Thursday, February 9, 2012

Brands with ideals outperform others

Millward Browns latest newsletter made me happy with this piece of news:

“The most successful brands and businesses in the world are built around something other than just making profit. They are built around ideals.

Here are bits and pieces from the paper:

The evidence is in Jim Stengel’s new book, Grow: How Ideals Power Growth and Profit at the World’s Greatest Companies. With the help of Millward Brown, Jim identified the 50 brands that ranked highest on both consumer bonding and value creation over the past decade.” In this work, Millward Brown observed that the best businesses are ideals-driven.

“A brand ideal is a higher purpose of a brand or organization, which goes beyond the product or service they sell. Jim explains it this way: “The ideal is the brand’s inspirational reason for being. It explains why the brand exists and the impact it seeks to make in the world. A brand ideal actively aims to improve the quality of people’s lives. It creates a meaningful goal for the brand—a goal that aligns employees and the organization to better serve customers. ” 

For example: Zappos is in the business of delivering happiness. Pampers does not just sell diapers; it cares for the happy, healthy development of babies around the world. IBM’s purpose is to make a smarter planet. Google exists to organize and give access to the information of the world, and Discovery Channel’s ideal is to satisfy curiosity.

A brand ideal is not a mission statement. Mission statements tend to be narrow, business oriented statements such as “Be the leader in customer satisfaction” or “Be the most innovative company.” Mission statements tend to be self-serving and therefore limiting. Ideals, being outward focused, extend beyond the company’s financial interests. Red Bull’s ideal is to uplift mind and body; it exists to energize the world. “To be the #1 energy drink” is probably a mission for the company, yet it is seen as an outcome, not its raison d’être.
The ideal is the brand’s inspirational reason for being. It explains why the brand exists and the impact it seeks to make in the world.

More examples: Method, the household cleaning company, was built on the ideal of inspiring a home revolution to create happy, healthy homes. Every aspect of each product is inspired by the ideal: the non-toxicity, the natural scents, the beautiful ”cosmetic like” packaging. Apple offers the best experience through beauty and simplicity. Chipotle Mexican Grill, another one of our top 50, fulfils its ideal of bringing integrity and taste back to food by inviting patrons to create their own custom dishes using fresh, natural, and locally sourced ingredients.

The best companies align their organizations and culture behind their ideals. By being purposeful (beyond making money and growing market share), they provide a higher meaning to all employees. The ideal provides clarity and intentionality. More importantly, these companies develop systems and processes to stay true to their ideals.

For example, Red Bull has set unique hiring guidelines. They don’t put a priority on hiring people with beverage industry backgrounds; instead they focus on athletes, DJs, and former Red Bull student ambassadors—people who believe in and live the ideal. Even the workplace is designed to be true to the ideal. For example, Red Bull’s London headquarters has skateboard ramps and slides from floor to floor!

Zappos has set up processes that allow employees to be true to the ideal of delivering happiness. Employees do not have quotas or time goals for customer calls. Nor do they adhere to scripts. They are empowered to help customers in need, whatever it takes. There are stories of employees sending flowers to customers in distress and helping customers order pizza in the middle of the night.

The ideal is a core principle inherent in a brand, something that emerges from a company’s DNA. Though such a high-minded concept may seem impractical or lofty, we also have proof that ideals-driven businesses deliver higher performance. We have consumer research data as well as financial data that verifies the power of ideals. Research recently conducted by Millward Brown found that, when asked to name brands that were based on ideals, people mentioned the brands in the Stengel 50 more than other brands.

We also have proof that ideals-driven businesses deliver higher performance. As shown in the chart below, Stengel’s top 50 brands outperformed the market over the past 10 years. An investment in the Stengel 50 would have been 400 percent more profitable than an investment in the S&P 500.

Learn more about the study: Brown: Point of View Ideals: The New Engine of Business Growth 

More on the topic, Simon Sinek´s TED talk about The Golden Circle:

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