The Four Cornerstones of the Conscious Corporation

U.S. population in 1776: 2,500,000

# of people employed by Wal-Mart in 2008: approx. 2,100,000

200+ Years of Corporate Ascendancy…

Corporations have grown so large that 51 of the world’s largest economies are now businesses, not countries

Corporate power has become so concentrated that sales of the 200 largest corporations represented more than 1/4 of total world economic activity in 2000

…Leading to Scandals and Abuses of Power…

…and Loss of Trust

Globally, 62% of consumers (77% in U.S.) had less trust in big business in early 2009 compared with a year earlier [Edelman’s Trust Barometer]

Lowest in history of Gallup Poll

But There’s a Yang to That Yin

Even as people have grown more wary of corporations, they have also come to want and expect more from themWhy?– Government has historically fallen short (tattered safety nets,

inability to solve complex global problems)– Consumers live closer to business today (strong emotional

connections to brands, deeper awareness of corporate activities)– Empowered public demands payback (acutely aware of disconnect

between what corporations rake in and what they give back)

64%I have become more

interested in corporations’ conduct and brand image over the past few years

74%Businesses bear as much

responsibility as government for driving positive social

change

56%Corporations have become a more important part of our

culture

Source: The Future of the Corporate Brand, Euro RSCG Worldwide

But There’s a Yang to That Yin

Even as people have grown more wary of corporations, they have also come to want and expect more from themWhy?

Government has historically fallen short (tattered safety nets, inability to solve complex global problems)Consumers live closer to business today (strong emotional connections to brands, deeper awareness of corporate activities)The empowered public demands payback (acutely aware of disconnect between what corporations rake in and what they give back)

64%I have become more

interested in corporations’ conduct and brand image over the past few years

74%Businesses bear as much

responsibility as government for driving positive social

change

59%Corporations have become better positioned over the

past 5 years to create positive social change

What once was the view of a leftist fringe is now mainstream thinking

And Corporate Leaders Are Stepping Up to the Plate

MORE POWER MORE RESPONSIBILITY

Comprising nearly 1/3 of total value of U.S. stock market and employing 10MM+ workers, member cos have resources and clout to get things done quickly

Disaster response task force has around- the-clock phone link to Department of Homeland Security and maintains “swat teams” capable of flying into any disaster site within 24 hours, assessing what’s needed, and reporting back to both gov’t and corporate leaders

$25MM to 1st person or organization to come up with a viableway to remove greenhouse gases from atmosphere

In 2008, Bill & Melinda Gates Foundation

dispersed $2.8BN in grant payments to health and development programs

(annual budget of UN World Health

Organization: $4BN)

An Opportunity: Reimagining the Corporation of the Future

Is Imbued with Human Values– Augmenting business skills with vital

social skills, including the ability to listen, communicate, and empathize

Builds Emotional Connections– Creating and maintaining a genuine

brand personality that draws the consumer in—making him or her want to engage with the company

Inspires Trust– Earning trust over time by consistently

meeting obligations and fulfilling promises

This Conscious Corporation of tomorrow will be built on 4 cornerstones…

82%To be successful,

corporations of the future will need to show

a more “human” face (e.g., by caring about people—employees,

customers, suppliers— and taking a more active role in community and

social causes)

Source: The Future of Value, Euro RSCG Worldwide

THE FOUR CORNERSTONES OF THE CONSCIOUS CORPORATION

1. A Purpose Beyond Profit2. A People-Centered Culture3. Champions Sustainability4. Respects Consumers’ Power

Cornerstone #1: A Purpose Beyond Profit

With the correlation between reputation and profit proved, as many as 9 in 10 Fortune 500 companies have dedicated initiatives focused on corporate social responsibilityThe most valuable reputation riches accrue to those companies with a clearly stated—and understood—purpose beyond profit

85%It is important that

companies stand for something other than

profitability

59%Over the past five years,

corporations have become better positioned to create

positive social change

Source: The Future of the Corporate Brand and The Future of Shopping studies, Euro RSCG Worldwide

50%I buy or refuse to buy products based on a

company’s expressed values and political/social activities

In the space of a decade, Google went from a college research project to a publicly traded company with a brand value estimated at $86BN+, all while seeking to live by its credos of “Don’t be evil” and “Work should be challenging, and the challenge should be fun”

Whole Foods became the world’s fastest-growing retailer by building its business on a core philosophy of “Whole Foods. Whole People. Whole Planet.”

