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Archives for 2012

Un-Stalling CSR with the Value Creation Framework | Part 2/2

(This is part two of this article, inspired in part by Forbes’ Why has Corporate Social Responsibility stalled? and looking at EABIS’ Value Creation Network (PDF). Part one can be read here).

Restarting CSR

The key to keeping the CSR agenda going lies in the SME businesses.  This is both acknowledged and discarded by the Forbes article:

Paul Klein: The vast majority of economic value is created by small and medium-sized businesses that don’t have the knowledge or resources to operationalize CSR. Is there an opportunity to engage small and medium enterprises (SMEs) in CSR and deliver social results on a scale that dwarfs what we’re seeing now?

Aron Cramer: I think that SMEs have a huge role to play …  Although SMEs don’t always have the resources to formalize sustainability, every business has employees, and thinking about how they are treated is crucially important. Every SME depends on having access to water and energy that is sustainable and clean so this is an issue of importance everywhere and also a big opportunity.

If CSR is ever going to have any impact, it has to engage SMEs: in reality, the big business version which is talked about is simply the hothouse development of what has to become business norms no matter what size the business. [Read more…] about Un-Stalling CSR with the Value Creation Framework | Part 2/2

Board of Directors Roles–Corporate Culture

My last post reviewed the major stakeholder groups who have an interest in good corporate governance. The focus of this post is that corporate governance starts with the Board of Directors.

Simply put, the Board reports to the company’s owners (stockholders) and its essential responsibilities include the duty to:

  • Provide the “tone at the top” on values and the corporate culture
  • Establish corporate strategy
  • Hire and compensate the senior staff, the C-Suite
  • Satisfy stockholder financial expectations
  • Ensure full compliance with legal and regulatory requirements.

A new responsibility for Boards in the US and UK is balancing stockholder interest with those of other stakeholder groups. This will be the subject of a future post.

Since my post Good Governance Needs an Ethical Culture (July 21, 2008), the world was in the early stages of the Economic Crisis of 2007/2008. Seems it’s time to look at how the Board influences corporate culture.

A corporate culture is the written and unwritten rules of how things get done within an organization. The written aspect is a document or the published statements of the Board or C-Level managers. For example, on Lockheed Martin’s website Culture page is this statement:

“Shaping a corporate culture is anything but passive. It’s a hands-on endeavor that requires the active participation of everyone who touches it, and everyone who is touched by it. Lockheed Martin is proud to support a culture in which all employees are respected and empowered to do the right thing. Every day, in every situation.”

This is reinforced by “tone from the top” provided by the company’s Chairman of the Board and C-Level Managers.  

Informal corporate cultures are determined by the grapevine, water cooler and hallway discussions, and result in unfocused, changing and ad-hoc behavior all focused on the short term. This short-termism preceded the bankruptcies of the Enron Era and the Financial crisis of 2007/2008. The paper, “Short-Termism, the Financial Crisis, and Corporate Governance” indicates:

To the extent that a firm’s culture is focused on employee self-interest, a greater likelihood exists that when employee self-interest and the long-term health of the firm diverge, the long-term health of the firm will be sacrificed to save employee self-interest.

Boards and C-Levels need to set the “tone at the top” regarding the longer term interests of the company and to continually reinforce this in all employee communications opportunities.  

In addition to this important action, the Board should insist on implementation of the following actions:

  • TAKE ACTION

    Publish corporate culture guides for employees and leaders

  • TRAINING

    Provide short online courses

  • CONTINUING COMMUNICATIONS

    Throughout the year distribute to all locations communication materials in multiple languages that deal with culture matters. These materials help maintain an awareness of current issues, familiarize employees with business conduct expectations, and promote understanding of business values and philosophy.

  • MEASUREMENT

    As Lord Kelvin said, “To measure is to know.” At a minimum, the company should issue an annual employee culture survey and have results reviewed by the Board.

Companies whose Boards champion an effective corporate culture are awarded with superior financial performance. Just look at the continuing research of  GreatPlaceToWork consultants who give strong attention to culture assessments in their awarding Top Company honors.. The top companies outperform major stock market indices.

