait too much longer for more proof and the responsible businesses will have eaten your lunch. Statistics he cites are:

• Ethisphere Institute: In 2008, ethical leaders outperformed the growth of the S&P 500 by 40%. In 2009, again. In 2010, by 35%.
• CSR Magazine found a shareholder value performance gap of about 10% between, for example, the most and least transparent companies.
• SRI Research finds that the mean Market Value Added of the top 100 Corporate Citizens is $36 billion, more than four times the Mean Market Value Added of the remaining companies — which is less than $8 billion.
• Berkeley’s Haas School of Business: Study found that companies high in social responsibility had significantly higher profit margins, returns on equity, and returns on assets.

What type of behavior characterizes these types of companies? It’s important to note that these are self-regulated practices of companies that take responsibility for relationships with and impacts on a variety of stakeholders, and incorporate an active, conscious commitment to the public interest (versus self interest alone) in their decision-making.

For additional details see the entire blog article here.

By Kathleen Hosfeld

The Journal of Public Policy and Marketing released a special issue devoted to stakeholder marketing this month, which among other things, features an article by our academic partner Jenny Mish, professor of marketing at Notre Dame, with her colleague Debra Scammon.

As the journal has limited visibility with people in business and non-profits who engage with stakeholders, I’m reporting here on some of the ideas that have the most applicability to day to day practice.

What is Stakeholder Marketing?

Stakeholder marketing is an approach to marketing that examines the impact of marketing on stakeholders other than the customer.  Our short-hand description is that it is about “marketing with rather than marketing at stakeholders.” It seeks to partner and collaborate with stakeholders in the creation of value for the company, its customers and other stakeholders. One article in the special edition, “Stakeholder Marketing and the Organizational Field,” says that research demonstrates a strong business case for responding to stakeholder issues efficiently. Among the benefits are improved financial performance, greater stakeholder identification with the firm, and stronger stakeholder support.

The ideas from this special edition, combined with my own research, leave me with two observations on the current state of stakeholder marketing:

Best Practices Not Yet Clear

First, the primary obstacle to the adoption of stakeholder marketing it that it does not lend itself to tactical considerations as easily as green marketing, social media marketing, relationship marketing or any other similar approaches. These other practices often comprise a set of tools and tactical strategies that can captured and shared. So far, stakeholder marketing has not been reduced to a checklist of best practices. These articles, rather, describe an intention. One essay suggests that stakeholder orientation is best represented in a definition of marketing management. As Jenny’s article indicates, stakeholder marketing begins with a set of principles rooted in values, which then inform the culture of the firm, which then informs marketing practice.

Jenny’s article actually goes farthest toward identifying practices that show up in a stakeholder oriented approach to marketing. Among them:

• Approaching promotion and sales from the perspective of educating consumers about their choices rather than persuading them or seeking to control their behavior in favor of the firm’s objectives.
• Engaging customers as partners in creating value for other stakeholders
• Giving away innovations and market intelligence in service of improving the overall well being of the industry or market.

Marketers alone are not organizationally empowered to implement these practices.  More so than other marketing approaches, stakeholder practices must be supported from the top and must be coordinated across functional boundaries throughout the company. This leads us back to the role of marketing management as key in implementing stakeholder marketing.

How is Stakeholder Marketing Different From Stakeholder Engagement?

The second takeaway is that this edition does not yet answer the question “How is stakeholder marketing different from stakeholder engagement?” To answer this will require comparing companies’ stakeholder engagement or Corporate Social Responsibility (CSR) programs with their marketing strategies, taking into account all aspects of the marketing mix: product/service, pricing, distribution/sales, and promotion. Where are the linkages, overlaps or gaps?

Over the last several months I have contacted a number of well-known companies that I perceive to be practicing aspects of stakeholder marketing. Unfortunately, they don’t recognize their actions as such. They are more inclined to say that their CSR programs have elements of customer engagement. Even Timberland, whose stakeholder initiatives have been integrated into aspects of marketing and promotion, declines to call what they do stakeholder marketing.

It may well be that in many companies a stakeholder orientation in marketing will come from gradual encroachment of CSR initiatives.  As long as companies reinforce short-term thinking among marketers through mandates on measurement and quarterly financial goals, marketers will understandably resist embracing stakeholder methods which are often long-term in nature and difficult to measure – even though enhanced financial performance may be the ultimate outcome.

