Inspired INC.: Become a Company the World Will Get Behind

Chapter 1

Profit is Good.

Profit-as-Purpose is Not.

Signs that companies just aren’t getting it

In a four-week window not so long ago, we saw an airline forcibly drag a paying customer off an aircraft, a soft-drinks company suggest its product is the answer to racial tensions, and a superstar ride-hailing app dragged down by an internal culture rife with sexual harassment – all in full view of anyone with an internet connection.

How did these companies respond? United took a full 24 hours to make a statement, and another week to apologize. A few months later they settled a lawsuit that legal experts estimate to be in the millions. Pepsi pulled its controversial advertisement and apologized to their celebrity endorser for putting her in such an awkward position. The message to everyone else they offended wasn’t quite so generous: Clearly, we missed the mark and apologize. As for Uber, an employee uprising and investor revolt eventually took down the founding chief executive, while a board member continued making sexist remarks to staff at the same time as he was making the announcement about the leadership change.

What were all these executives thinking when these events unfolded? It’s impossible to say without being there, but it sure looks like they thought they had a lot more time and public goodwill to manage the situation than they actually did. Or perhaps they were assuming that the approaches that worked well in the past will still work today.

These examples aren’t limited to a few bad decisions at United Airlines, Pepsi, or Uber. They’re also not limited to American companies. They are symptoms of a bigger issue:

Companies have been so focused on profit, that they’ve completely disconnected from the real world.

Well, our luck in the corporate sector has finally run out. Everyone knows everything now. Values conflicts are no longer tolerated, and profit without meaningful purpose will only lead to similar and more frequent mistakes. With so many well-educated and bright people leading businesses today, you might ask: what is going on?

We are in an era of uninspired companies

A business that makes nothing but money is a poor business. – Henry Ford

In today’s dollars, Henry Ford’s net worth would be north of US$200 billion. It’s a safe bet he wasn’t saying profit is bad.

Henry Ford made things that mattered to people. When Ford Motor was founded in 1903, cars were little more than playthings of the ultra-rich. But Ford believed cars could connect people to opportunity in a nation spread across vast distances. He saw a world in which the average worker would own a car. Turning vision into reality meant revolutionizing the manufacturing process. It also meant rethinking work life. By 1914, Ford factory workers were paid twice as much as their counterparts at other companies. The result? They could afford the product they made, and by 1923, half of the world’s autos were Ford Model Ts.¹

That’s pretty inspiring stuff and it changed all our lives. So why was Ford worried about businesses that make nothing but money?

Ford gives us one of the earliest examples of a leader whose vision to deliver big ideas was at odds with the short-term demands of shareholders. In 1919, he wanted to forgo dividends and invest a capital surplus in more plants, more employees, and higher wages. The Dodge brothers – two major Ford shareholders at the time – sued, arguing that the company had a responsibility to deliver maximum return to shareholders. The Dodge brothers won and the era of shareholder primacy was born.

Businesses have been separating from their other stakeholders – the people who buy, sell, make, and use their products and services – ever since.

The corporate sector’s 100-year break-up with society

A century ago, serving various stakeholders was simple. If someone wasn’t happy, the feedback loops were short: suppliers, manufacturers, sellers, and buyers all lived around the corner from each other. Businesses were closely tied to their stakeholders and the connection was personal.

But the world changed.

Over time, for many good reasons associated with development and progress, our relationship with individual companies was eventually reduced to the distant monitoring of their stock price. The factory system of the industrial revolution drove out craftsmen in favor of mass-produced products, separating makers and builders from buyers. Transportation and communications innovations from the highway system to the telephone provided even more ways for companies to limit their interactions with actual people.

Without physical proximity, a company’s primary connection to a broader set of stakeholders became marketing – the ads, logos, packaging, and stories we deliver to anyone who’ll pay attention. But all too often these have been vehicles for inauthentic messages that fail to achieve lasting connections. For many companies, the deepest connection they achieve is an evocative Super Bowl commercial or a dancing pony video people will remember for as long as it takes to post it on Facebook.

An era of shareholder primacy also shaped another defining characteristic of today’s corporate sector: the expectation that companies deliver profits quarterly and grow infinitely.

Almost every chief executive in the world is under the constant strain of quarterly earnings growth. Its importance has created an operating environment where profit-at-all-costs is a defining job requirement. Even if a board recognizes the issues with short-termism and structures half of a leader’s compensation to reward long-term outcomes, they’ll still fire anyone whose numbers fall over three consecutive quarters.

