UNILEVER vs. THE SWAMP: Purpose-Driven Business Comes of Age

In a dramatic step, Unilever is demanding global online giants, including Facebook and Google, change fast or lose critical ad revenue — so is it more than just a reaction to fake news and bad content?

Yesterday’s announcement was both a protest and a plan. CMO Keith Weed declared the company wouldn’t continue to drive a digital supply chain “which is, at times, little better than a swamp in terms of its transparency.” In the wake of continuing press on Russia’s 2016 digital election interference and growing concerns about harmful and divisive content, Unilever’s move is more than a tactical shift — it’s proof the company has figured out that competing on purpose has come of age.

As Unilever’s own global study of 20,000 consumers found last year, 1/3 of consumers are now buying brands based on social and environmental impact. Among hundreds of Unilever brands, including Dove, Hellmann’s, and Ben & Jerry’s, brands that have integrated sustainability into both their purpose and products delivered nearly half the company’s global growth in 2015. Collectively, they are also growing 30% faster than the rest of the business.

The study yielded some important insights for Unilever: “Brands should go beyond traditional focus areas like product performance and affordability. Instead, they must act quickly to prove their social and environmental credentials and show consumers they can be trusted with the future of the planet and communities, as well as their own bottom lines.” This means, to those paying attention, yesterday’s announcement should not have been a surprise.

Fighting for truth in an age of memes

Why do we say competing on purpose has come of age? Because all of the major stakeholders in the business ecosystem are now asking for it. Last month at Davos, British Prime Minister Teresa May called for corporations to address sexual harassment, fake news, hate speech, and other damaging content. And in what many are calling a watershed moment, Blackrock, the World’s Largest Institutional Investor, demanded companies deliver not just a positive financial return but a positive social impact as well on January 12.

Welcome to the Age of Meme Warfare. Think memes are merely funny pictures on the web? They are more. They are ideas — self-replicating ideas. While Twitter and other sites prove the popularity of humorous memes, they’re missing a larger point.

Memes are the units of combination in the domain of inter-subjective thought. This inter-subjective talk is our ultimate source of advantage. Humans conquered the world where other animals could not because of our ability to cooperate flexibly at scale, due entirely to shared fictions. This is how we conquered the world, by creating shared myths that unified our inter-subjective spaces, allowing us to align, unify and scale our networks in ways other species simply can’t.

A thirst for transparency and value

Speed and transparency have long increased the risks of a narrow monetary purpose while raising the benefits of embracing broader good. Going back barely a century, we could say that in the Industrial Revolution people thought you need to pollute the Charles River to be competitive. By 1970 (and the information age), the EPA put you in prison for the exact same thing. Today smart competitors like TOMS Shoes and FIJI Water are leveraging attributes like a positive carbon footprint to drive market share.

As we enter a Fourth Industrial Revolution (the coming together of digital, physical, and biological networks) the rules of leadership remain unchanged. The winners are the first to master the new means of production. In seeking greater transparency and reporting from the networks it advertises on, Unilever is acting as a smart network designer, measuring and managing the tools of the day: digital networks. More important, they are doing so to foster greater trust which is the foundation that all social networks (and businesses) ultimately rest on.

The new revolution demands a new model of value. As we see intangibles comprising record proportions of valuations (87% of the value of the S&P is now intangible vs. 17% in 1975), the value on the relationship capital in one’s business ecosystem is higher than ever. This is a clear sign that we all need to get better at managing social, intellectual, human, and relational capital. Purpose is a central means of doing so, and smart companies are using it to advantage while others fumble.

The stakes are high, and kitschy attempts to overreach on purpose will continue to be greeted by consumer skepticism, just as many of this year’s Super Bowl ads were criticized. This is just a clear indication that brand-washing is not the same as truly purpose-led strategy. But make no mistake, competition includes this dimension of differentiation going forward more than ever. At least one of the world’s biggest accounting firms sees the value with Ernst and Young’s Vallerie Keller creating the Beacon Institute to help organizations to realize the value of purpose. And we have seen innovative mid-market firms like IT provider Candorisembrace purpose to grow at a multiple to the market.

In one of my favorite examples of purpose-lead execution, POM Wonderful and a consumer group successfully sued Coca-Cola over its Minute Maid Blueberry Pomegranate juice that contained 0.3% and 0.2% of the juices respectively, and the product was subsequently withdrawn from the market. That’s a daring example of using purpose to deliver a knock-out punch to the competition.

While Unilever’s move won’t knock out any competitors, it may be the beginning of a new chapter for modern brands. With investors like Blackrock cheering them on, Unilever’s declaration that the networks be more trustworthy is a not just a smart move, but one that offers little risk for the brand along with lots of benefits for the rest of us.

Want to learn more about designing and orchestrating business ecosystems? Get in touch.