In the following series of articles, I’ve taken some of the topics raised by the authors in this special edition and provided brief summaries of findings that I feel are the most practical for those who manage marketers or have strategic oversight on a firm’s marketing.

Evolution of the Marketing Orientation – Researchers propose that stakeholder orientation is the next evolution in what began as a product orientation and evolved next to a market orientation.

Stakeholder Practices of Triple Bottom Line Firms – What does stakeholder marketing look like? Exemplary Triple Bottom Line firms provide the most insight and examples.

Like it or Not: Dragging Companies into the Stakeholder Perspective — Market events often trigger stakeholder activism that forces companies to shift from stakeholder management to stakeholder engagement.

Social Networking Taps the Creative Potential of the Stakeholder System — Social media marketing technology gives companies ways to manage stakeholder ideas and input.

Copies of the Journal of Public Policy and Marketing are available from the American Marketing Association. Purchase requires a subscription, which for individuals costs $90. The Journal publishes twice a year. Digital versions are available, but only to subscribers. Additional Information is available here .

If you are interested in integrating stakeholder strategies into your own marketing programs or strengthening stakeholder relationships in other ways, please contact us.

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This series of articles is dedicated to my beloved friend Coffee, with whose help they were written.

This article is one in a series of reports about the Spring 2010 Journal of Public Policy and Marketing special edition on Stakeholder Marketing. See an introduction to and a summary of our coverage of this edition here.

By Kathleen Hosfeld

In an article called “The New Marketing Myopia,” authors N. Craig Smith, Minette E. Drumwright, and Mary C. Gentile suggest that a stakeholder perspective is the next step in a progression that began with “product orientation” and evolved to “market orientation.” Building on the insights of Theodore Levitt’s landmark essay “Marketing Myopia,” originally published in 1960 in Harvard Business Review, the authors say that a stakeholders orientation in marketing will help prevent companies from relying too heavily on products or services that may come under regulatory or other scrutiny, or fall out of step with mainstream values.  Another article in the Journal’s special edition, “From Market Orientation to Stakeholder Orientation,” by O.C. Ferrell, Tracy L Gonzalez-Padron, G. Tomas M. Hult, and Isabelle Maignan, further develops the this idea.

A product orientation is internally focused on selling what one can/wants to make. A market orientation shifts to an external assessment of what customers need/want, and what competitors provide. A stakeholder orientation would also be externally focused, including other voices beyond customers and competitors, those advocating for longer-term, ethical, social, environmental or cultural issues.

The New Marketing Myopia article provides examples of food manufacturers and retailers who trade on the short-term desires of children for junk and fast food, and US automakers catering to the desire for gas-guzzling SUVs while disregarding signs of increasing regulatory pressure for more fuel-efficient vehicles. Stakeholders have lobbied both industries for years.  Automakers in particular have paid a price for ignoring stakeholder concerns.

The authors make the point that a market orientation, because it looks outward, has the potential to more easily evolve into a stakeholder perspective. The chief difference is that market orientation tends to ultimately prioritize customers and competitors over other stakeholders, whereas stakeholder orientation seeks to manage to all stakeholder interests simultaneously.

The original “Marketing Myopia” offered inspirational examples of how a market orientation expanded possibilities for long-term organizational evolution – reframing the core business from specific products which may only have a market for a decade or two to a customer need that might be reinterpreted over many decades.  It expanded trains to transportation, or silent films to film and video entertainment.

The authors suggest that stakeholder orientation can help companies “develop foresight regarding the markets of the future.” However, they provide no examples of how companies have thrived by doing so. Rather the stakeholder orientation as described here serves as a constraint – what one should not or cannot do – rather than something that broadens strategic options.  This does an injustice, I believe, to the stakeholder concept, which by way of its expanded systems view and the latent creativity present in the stakeholder system itself should similarly explode strategic options.

I wanted the authors, particularly of the New Marketing Myopia article, to cite examples of the generativity fostered by the stakeholder perspective. In some situations the stakeholder perspective might offer an expanded view of customer needs—from junk food to youth nutrition, or from SUVs to transportation solutions.  In others, it might show how companies and customers can create new benefit for other stakeholders while enhancing value creation for themselves. Or, it may simply mean meeting the same customer need but from within a business model or operational system that has been redesigned to respond to issues of ethics and sustainability.

Significant change is motivated by a compelling future.  I believe there is a compelling business case for adopting a stakeholder orientation in marketing. The authors of both these articles have not made that case.

