In this guest post, Bronwyn van der Merwe, General Manager of Fjord Asia Pacific, part of Accenture Interactive, discusses the three key considerations businesses must make when it comes to exploring definitions of growth and how they can achieve meaningful change to secure longevity….
People are putting organisations under pressure to define their successes in more holistic and life-enhancing ways than financial growth alone. In response, organisations need to define new success metrics and we’ll see a switch in focus from digital, which has been a primary focus for the last two decades, to purpose.
Successful business growth has traditionally been defined by financial metrics such as equity, capital and revenue. Whilst there’s no doubting these metrics paint a picture of a business’s financial growth and performance, Accenture’s first trend from the Fjord Trends 2020 Report suggests they must no longer be the only metrics companies use to understand success and longevity.
Unsettled by several factors including changing societal values, economic and political instability, and concerns about climate change, people are urging organisations to reconsider the mantra of the last 50-60 years; that companies are only there to deliver profit for shareholders.
One of the central challenges for businesses is redefining what constitutes success. The vitality of companies depends to a very large extent on their ability to create profits in order to be able to make the organisation sustainable and vibrant. However, we are going to see new types of value growing, based on values, as people begin to talk about learning, happiness, longevity, good health and environment as being things which organisations should also focus on.
Rather than viewing this as a tug of war between profit versus people or the environment, organisations must come to see it as an integral component to the development of business strategy.
Here are three key considerations businesses must make when it comes to exploring definitions of growth and how they can achieve meaningful change to secure longevity:
People before profit
People are integral for businesses – both as consumers and employees. People are fuelling demand for change at a time when the wealth gap between the highest income population and everyone else is the widest it’s been since the 1930s. The calls for change are coming from inside and outside the house – investors, employees and customers are increasingly making their voices heard on topics such as equality, sustainability and diversity.
For example, research from Adobe’s Diversity in Advertising survey demonstrated 62 per cent of Australians believe diversity in advertising is important, with one in five having boycotted a brand due a lack of diversity.
The good news is that those with the influence to make a change are listening. We have seen this in action with Coles and Woolworths banning single-use plastic bags. The Iconic, one of Australia’s largest online fashion retailers has a ‘Considered’ line of clothing made using materials or processes that are better for humans, animals or the environment. Activists such as Greta Thunberg are influencing entire generations to adjust their way of life who, in turn, are putting pressure on businesses and governments to do the same.
Now more than ever, consumers are speaking with their wallets and engaging with brands that align with their personal values. This results in increased competition, which gives businesses no choice but to shift their offerings to align with customer expectations, or risk being left behind.
From capitalism to conscious consumerism
Businesses and brands are seeing the impact conscious consumerism is having on their bottom line and their reputation. The Fjord Trends 2020 report reveals that in Sweden, flight shaming has resulted in an 8 per cent fall in airport passengers and 2 million extra train journeys. They’ve even invented worlds for flight shaming, ‘flygskam’, and train bragging, ‘tagskryt’.
Flexitarianism is on the rise. Flexitarians are carnivores who are making active choices to reduce their meat intake. A 2019 survey reported that in addition to an approximate 10 per cent of vegans/vegetarians, 12 per cent of Australians identify as ‘meat-reducers’ and 20 per cent as ‘flexitarians’.
In the fashion industry, not for profit organisation Baptist World Aid releases an annual Ethical Fashion Report ranking the country’s most popular fashion brands on their environmental management and worker policy, in an effort to help consumers make better decisions on where they spend their money.
Organisations must also do more than have good environmental practices in place. Social issues such as gender equality, diversity and LGBTI+ inclusivity are becoming substantially more important considerations from a growth perspective. This holds true for both consumers and employees – when it comes to deciding where to spend their money and choosing where to work.
Out with the old and in with the new
Moving towards broader definitions of growth will naturally lead to new thinking in measurements and metrics, and new economic models that challenge the age-old approach to business.
These changing measurements are not only observed in the private sector but in governments too. New Zealand’s Wellbeing Budget recognises that while economic growth is important, it does not guarantee improvements to a nation’s wellbeing and living standards. The Wellbeing Budget instead redefines success for the nation to incorporate the health of natural resources, people and communities.
Taking the next step
Remaining successful in a world where ordinary people are driving tangible change in business operations will no doubt be challenging for organisations constrained by traditional definitions of growth. While reaching revenue targets and expanding market share will remain integral measures of financial performance, these cannot be the only metrics organisations use to quantify success.
We are now in a time where organisations have no choice but to look beyond the balance sheet and listen to what their customers, employees and shareholders are saying. This is indeed the clarion call for change – only then can they truly expect to flourish.