How should firms approach competing using their commitment to social and environmental purpose? This was the challenge tackled by Omar Rodríguez-Vilá and Sundar Bharadwaj in their 2017 article published in the Harvard Business Review. (Sundar is a colleague of mine at the University of Georgia). The approach they outline seeks to show a clear way to link competitive advantage and social purpose.
Finding A Social Purpose
There are firms that won’t need the advice that the authors supply. These are those with brands that have social purpose as part of their very core. Firms which were set up with a social purpose at the core the authors call social purpose natives. They don’t need to find a social purpose. It is already there. (I guess there is a second type of firm to whom the advice does not apply, those which do not want a social purpose).
Still, assuming you see the value of a social purpose (for society and hopefully the firm too) then how do you compete on it?
They suggest looking at brand heritage, customer tensions, and product externalities. In essence, the purpose should make sense with the brand’s history, it should matter to the customers, and it should relate to the products. (They give examples, such as Airbnb fighting discrimination in the provision of accommodation).
There will be still many different possible purposes. So you will need to pare down the list to find an effective choice.
An effective social-purpose strategy creates value by strengthening a brand’s key attributes or building new adjacencies [opportunities in related fields].
Rodríguez-Vilá and Bharadwaj, 2017
Competitive Advantage And Social Purpose
It is not cynical to say that the social purpose must generate some benefits for the firm. If there aren’t benefits for the firm it won’t be sustainable. You will go out of business. As such, managers need to find a social purpose that delivers meaningfully on both the social and firm performance sides.
You then have to find a way to communicate this. The example of the Greenworks brand was informative. The firm risked falling between two stools. The managers wanted to associate the product closely with Clorox to gain the perceived benefit of effective cleaning. Yet, they also wanted to gain the consumer perception of good for the environment. This meant distancing from Chlorox. It was hard to get both powerful/effective cleaning and gentle on the environment.
Reaction To Social Purpose
Firms should always recognize that there will be a range of reactions to attempts to link competitive advantage and social purpose. Some will be cynical thinking that the social purpose is just greenwashing. The firm must be able to make a noticeable difference to their cause to counter this belief. On the other hand, some people will hate almost any meaningful social purpose thinking it is firms over-reaching.
It is, therefore, important to be clear on what the aim is, and the results that are being obtained. You need to measure that meaningful results have been achieved. The company should be able to show that the social purpose:
- Generates resources
- Provides choices
- Influences mindsets &
- Improves conditions
Linking competitive advantage and social purpose is about creating win/wins. This is possible but needs serious committment.
For more on purpose see here.
Read: Omar Rodríguez-Vilá and Sundar Bharadwaj (2017) Competing on Social Purpose: Brands that win by tying mission to growth, Harvard Business Review, September-October