Jim Stengel, the author of Grow and former global marketing officer for P&G, is a leading proponent of the need for companies to have a higher calling than simply making money if they want to inspire employees and receive enduring loyalty from customers. Stengel talked to TRUE about how his theory on ideals-driven business strategy is holding up since his groundbreaking book was published in 2011. [Another Stengel video is on the home page.]
TRUE: Would Grow’s messages still be valid if published today?
Stengel: Absolutely. I began writing Grow five years ago and I finished it about two-and-a-half years ago. It’s based on a 10-year study of brands that have grown with the consumer and grown financially. Now, a few years later, I think the themes in that book are even more resonant. I have yet to find an ideals-driven business that did not result in higher profits, higher growth, and higher employee engagement—and I have looked.
From the Grow research, conducted with a team at Millward Brown, we picked 50 brands from a database of 50,000 and created the Stengel 50. [The main thing that] characterized companies that made it onto the Stengel 50 was performance over time. We looked at 2001 through 2011, so the recession was in there. And that group of 50 brands outperformed the S&P 500 by about 400 percent in that decade. So then we wanted to know what else these enterprises had in common. That’s when we saw it: They all seemed to have something different going on in the culture. You can call it a higher ideal or a higher mission or a higher purpose. I don’t care what language you use, but that was No. 1. Their culture really revolved around the ideal. They rewarded people’s behavior against the ideal. HR wasn’t over here; it was integrated with the ideal. If the ideal at Discovery Communications was curiosity, which it was, then that’s what they looked for in employees at all levels. These companies communicated all the time about the ideal, inside and outside the companies, in everything they did—their office designs, their emails, their meetings, their advertising and other communications, of course. The companies also thought about the product experience through the lens of the ideal. Again, we didn’t have R&D and Engineering over here, and the ideals people over here. They were all operating against a similar goal. Finally, even their evaluation systems focused on the ideal. Yes, they measured share and cash and earnings, but they also measured their progress against the ideal.
TRUE: Would the same 50 make it on the list today?
Stengel: Looking at the list now, since the book was published, I would say 85 percent to 90 percent of the companies would still be there. A few would have dropped off, but you’ll find that on any index. The ones that have dropped off did lose their focus. They lost their energy. They lost their conviction around their higher ideal. Typically, they were in tech—obviously a challenging space, so fast-moving, so much disruption happening all the time. I’m thinking here of the misses like Blackberry and HP, which simply lost their focus. At the same time, you have winners like Samsung, Apple and Google. Many companies go for decades with the same ideal. The real challenge is figuring out how to keep innovating against that. You have to keep telling new stories that convey the ideal. As time goes, the real criteria for success will be those that can constantly innovate against the ideal.
Another challenge is leading this kind of organization. It’s a different leadership style. There needs to be more inspiration involved, more communication, more barrier-busting. There’s more air cover for employees trying things. There’s also a real acceptance of failure, not just giving it lip service. Look at Discovery Communication. They want people to always be trying stuff that’s never been tried before, and you can’t do that without accepting some failure.
TRUE: What does it mean to operate as an ideals-driven business today? Does an idea have to be connected to the category the brand is in?
Stengel: I have found that ideals-driven brands operate at a higher energy level, a higher sense of mission, a higher sense of purpose, a higher ideal. They’re seeking to impact the world in some way that’s natural for their category, their history, their employees, and that just results in some incredible work that makes a difference, grows the brand, and by the way, attracts amazing talent
For an ideal to be embraced by employees, customers and consumers, it has to be believable, but it’s usually not directly related to the function of the brand. The ideal is usually reaching much higher than that. In that sense, it’s not connected to the category. The big ideals, the big missions, the big purposes, are much higher than where the brand has usually played historically. But it has to make sense; it has to be believable. I’ll give you a few examples.
If you look at Google or Apple, they’re used all the time as examples, right? Their higher ideal is way beyond their categories. I love what Apple’s doing recently. I mean, this idea of “Better.” “We just want to make things better,” and the latest video they released I think is very emotional, very powerful, about their impact on the world.
Look at Johnny Walker, big-selling whiskey. What’s their purpose? Well, it’s about the need for progress, moving forward. When Greece was at its worse during the debt crisis, the company did locally inspired stories about just that—the need to keep moving, for progress. That’s an extreme example but it really works to connect consumers with a company. That brand is high-growth and it has been high-growth for many, many years.
TRUE: Is ideals-driven management usually a top-down phenomenon?
Stengel: I’ve found that ideals-driven philosophy or ideals-driven strategy comes from everywhere. Sometimes it comes from below in the company, sometimes in the middle, sometimes the CEO. At Unilever, clearly Paul Polman believes in the purpose of Unilever. He studied the story of Lord Lever and how it all began. He is leading that from the top, setting bold goals. But when I was at P&G, Pampers had a tremendous turnaround, tripled its size over 10 years, and it started in the middle of the organization with people who were just tired of the way we were doing business and tired of losing. So it really can happen anywhere, but what has to happen wherever it starts, it has to have the support of the CEO. The senior leadership has to believe in it and show it through their actions, in touch times and in good times.
TRUE: How does social media fit in with this management style?
Stengel: With everything that’s going on in society, social media, and the rapid pace at which information is shared, this is making an ideals-driven philosophy even more compelling. It magnifies the great things companies are doing—great news travels more quickly, and when you make mistakes, you have a chance to deal with them more quickly. For those companies whose behavior is authentic, who are trying to do the right thing, who are truly ideals-driven, social media is a huge, huge asset, and the best ones are taking advantage of it.
Look at Tesla, why are they so hot now? A lot of that’s social media. Have they done a lot of traditional advertising? No, none. It’s just that they’ve created a tremendous amount of buzz and people just can’t stop talking about it.
TRUE: If you were writing Grow today, would you add anything or take a different approach on anything?
Stengel: If I were rewriting my book today, I would look at a few things a bit differently. One theme that I don’t think I explored as well as I could have is the whole area of succession planning. Many of these great brands were founded by inspirational leaders, and then the leader leaves and the change doesn’t happen as well as it could. There are all kinds of books about succession planning and great theoretical models, but something isn’t quite working right. When I work with clients, we really think about not just is a leader going to be good in all the natural stuff—management, planning, speaking, communication—but we’re asking is that person going to believe in the ideal and carry it forward. That’s not a question that really gets asked, but it should.