Licensing BMW Brand Equity Brings the High-Performance Promise to Baby Products

When there is equity in a brand, there is a risky temptation to over-extend the brand and ultimately, devalue it in consumers’ minds. Will that happen to BMW as it pursues a wide range of brand licensing opportunities? It can be hoped that as long as the brand is licensed consistently and the BMW licensing team exercises restraint, the BMW brand promise won’t be tarnished. In other words, the brand that promises high performance must be licensed to products that deliver on that promise.

This month, a licensing deal between BMW and Maclaren has been discussed among retail and branding experts across the web with everyone speculating on how the BMW brand will be perceived when it is seen on Maclaren baby strollers. Of course, BMW isn’t the first automotive brand to license its name and logo for baby strollers. If you walk into a baby gear store in the United States, you’ll find a number of JEEP strollers. It’s a great match, particularly for fathers who prefer a more gender-neutral stroller to push their babies.

Furthermore, Maclaren strollers are priced significantly higher than many other strollers, so the high-end BMW brand is likely to match the Maclaren target audience, too. The hope, of course, is that BMW customers who need strollers will choose the BMW Buggy from Maclaren and that Maclaren stroller customers will become more interested in the BMW brand and consider it for their future automotive purchases. The licensing agreement seems like a win-win for both brands.

bmw buggy maclaren stroller

So far, BMW appears to be exercising the necessary restraint in its licensing deals. Brand Channel reports that the BMW team will not license its brand to cigarette or food products and video games that would feature BMW vehicles exploding or being destroyed in any way won’t debut anytime soon. Licensing deals that have been signed to date include:

  • Aspex eyewear featuring, “distinct contouring of the frames as reflective of BMW’s dynamic automotive artistry.”
  • Group III luggage featuring, “exceptional quality and superior performance – two hallmarks of the BMW brand. Created to compliment the enterprising lifestyle of BMW owners, the branded luggage will be manufactured with stylish and distinctive hardware.”
  • Ball Watch featuring expert craftsmanship that, “incorporates various technical feats.”

What do you think of the BMW brand licensing strategy?

Image: BMW and Maclaren

Setting The Benchmark: Online Recruiting at its Best

With the right programmers, top designers and expert copywriters, your corporate website can be made to do just about anything. That’s a great opportunity, of course, but the freedom to create can be overwhelming at times and it’s no wonder that so many top recruiters end up playing things safe. Usually a job description and an application form does bring in applications, but if you want to target the top cut of graduates you need to start thinking creatively. If you’re stuck for ideas, why not take a look at some of the industry leaders when it comes to online recruiting?

Red Bull Racing Internships

Though it’s currently offline, the flashiest (if you’ll excuse the pun) recruitment site I’ve seen directed potential applicants towards an interactive ‘challenge’, including memory tests and spatial reasoning exercises. Only then are applicants allowed to see the application form. It’s a great way of pulling in hits, but also works as a sort of screening process.

Marks and Spencer

Another popular graduate recruiter is right on the mark with a Flash-based site which is simple and designed for the user. The smartphone-like dashboard is a great way of getting users to the right information with the minimum of fuss. It’s creative without being overly ornate.

Nike Design

You’d expect an site looking for product design interns to be top-class and Nike’s is. Putting function over form, Nike offers interns a chance to link a resume, portfolio and a website and allows the applicants creativity to shine. Plus, it allows a link to Facebook which allows recruiters an all-telling look at their applicants pages!

Random House Publishing

Publishing is incredibly in demand from graduates looking for creative roles and, as such, Random House (amongst other publishers) use Facebook almost exclusively for recruiting interns. A post asking for CVs a week before an internship starts will guarantee a committed intern who will have plenty to do!

Ernst and Young

When something a little more formal is required, E&Y are leading the market. It’s on brand and easily identifiable, but most importantly the site layout is incredibly efficient. This sort of model is ideal for large recruiters who offer lots of roles year on year and can easily be tweaked and updated when the branding changes.

