Show 94 – Authenticity Gap Report – Leading With Impact
Show 94 was produced in partnership with FleishmanHillard Fishburn to discuss some of the implications to businesses that the latest release of the Authenticity Gap report ‘Leading with Impact’, has highlighted.
Russell Goldsmith was joined at FHF London’s offices by Tabitha Aldrich-Smith, Head of Marketing Communications at OneWeb and Steph Bailey, Managing Director for Corporate and a Senior Partner at FleishmanHillard Fishburn.
It’s over two years since we last chatted to Steph on the podcast to talk about her company’s Authenticity Gap report (on Show 50), so, before we went through some of the top line findings and key trends it highlighted, we started by asking Steph to remind listeners what the report looks at and why it’s so important for organisations to take note of it.
Steph explained that the report is FHF’s way of understanding how to prioritise communications, because one of the biggest challenges we have is that every day something changes. She said that she has often seen in presentations, something about changing expectations or the changing world or ‘it’s never been the same’. However, for Steph, the reality is it is not the same, and for companies and brands, that makes it a very difficult place to navigate, particularly when it comes to their reputation.
The Authenticity Gap is how FHF looks at reputation through nine drivers. The interesting thing for Steph, however, is that quite often a company will only look at their reputation through the perspective of their product. So, they’ll only think about value for money or how they’re innovating or how their customers are reacting to that product. Whereas FHF found that only 51% of company reputation is based on that. A huge 49% is based on the other drivers, which can broadly be defined as societal impact and management behaviours. So, when we see the backlash against CEO pay, for example, or how much a company is paying in tax, or when we see people talking about how companies give back to the community or how they look at the environment, these are all interesting perspectives which influence how a company’s reputation is viewed by the wider consumers.
For the latest report, FHF researched the UK, US, Brazil, China and Germany and polled around 7000 informed consumers, i.e., those who understand and know about a company in a way and level that allows FHF to actually gather information that is relevant and informative.
For Steph, the big shock is how much the environment has gone up the rankings. In their previous report, two years ago, the big thing was data privacy and data security. Whereas now, Steph said that it’s all about the environment, which she puts down to the ‘Attenborough effect’.
Tabitha explained that OneWeb’s mission is to connect everyone everywhere to the Internet. She said that four billion people do not have internet connectivity that’s decent and good enough for modern apps, video content, rich data, and many can’t even connect at all. Yet, all that connectivity that we take for granted is now absolutely fundamental to education, healthcare and economic growth as well as entertainment and the environment. So, where you can’t get connectivity right now, for example, in the middle of the oceans, in the skies, in remote parts of the world, or even closer to home where there are plenty of ‘not spots;, OneWeb is going to provide Internet access with a constellation of 650 satellites that orbit the Earth and provide Internet connectivity from Space.
Tabitha believes you as a company can have a strong social purpose and be a profitable company and that those two are not competing challenges. She said that OneWeb brings benefits to schools, lifesaving telemedicine in remote areas, a cleaner environment even, so, right now that’s where they see the absolute important impact. The company is in scale up mode and so are looking to build trust, to show people what it can do, but they will have to wait until 2021 when their constellation becomes live to actually show people what it is all about.
Tabitha thinks that whether you have a legacy reputation or you are building a new reputation, the principles of building your advocacy with your different stakeholder groups are the same – the purpose to change behaviour and be really consistent with the messaging. She said that OneWeb is a disruptive company in the industries of satellite communications, but one of the things she thinks about is how do they make sure that they don’t use authenticity or reputation as an excuse for sticking to what’s comfortable. She added that sometimes you have to move forward and change the way you talk about things, change what your stand for to adapt to how things are changing in the world. She thinks that it’s that long term thinking from shareholders that’s actually crucial.
Tabitha explained that OneWeb is a $3.4 billion start up and they have a passionate group of investors behind the company that see a long-term future.
In terms of Steph protecting the authenticity gap further down the line, particularly for a business that is starting out now, Steph said that the most important thing is to predict the future. So, in the case of OneWeb, if talking about rockets, she thinks about Space debris and the impact on Earth. So, if we are taken into Space in the future by the likes of Musk and Branson, what will be the future that we see? Will we see, as she envisages, huge satellite dishes coming towards us. Steph’s fear is that people aren’t thinking about it and at the moment it’s not on our radar. But being able to predict the issues of the future and plan for them, not as some kind of spurious exercise, but as a reputation protecting exercise, is the only way that companies are going to exist in the future.