This article is one in a series of reports about the Spring 2010 Journal of Public Policy and Marketing special edition on Stakeholder Marketing. See an introduction to and a summary of our coverage of this edition here.

By Kathleen Hosfeld

While some companies step into a stakeholder orientation by choice, others find it forced upon them by stakeholder activists.  In “Stakeholder Marketing and the Organizational Field,” by Jay M. Handelman, Peggy H. Cunningham and Maureen A. Bourass, the authors begin with the story of Starbucks’ capitulation to human rights, environmental and nongovernmental organizations’ demands to carry fair trade coffee. Rather than settling the issue, this agreement unleashed further demands from the activist community. As stakeholder dynamics accelerated, Starbucks was forced to move from a position of trying to “manage” stakeholder issues and perceptions to a stance of collaboration.  By building partnerships with activists, the authors say the company achieved a degree of legitimacy that “mitigated” further attacks.

The complexity and rapid evolution of stakeholder demands, as demonstrated in the Starbucks example, can outstrip capacity to respond through what the authors call a “strategic” and what I would call an issues-management approach. As a result companies are forced to recognize their place in a field, which the authors describe as a community of organizations and stakeholders – marketers, consumer activists, government, professional and trade associations, and special interest groups.

In order to respond to stakeholder demands, Starbucks was forced to engage with members of the field, instead of managing them. They had to act as one of several constituents in network of embedded relationships.  The authors describe similar dynamics in the food retail business during a period of high inflation, when the industry fought stakeholder influence, and compared it with the same industry’s response to challenges between 1988 to 2005 (e. coli outbreak, 9/11 and childhood obesity) in which members engaged with stakeholders. As a result of engaging, food retailers profited, and found ways to leverage events or issues into marketing opportunities (such as appeals to patriotism during the aftermath of 9/11).

The authors make the point that as market and economic forces trigger stakeholder activism, conflicts between activists and the companies they target are based in ideology. Conflict occurs when companies stand solely for their own interests, while activists and other external stakeholders advocate for those they see as vulnerable – consumers, environment, social groups, etc.  Parties that begin to see how their own interests are aligned or compatible can bring resolution to issues more efficiently.

The article concludes with recommendations to carefully monitor trigger events that lead to stakeholder activism, to monitor the firm’s own institutional (social, economic and financial) capital relative to stakeholders, and to be conscious of the ideological assumptions that inform the response to stakeholders.

This article is one in a series of reports about the Spring 2010 Journal of Public Policy and Marketing special edition on Stakeholder Marketing. See an introduction to and a summary of our coverage of this edition here.

By Kathleen Hosfeld

Bhaskar Chakravorti, a senior lecturer at Harvard University and a partner of McKinsey & Co. writes in his article “Stakeholder Marketing 2.0” about one contribution that social media marketing can make to stakeholder commitments in marketing.  Marketing with customers rather than at them is one of the paradigm shifts that occur in the movement to a stakeholder perspective.

In a traditional setting, he writes that “the intended targets (customers) did not have the opportunity to interact with decision makers; provide feedback; and influence the product, the experience or the brand in an ongoing manner ….Consumers were downstream participants and suppliers, partners or employees played their respective roles upstream.”

What social media marketing tools allow companies to do is to create manageable forums for interaction – what Chakravorti calls “harnessing distributed intelligence.”  Specific examples of “crowd sourcing” that he cites are Dell’s Idea Storm for external stakeholders and EmployeeStorm for internal stakeholders, Starbucks’ MyStarbucksIdea.com, Mujii Awards and Staples Invention Quest.

Chakravorti describes five characteristics of desirable social network solutions for stakeholders – by which he means primarily customer and employee stakeholders. Chief among them is an emphasis on encouraging diversity of participation, making the decision-making model for the company clear in the design of the system, and preventing the potential for manipulation such as minority coalitions campaigning to create greater weight for their ideas in the system.

Chakravorti notes that research has not yet proven that utilization of these ideas results in better financial performance or enhanced stakeholder marketing outcomes. Given the overwhelming curiosity that business has in social media networking, I doubt that this caveat will deter any company of a size from investing – and perhaps considerably — in designing social media programs like Starbucks’, Dells’ and Staples’.

Noticing the gap between what consumers say and what they do.