Green Mountain Coffee Roasters grew from a single café in 1981 to >7,000 customer accounts in 2008 with a holistic approach to business that is encapsulated in its motto: “Brewing a Better World”

Target has risen to #2 discount retailer in U.S. while donating $3MM+ each week to the communities it serves

Cornerstone #2: A People-Centered Culture

The Conscious Corporation treats people well, including employees, suppliers, and customers

58%I avoid shopping at stores

that don’t treat their employees fairly

49%Companies are not doing

enough in terms of respecting the rights and

needs of employees

60%Big corporations do not

share enough profits with all employees

Source: The Future of the Corporate Brand, Euro RSCG Worldwide

Zappos.com grew from $1.6MM in sales in 2000 to more than $1BN in 2008 (and was just purchased by Amazon for $850MM), achieved through a relentless focus on customer service and a corporate culture centered on 10 core values; living up to the core values is 50% of every performance review

Since its founding in 1978, the Container Store has seen average annual growth of 20%

It has made Fortune’s annual list of “100 Best Companies to Work For” for the past 10 years in a row

At Whole Foods, team cohesion is considered of such importance that teams are empowered to do their own hiring. After a trial period, any new employee that doesn’t receive the approval of at least 2/3 of the team is let go.

U.K.–based Tesco has grown into world’s #3 grocery retailer and #1 online supermarket

In 2009, 52,000+ employees shared in a £126MM payout from Save As You Earn investment program, reaping returns of 45%–88% over 3– 5 years while economy was tanking

Cornerstone #3: Champions Sustainability

73%The most successful and

profitable businesses in the future will be those that practice sustainability

Source: The Future of the Corporate Brand, Euro RSCG Worldwide

50%Companies are not doing

enough in terms of making environmental impact a core factor in corporate decisions

Since 2005, Wal-Mart has sold 145MM+ CFL light bulbs, saving customers $4BN over life of bulbs and eliminating need for 3 coal- fired power plants

Working with suppliers to make products 25% more energy efficient within 3 years; by 2010, every air conditioner sold will be Energy Star rated and all flat- panel TVs will be 30% more energy efficient (energy savings on TVs alone will be enough to power 53,000+single-family homes for a yr.)

As part of Plan A sustainability initiative, Britain’s Marks & Spencer has significantly reduced use of plastic bags by giving customers bags “for life” (if a bag wears out, M&S will replace it for free)

Industry surveys (e.g., Chatsworth FTSE 100 Green Survey and Covalence Ethical Ranking) show Plan A is having a positive effect on how people regard M&S—retaining loyalty of existing customers and winning new business

Burt’s Bees has committed itself to delivering zero waste to landfills and being fully powered by renewable energy by 2020

Cornerstone #4: Respects Consumers’ Power

Source: The Future of the Corporate Brand, Euro RSCG Worldwide

86%I search for customer

reviews online while making purchase decisions

51%I write online product or

retail reviews

82%Businesses need to open a

dialogue with their customers

74%Businesses must be completely open and

transparent

The Conscious Corporation respects consumers’ increased power by working with them in a more egalitarian, collaborative way—and by offering opportunities for them to be part of the business and brand

57%I have made a purchase

decision based on a company’s conduct

76%As a consumer, I have a responsibility to censure unethical companies by avoiding their products

GE has made keeping the public informed a central tenet of its ecomagination initiative; it accomplishes this through an annual ecomagination report, a dedicated website (ecomagination.com), global conferences and events, and advertising

In just 10 years, Innocent Drinks has managed to gain a 72% share of U.K.’s smoothie market; each year, invites 100 customers to attend Annual General Meeting, giving them an inside view of company’s business and a chance to vote on upcoming initiatives

In 2008, despite global downturn, Nike’s net income soared 26%, to $1.9BN, while earnings per share grew 28%

Success is partly attributable to Nike’s ability to foster a sense of connection and community among its customers—e.g., Nikeplus.com (offering info, support, and opportunities to interact on- and offline with fellow enthusiasts)

25-city Nike1 Human Race: biggest one-day running event in history, raised some $3MM for charity