Of course, these recruiters are all big brands, but there’s no reason this sort of web estate can’t be generated by smaller recruiters. A well modelled recruitment site is a valuable asset and can stay with you for a long time so it’s worth developing well and looking after.

54% of the World’s Top Brands Are on Instagram

More than half of the world’s top brands are now active on Instagram according to a new report from SimplyMeasured. Those brands are active and attracting followers, too. 20% of brands on Instagram have more than 10,000 followers, and 18% have more than 20,000 followers. However, just eight brands on Instagram have more than 100,000 followers. Those eight brands are responsible for 92% of the audience engagement.

Instagram launched as a simple photo-sharing app just two years ago in October 2010. At the beginning of 2012, 15 million people used Instagram. Fast forward nine months and Instagram had grown to 100 million users and shows no signs of slowing down.

Suffice it to say, Instagram is very alluring to brands that want to connect with those 100 million users. It’s not surprising that between August 1, 2012 and November 1, 2012, the Instagram adoption rate among the world’s top brands jumped by 35%. That’s higher than the Pinterest adoption rate during the same time period of 24%, and significantly higher than the 5% increase Google+ experienced.

The eight brands leading the way on Instagram are MTV, Starbucks, Burberry, Nike, Gucci, Tiffany & Co., Audi, and GE. The most active category on Instagram is apparel, and business-to-consumer brands are more active than business-to-business brands overall. You can see some statistics in the image below about these eight brands and their Instagram account details recorded during the 3-month period of August, September, and October 2012.

Click the image to view it at full size.

instagram top brand account details

One of the most interesting things learned from the SimplyMeasured report is how significantly Facebook drives engagement for Instagram photos. Of course, since Facebook purchased Instagram, this is a relationship that will only grow. According to the report, out of 2,533 photos that brands shared on Instagram during the 3-month study period, 60% were shared to Twitter and 93% were shared to Facebook.

Nike stands out as a brand that has had great success with Instagram. A mixture of compelling photos has led to great engagement rates, including:

  • 57.3 tweets per photo
  • 612.3 Facebook likes per photo
  • 1.5 Facebook comments per photo
  • 0.9 Facebook shares per photo

You can read the full Instagram Brand Adoption Study report from SimplyMeasured below, which tracked the performance of the brands on Instagram from Interbrand’s list of the top 100 brands.
 

Marketing, Corporate Lifecycles and Investor Relations

In marketing there is a well-known graph known as the Product Lifecycle Curve, which I’ve set out below.

The graph illustrates how successful products are first brought to market and purchased by early adopters, then go through phases of rapid takeoff and swift growth. Once the product has achieved wide spread acceptance, the growth begins to slows down, eventually reaching a period of maturity. Mature products run their course and inevitably decline sets in.

The speed at which all of this occurs depends in large part on the nature of the industry and the aggressiveness of competitors. Tech gadgets, for example, have much shorter product life cycles than say, breakfast cereals. The exact shape of the curve and the length of maturity will also differ, but the general shape and sequence of the curve holds true for many products.

The interesting thing about the product lifecycle is that it has applicability to a number of other things, corporate lifecycles included. Stop thinking about products and substitute corporate development and the graph doesn’t change. Where this is of interest to investor relations professionals is in the type of investors each phase of the cycle attracts. Set out below is the same graph with investor segments sketched in.

One of the interesting things about the graph is that as you move on the life cycle line from left to right, the price/earnings ratio that investors are willing to pay for a stock declines. This is because investors perceive that the rate at which future earnings will accrue to the company is slowing and they are therefore willing to pay less for that future stream of lessened earnings. Growth investors are well known for their penchant of “paying up” for future growth, while value investors are almost religious about not over paying for a stock.

Companies often struggle with this, particularly at the inflection points between stages. Company executives will say, “We’re a growth company – look at our past record. The market is undervaluing us.” Investors, on the other hand, will look forward and say, “Nope, you’re a mature company. Your big gains are over and we’re not going to pay a premium for a company that is going to grow at the rate of the market.” Many an antagonistic relationship has been fostered based on this differing view of the world.

Understanding where your company stands on the lifecycle graph can help an investor relations person understand how the street may be viewing you.