Here’s how Mark Wilson, most recently CEO of the U.K.’s largest composite insurer, Aviva, describes it²: I trained for a marathon but only get to run a series of sprints. The markets have become short term to the nanosecond. Regulators oftentimes don’t think more than three months out. As leaders, we have to think more long term. But as economies, countries, and companies we haven’t learned – even after a major financial crisis.

Is all of this the fault of the financial markets? No. The evolution of capital systems has enabled companies to access the resources they need to enable innovation, global trade, economic development, job growth, and many other great things. We also don’t take issue with profit. Profit is good. Without profitable businesses, societies fail.

The more glaring issue is that, over time, profit became the corporate sector’s main reason for being – its primary purpose. And it is now so normal, we don’t think to question it. Even when a company has a compelling mission, vision, or purpose statement that claims something bigger, everyday decisions often signal that profit maximization is the real goal – and when profit becomes purpose, things eventually fall apart.

Profit-as-purpose is a defining issue of our time and underpins the corporate sector’s current systems, norms, behaviors, and reputation. While that may have worked in the past, it won’t work anymore.

Why? Because after more than a century, the balance of power has shifted irrevocably to the fuller range of stakeholders that companies impact – employees, customers, ordinary citizens. These folks just don’t have to tolerate profit-as-purpose business models anymore.

Society reemerges with unprecedented force

Plenty of people predicted the internet would change business as we knew it, but not many saw this coming: A power shift led by ordinary people with smartphones displacing shareholders from their throne and bursting corporate bubbles wide open.

Business leaders are now under unprecedented pressure from their stakeholders and it’s not going away. It will only strengthen with the exponential growth, adoption, and application of new technologies and increasingly empowered citizens.

The truth is, we’ve been in an uninspired era for a long time now. We disconnected from our stakeholders and put profit maximization first.

Now we’re paying the price.

We are now in an era where the corporate footprint is no longer proprietary information. Employees’ experiences aren’t a secret and neither are their opinions of you. Policymakers and regulators answer to digitally savvy and increasingly influential watchdogs, activists, and ordinary consumers – not just public affairs departments. Researchers have the tools to translate scientific findings about your products to a broader audience faster than ever. As for customers, they don’t just talk about their experiences. They rate, record, and review them. The share button can be a company’s best friend or its greatest enemy.

In short: after a century of physical, practical, and emotional separation, the internet has put us all back into the same neighborhood where everyone knows a lot more about everyone else. Business and its full spectrum of stakeholders are all newly reconnected (Figure 1).

Historically dismissed stakeholders have resurfaced, with speed and collective impact that unprepared businesses simply can’t keep up with. Even people who don’t consider themselves activists can, and are, engaging today. This once-fragmented group of stakeholders has become a powerful and collective crowd who can change things in an instant. Their influence has snowballed to a point where the balance of power has shifted in their favor.

Figure 1: Accountability to a broader range of stakeholders returns.

The really bad news:

Business is not trusted ... at all

People are suspicious of most types of institutions, but thanks to a long era of profit-as-purpose, there is a special disaffection for business. Accounting fraud scandals from the likes of Enron and WorldCom, devastating oil spills and fatal mine collapses or explosions in Brazil, Turkey, and the U.S. are just a few of the monumental corporate disasters we’ve experienced in our lifetimes. Fraud, environmental damage, cultures of bigotry and harassment, stolen and misused information – the list goes on. These kinds of experiences have led people to expect companies to eventually fail them in some way.

In the U.K., for example, only 33 percent of people have a lot of trust in major corporations.³ In the U.S., the figure is a dismal 10 percent.⁴ Chief executives rank very low on the list of trusted sources of information, with only 44 percent of people globally believing what they have to say. That’s only slightly ahead of board members, whose credibility levels have dropped to a low of 41 percent.⁵

If you think these trust issues only relate to people outside the walls of your company, think again. In 2018, 21 percent of U.S. employees and 29 percent of U.K. employees say they don’t trust their employers. In France, it’s a staggering 40 percent. Meanwhile, in Japan – the least trusting workforce in the world – that number is 43 percent.⁶ Once a worker loses faith, commitment is quick to follow: A survey of 155 countries found only 15 percent of people feel engaged at work. Western Europe is below average, with only 10 percent of their workers feeling engaged.⁷

What does this mean?