According to Tabitha, Space debris is a critical question for OneWeb and one that they get asked virtually in every piece of communication and conversation that they have. However, she said that their Founder and Chairman, Greg Wyler, said, “On my tombstone, it should say ‘Connected the world,’ not ‘Created orbital debris’” and so at the very beginning, the company started to think about how can they mitigate that? What can they do to make sure that they don’t contribute to the problem of Space junk? They therefore started thinking about environmental management in Space. How do you do that? What does that look like? They therefore launched an initiative called ‘Responsible Space’, which is about making sure that the keep Space clean and leave no trace in Space. They have a plan that involves designing the satellite so that they can be deorbited and are thinking about the whole wider industry of cleaning up Space and the technology you need to make sure that Space can stay clean.
The report states “the rise of movements such as Extinction Rebellion, widespread climate protests and growing public concern about single use plastics and irresponsible energy has meant environmental action is no longer table stakes, it’s business critical” and talks about Greta Thunberg and David Attenborough driving the awareness.
According to the findings, 79% of consumers are concerned about environments issues, and 59% expect companies to take a stand on climate change, which is a huge increase on the previous time that we discussed the report on the podcast.
This meant that protecting the environment ranks as number three in the list of issues that consumers most expect companies to act on.
Steph said that we’ve actually known about this since the 1960s and so, the research is nothing new. However, she said that the optimistic side of her is delighted that companies are now putting this front and centre and that things like impact investors and ESG audits are ensuring that it is a shareholder issue, which she thinks is part of the change that needs to happen. However, she also stills struggles with the fact that big investment is being made into fossil fuel companies and thinks that Generation Z are not prepared to allow us to get away with this and are fed up. Steph thinks that if we want to really ensure that our companies are around in the future, then we need to be a bit more robust in how we look at the environment and don’t do this as a tickbox exercise for our shareholders. We should, instead, do this because we are fundamentally going to change.
Steph thinks that this is a shared responsibility between business, governments and consumers and that it’s naive to think that any one of those groups is going to be able to do this on its own. However, she does think that regulation is the impetus that for many organisations, allows them to actually put investment into that area.
Tabitha agreed and added that the UN’s Sustainable Development Goals are not optional and are a license to operate.
Steph said that behaviours haven’t fundamentally changed. So, whilst there is an expectation on, for example, the aviation sector to somehow clean up its act, people aren’t stopping their experiences. She said that you see the rise in experiential travel and people finding it acceptable to travel to far flung places like India or Malaysia, but not seeing the direct contradiction given the carbon emissions that that creates. However, she thinks that will change, though and that we will see in the next five years, greater awareness will filter down to consumer behaviours.
Plugging the Authenticity Gap
For companies wanting to plug the authenticity gap, Steph said the first thing is not to make broad brush statements. For example, it’s more important than ever that companies don’t get involved in greenwashing because they will be held accountable. She said that social media will allow us to dig up pledges and promises that companies have reneged on. So, the first thing is to ensure that you do your due diligence on anything that you say is matched by your business priorities and how you actually work as a business. The other thing that Steph said is to keep ahead of the times and be future focused. She said that there is a tendency within organisations to look just at the day to day and to fail to see where people expect you to go in the future. What is interesting is that the rigour that you have with your investors, consumers will expect that rigour with their own communications. So, whereas before you could have a very top line view of what was happening, Steph thinks the more you align your communication so that how you’re talking to investors, it’s exactly the same as the way that you’re talking to consumers, she thinks the better a company will be.
A second trend that the report focused on is Data Privacy and Cyber Security.
The report states that “thanks to GDP, the fallout from the Cambridge Analytica scandal and record fines from cyberattacks and data breaches, we are more aware than ever of the importance of managing data correctly”.
According to the findings, 83% of UK consumers said data security and privacy was an important issue, which scored the highest across all issues studied, and only 41% said they are willing to have their data collected, even if it meant forfeiting greater convenience and personalisation. Also, 63% felt that privacy concerns made them less likely to use products and services from companies that use data for their own benefit.
Tabitha said for OneWeb, security and cyber security is embedded in the design of the system, but that it is also their duty to provide a robust and secure internet. She was also interested in our collective responsibility on this issue though. For example, having a cultural embedded way of thinking about things in security, in the office environment, for example, even down to leaving stuff around, which is usually down to human error.