Recently the radio industry was rocked by the results of using new listening measuring devices to monitor listener behavior. Called “People Meters,” the devices “listened” to the sound in the room of the person wearing them, and recorded what stations they picked up. Prior to the use of these devices, people kept journals of how many hours a day they listened to particular stations. What people reported was that they listened to National Public Radio stations and classical music stations. What the People Meters revealed however is they were actually tuning into easy listening , oldies and country western stations. This is something like reporting that you read National Geographic, Scientific American or Town and Country magazines, when in fact you’re actually reading People, Cosmopolitan or Seventeen.

The difference between what we know we should do and what we actually do is something that smart marketers have noticed for a long time. It’s a lesson many forgot in the dot.com bubble days when focus groups asked people to evaluate whether or not they would use a certain Web technology in the future.

The Hartmann Group, a Bellevue research firm, has explored the gap between our so-called “new thrift” and the actual purchase behavior of many consumers. We clip coupons for the grocery store, but then go out and buy an iPhone. This phenomenon helps us understand why people report that sustainability is very important to them, but their purchase behavior doesn’t necessarily confirm it.  Read more here.

“The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic.”
— Peter Drucker

By Kathleen Hosfeld

Freeze and wait. That’s been the reaction of many to this time of economic uncertainty. While that works for animals who camouflage themselves in their surroundings until danger has passed, its wisdom only goes so far in the human marketplace.

This strategy assumes that the “danger” will indeed pass, and that things will “get back to normal.” Early signs, however, suggest that the old status quo has been disturbed permanently. How much consumer and corporate behavior will change for good remains to be seen. Many agree, however, that this crisis has changed them in fundamental ways.

In this time those that are thriving are doing something fairly counter-intuitive. They are moving in the direction of their hearts, and doing the things they long to do. As a result, they are stepping out of stagnant eddies into places where new energy and activity are flowing.

I recently watched a short film called Lemonade that tells stories of people in the advertising industry who used their layoffs as a call to action. By unleashing the power of what was meaningful to them, their lives and careers were redirected in important ways.

Around Thanksgiving 2009, I wrote a small blog article titled “Let the Beauty We Love Be What We Do.” It’s a challenge to counteract fear with a move toward what we love.  What do you feel called to do? Now is the time. Take your own career or your organization in a direction you have always longed to go. It may not make sense and yet it’s the right move.

Yesterday’s logic is to focus on the numbers – the numbers you can hit or the numbers you can earn. The new logic is to find the place where you can make a difference, the place that is meaningful to you, and let that energy carry you forward.

No-cost places to start include:

• Watch the Lemonade movie.
• Read the blog article I wrote and spend some time thinking about the beauty that you love.
• Reconsider your value propositions for key stakeholders.  Are they compelling to you? Do they speak to your desire to make a difference in the world?  Use our free value propositions worksheets for this exploration.
• Start a conversation in your workplace around the question: “How do we want to make a difference at this workplace, through this work, or using the assets and resources we have available to us?”

I’m interested to know what changes you decide to make. Let me know.

By Kathleen Hosfeld

By a small miracle, I took part in a recent phone survey conducted on behalf of a local grocery chain that has recently built a new store in West Seattle, where we live. I say it was a small miracle as I’m usually screened out right away because of our work.  For some reason, they didn’t ask, and I didn’t tell.

As a result, I offered what I hoped to be really helpful information for the survey. I was somewhat taken aback when the interviewer called me again minutes later to say that some of my answers “didn’t fit their categories,” and her supervisor wanted me to  please provide responses that fit their categories.

What they wanted to know is who had the 1) best bakery, 2) best produce, 3) lowest prices. The answers that I gave that didn’t fit their categories had to do with sustainability.  One of the things I told the interviewer is that I choose my grocery stores on how easily I can walk to them.   I told her that organic produce was important to me. One of the things I would also tell them – but didn’t have the chance — is that I choose my grocery store on its citizenship, its support of local farmers, and the amount of local produce it offers. None of these criteria fit their survey. Within walking distance of my home, I have three stores that offer great examples of these qualities. They have great bakeries and good produce. One has low prices.

I realize that I am what they call an “outlier” – someone not in the mainstream.  (Or maybe I am in the mainstream but no one is measuring what matters to me, so there’s no data to back this up.)The lesson for companies: listen to the outliers. Give them a chance to give you an answer you don’t expect.  By ignoring the unusual, you may be ignoring the new paradigm that will change your industry forever. You may be ignoring a chance to see where your market may be going before it’s too late.