A more conscious approach to business drives growth and

profitability

The Rewards of Reputation

Reputation has been shown to affect how a company is perceived both internally and externally, and to influence such factors as:– Employee retention and hiring– Product and service pricing– Investor preference– Vulnerability (a sterling reputation can serve as a protective

barrier in times of crisis)– Credibility and trust– Relationships with journalists, regulators, and NGOs– Market cap (reputation has been found to account for as

much as 75% of the gap between a company’s book value and market cap, according to Risk Management)

“ecomagination is not meant to revamp the brand at all; it’s about good business sense. It’s not an advertising

ploy or marketing gimmick, GE wants to do this because it is

right, but also we plan to make money while

we do so.”—Jeffery Immelt,

CEO

“Put simply corporate social responsibility helps us to attract shoppers to our stores, recruit and retain the best people, form better partnerships with our suppliers and create greater value for our shareholders.”

—Paul Myners, Chairman, Marks &

Spencer

Early Response to Good for Business

“Good for Business is an excellent guide that shows how transparency and engagement can positively impact a company’s reputation. Readers can immediately employ the lessons revealed in the book.” Steve Fludder, Vice President, ecomagination, GE

“With their ‘Four Cornerstones of the Conscious Corporation’ framework, the authors have laid out a clear and compelling vision of a new, more effective way of doing business. Corporate leaders who hope to own the future will heed their advice.”Justin B. Smith, President, The Atlantic

“Good for Business blazes a trail for corporate executives who want to succeed in the new economy. The authors offer a big-picture vision about the need for a more holistic and ‘humanized’ view of the corporation, and they provide specific suggestions on how to adapt to a world of empowered consumers, heightened transparency, and changed requirements for leaders. A must read for everyone in the C-suite and all who aspire to get there!”

Dan Esty, Yale University and author of Green to Gold

“In the emerging world of extreme transparency, customers and employees will trust companies that are truly making a difference in their lives. Being good will trump looking good. This book clearly outlines winning brand values and the behaviors that lead to that most precious bond: trust.”

Stephen Quinn, Executive Vice President and Chief Marketing Officer, Wal-Mart

Click here to order Good for Business on Amazon

ALSO BY THE AUTHORS

39

Consumed: Rethinking Business in the Era of Mindful Spending

Based on the Euro RSCG Worldwide New Consumer study and written by two executives within Havas

Available in Bookstores July 2010

Andrew Benett, CEO, Arnold Worldwide and CSO, Havas Worldwide

Ann O’Reilly, Content Director, Knowledge Exchange, Euro RSCG Worldwide

Advance Praise for Consumed

“People are getting serious about making smarter, more mindful choices and are looking for companies that give them what they want. Consumed acts as a navigational aid, empowering business leaders to anticipate and meet these newly emerging needs.”

—Becky Saeger, EVP and CMO, Charles Schwab Corporation

“Benett and O’Reilly offer insight and guidance about how best to communicate with and build relationships with today’s more thoughtful consumer. It is essential reading for anyone seeking to win the in the post- recession marketplace.”

—Mike O’Driscoll, Managing Director, Jaguar Cars

Advance Praise for Consumed

“This is an important book for executives because the

world is clearly changing. Business

leaders need to understand the trends

highlighted in Consumed and think deeply about the

implications for their brand.”

—Tim Calkins, author of Breakthrough Marketing Plans

“A permanent shift has taken place among consumers. They are far more engaged in every aspect of marketing and manufacturing, and brands that want to win and retain their loyalty will need to listen better, react faster, and be more nimble in everything they do. This book offers a fresh and vital perspective on those actions that will be most essential to future growth.”

—Christian McMahan, CMO, Heineken USA

Click here to order Consumed: Rethinking Business in the Era of Mindful Spending on Amazon

Media Inquiries

For inquiries regarding Euro RSCG Worldwide’s New Consumer study, please contact:

Eric Edge Global Chief Communications Officer Euro RSCG Worldwide T +1 312.640.4747 (Chicago) T +1 212.886.2012 (New York) E eric.edge@eurorscg.com

For inquiries regarding Good for Business or Consumed, please contact:

Eric Robertson SVP, Global Corporate Communications Director Arnold Worldwide 110 Fifth Avenue, 9th Floor New York, NY 10011 (ph) 212-463-1201 (m) 646-465-3793 e-mail: erobertson@arn.com

Also Available on SlideShare

Click here to access The New Consumer in the Era of Mindful Spending on SlideShare.net

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