Steph said that many of us have given up our data quite willingly for the gift of free stuff. So, in relinquishing that data, we have relinquished our rights over it. The challenge that we have is now we are starting to understand with the likes of Cambridge Analytica, what the real price of that actually is. So, in a good world, that data is used in order to inform and educate and improve behaviour and decision making. But the fear, Steph think, and the reason why we are seeing it so high within the Authenticity Report, is when it is not used for good, when it is used for either political bias or in order to inform by the companies or organisations about information that should be private, and when it is used against people. She thinks that organisations and governmental departments have a massive responsibility to protect this data and protect the rights of the individuals who’ve unwittingly given it away.
The Activist CEO
The report states that 76% of engaged consumers (those searching for information about a company’s products or services or sharing information, news or articles about a company’s products or services with others) in the UK expect CEOs to take a stand on issues that have an impact on the company’s customers, 72% on products and services and 76% on their employees. It also states that 55% think CEOs should act on issues with a large societal impact, even if they don’t significantly affect their company.
Tabitha thinks that having a purpose driven CEO in Adrián Steckel, and a whole purpose driven leadership team, actually makes her job easier because they know they have a really clear vision and mission and know where they are going. It enthuses people. The employees are excited that and people are drawn to work for the company because they feel that mission and vision as well.
It’s not all doom a gloom for those businesses who don’t have that charismatic activist type CEO. Steph said that the positive thing is that we’re not just expecting to hear from the leadership. We expect to hear from people who actually understand what is happening in the business. So, organisations where you have so many people who are in charge and responsible for different areas and can talk with authority, those are the people we expect to hear from because we know that they are not going to whitewash or give a corporate answer. They are instead going to give us the detail that we expect.
Fashion and clothing didn’t come out well in the report in terms of the environmental issue as well as consumers having consumer concerns around brands manufacturing in less developed countries, abusing workers’ rights and what seems to be a growing pressure for fast fashion to.
Steph’s thought here is that it’s a tricky area because industries such as the fashion industry are hugely dependent on the supply chain and that whereas before, the drivers of fashion were very much cost and fast fashion, we now have the rise of the green consumer, who’s also expecting to understand where that fashion comes from, what are the rights of the individuals who have made that garment and what is the purpose of the organisation that they shop from? She said this goes back to this consumer contradiction where, in her own office, she sees Amazon and ASOS boxes all round their postal area. but at the same time, we see the demand for a more conscientious approach from retailers. She therefore doesn’t see this as an easy win for the fashion industry and thinks it will be a brave company that comes out and finds a solution that is going to impact on the consumer.
Steph said that the food sector is just as challenging because it is one of those industries where particularly consumers feel that they understand it. So, for them, it’s quite a black and white issue – you shouldn’t be pulling down trees in order to make way for certain crops. You should be finding a way to ensure that you can continue to pay the same for the chocolate bar that you’ve always bought. However, she added that once again, they don’t see the contradiction in that. They don’t understand that if we’re going to follow fair trade policies or we’re going to ensure the fair wage, then that will have impact on how much we actually pay for those products. So, it’s a tough one to navigate.
Tabitha feels that the food sector is having to really transition and pivot their business models substantially, particularly around healthy eating and palm oil. She said that there are so many issues to do with food, food sourcing, food scarcity, and that it’s about building a relationship with the consumer.
Steph thinks that in the same way as we nutritional labelling, we will probably see environmental labelling coming in to give those consumers that journey, which at the moment she said is very dark, in terms of what is happening once the farmers have grown that product. What happens next? She thinks the big challenge is that you have some very big players, such as the supermarkets, who are changing the price structure and creating systems which the producers are finding it hard to exist and respond to.
Steph added that the decisions that we’ve seen pushed by supermarket are being pushed by the consumers themselves. So, the consumers want parity in their product choices when there shouldn’t be parity so much as you wouldn’t pay less for a luxury item, so you shouldn’t pay less for an item that is sustainably sourced.
What does good look like?
Tabitha said that OneWeb has a value called ‘Leading with heart’, which she said starts from what do I believe in and do what’s right. She said you can know what’s right by listening and measuring and understanding the kind of world and your stakeholders around you. So, for her, that’s what good looks like – doing what’s right – and having an inspiring vision on the top of that, which helps to galvanize people to do what’s right.
Steph said that it’s very easy for organisations to hide behind the issues we had been discussing and hide behind shared responsibility and not genuinely take a stand, but she thinks that with the next generation, that’s changed, as she thinks that they will vote with their wallet and will move away from organisations that don’t actually have a purpose and don’t actually look at the future.
Using the Authenticity Gap Report
If you download the report from FHFLondon.co.uk, then Steph said that the best way to use the data is to understand what consumers expect of you. One of the benefits, therefore, is that you can look at the nine drivers and actually see where you can have a genuine voice within the debate.