People don’t buy what you do, they buy why you do it. The goal is to do business with people who believe what you believe.
Consider Yvon Chouinard, the founder of Patagonia. A renowned climber, Chouinard noticed in the early 1970s that his favorite routes in Yosemite were being damaged by protective pitons hammered into the rock. Even though most of his income was selling pitons, Chouinard evangelized for a different method of securing ropes. Soon, he was doing even better selling the non-destructive climbing “nuts” that would quickly transform his sport.
In the mid 1980s, Chouinard decided to commit one percent of Patagonia sales or ten percent of profits to environmental projects that were often staffed full-time by his own employees. That commitment grew into the 1% for the Planet movement, with more than 1,300 business members worldwide. In the 1990s, when a self-imposed environmental impact study revealed that “100% cotton” was actually 27% formaldehyde and other chemicals, Chouinard invested in processes to make organic cotton perform just as well, helping to transform the industry.
Patagonia hires people and cultivates customers who share Chouinard’s values. A substantial portion of the company Web site is devoted to promoting those values through in-depth essays, and Patagonia reaches a wider audience through innovative campaigns such as its Don’t Buy This Jacket print ad and its Common Threads Initiative, which encourages customers to buy and sell used Patagonia clothing on eBay rather than buying clothing new and then throwing it out.
Reduce, repair, reuse and recycle: Not a conventional marketing message. But it works because that’s what Chouinard truly believes and because Patagonia devotes substantial resources to living its principles and telling its story. That’s why a Fortune cover feature once described Chouinard’s Patagonia as The Coolest Company on the Planet.
And Patagonia is not the only cool company. Lots of brands are learning to compete on the basis of doing better for the world. For example:
Marks & Spencer
Plan A (Because There Is No Plan B) encompasses 17 corporate objectives and 180 commitments -- all undertaken with the goal of making Marks & Spencer the world’s most sustainable major retailer by 2015. It’s all explained in the Plan A performance report, which details progress toward each commitment and outlines plans for the next year. M&S engages customers in the story of Plan A through videos, charity events, a clothing donation program, personal pledges and more -- building customer loyalty through personal awareness and action.
In 2010, Unilever CEO Paul Polman challenged the practice of managing business for short-term shareholder results, saying “If I focus on doing the right thing for the long term to improve the lives of consumers and customers all over the world, the business results will come.” But public opinion had not caught up with Polman's vision. On a survey of customer perceptions, Unilever scored only 32 compared to its actual score of 79 on the ClimateCounts.org sustainability index. Two years later, Unilever's score has increased to 88 to lead all 136 companies on the index. And Unilever is closing the perception gap by producing educational videos, engaging with stakeholders and customers, and putting its Sustainable Living Plan front and center on its Web site.
In addition to energy and water use, greenhouse gases and waste, The Global 100 list of sustainable companies considers criteria such as safety, employee turnover, leadership diversity and executive compensation. These unusual KPIs are intended to improve the quality of the rankings -- for example, a better safety record means less chance of accidental spills. Topping The Global 100 for 2012, Novo Nordisk’s responsibility measures go far beyond even these wide-ranging criteria. Ethical animal testing, fair purchasing, transparent communications, global health promotion and more -- the entire Novo Nordisk story is built on a consistent and comprehensive set of core values.
A recent Harvard Business School study shows how environmental responsibility improves business performance, especially for B2C companies that compete on the basis of brands and reputations. The authors conclude: “A more engaged workforce, a more secure license to operate [because you’re a good neighbor], a more loyal and satisfied customer base, better relationships with stakeholders, greater transparency, a more collaborative community, and a better ability to innovate may all be contributing factors to…superior performance in the long-term.”
That statement could serve as an introduction to Business 101. Consumers want stories that ring true. They’ll come to you when you give them reason to believe what you believe.