It means that the game has profoundly changed.

The combination of a trust crisis and a digital and social media revolution very abruptly transferred power into the hands of those who don’t trust us – and who now expect far more from us. When they pull together, they can make or break companies faster than ever.

Ignore the new circumstances, continue as if nothing’s changed, and you’ll only face more problems. The speed and impact of the social media revolution mean that we don’t have time to legislate, PR, or CSR our way out of it. None of those things will work on their own anyway.

The alternative is to figure out how to thrive in this new environment and turn it into advantage. This requires a redefinition of the problem we’re solving for and a reimagination of the business model that will solve it.

Now is the time for Inspired Companies

Business leaders are in a tough spot. Buck the shareholder primacy system too hard and career suicide is assured. Ignore the demands of the powerful new crowd of broader stakeholders that rejects that system, and you’ll also lose. Balancing the demands of both, while designing our companies to prioritize the crowd, is the only way to succeed. Those who don’t evolve will not just stand still, they’ll move backward.

Most companies today are wired to extract value from the crowd. The more Inspired Companies are embracing the power shift, redefining themselves to pursue ideas bigger than profit, and experiencing how the power of having the crowd onside fuels their success. We are witnessing how these companies create trust, brand distinction, and competitive advantage in ways that leave others behind.

We spent our careers inside Nike experiencing this power shift, and what it feels like when stakeholders outside your own corporate bubble are onside and when they are not. But it wasn’t enough to be leaders in one company to get the full picture, let alone to know what to do about it. So we gave up our high-paying corporate jobs to spend more time analyzing how the new market and power dynamics are playing out around the world. We studied the strategies that work and paid equal attention to ones that don’t. We dissected 30 combined years at Nike, interviewed a diverse set of chief executives and leaders in private and public sectors, and stress-tested our findings with companies ranging from communications to gaming, cosmetics, and legal services. We analyzed spectacular mistakes and impressive successes of companies from the airline industry to banking and chocolate, as they all work to tackle the significant shift in power dynamics and turn it into advantage.

Throughout Inspired INC. we pull from a diverse set of examples to reveal the learnings and the answers: Tony’s Chocolonely in Amsterdam; LEGO in Denmark; Nike, Starbucks, Wildfang, and Netflix in the U.S.; eRepublik Games in Spain; British Telecom, Unilever, and Aviva in the U.K., and Kao Corporation in Japan – just to name a few. Some companies you’ll recognize and others you won’t. That’s okay – and it’s also the point. Our goal was not to find and declare the most Inspired Company in the world (spoiler alert: one doesn’t exist). Instead, it was to look at enough examples of success and failure across industries, countries, and cultures until universal principles and clear patterns emerged. Here is our most important finding:

The future belongs to companies that stand for big ideas with many winners. They organize themselves around those ideas and deliver them in a way that recruits the world to work with them, not against them.

We call these companies Inspired Companies.

A framework for Inspired Companies: Mission. Action. Profit.

At the highest level, there are three things Inspired Companies do better than others: They stand for a big idea, they pursue it with fierce authenticity, and they make good money.

Inspired Mission

The pursuit of inspired ideas is the foundation of an Inspired Company. Framing that pursuit as the ultimate expression of why your company exists is the crucial first step. These must be big ideas with many winners:

Enriching life through communication (Huawei)

Organize the world’s information and make it universally accessible and useful (Google)

Accelerate the advent of sustainable energy (Tesla)

Create a better everyday life for the many people (IKEA)

Make sustainable living commonplace (Unilever)*

It’s hard to argue with any of those statements. They’re great ideas that we can all get behind. Oh, and don’t get caught in a debate about whether you call these statements a mission, purpose, or vision. You only need one and it needs to be big.

Inspired Action

Anyone can put lofty words on paper. The real work comes in aligning an organization, its everyday actions and decisions, operations and incentives, brand, communications, and behavior in pursuit of your Inspired Mission.

The newly emerging crowd has a heavy level of skepticism and low levels of trust to overcome, so consistent and deliberate Inspired Action is a prerequisite to earn their attention, trust, and support. Inviting them into your business and enabling them to participate directly in new and exciting ways will propel your business forward faster. Old rules and arbitrary industry norms will have to be questioned and overturned. Silos and hierarchies will need to be broken down if you want to be positioned to succeed and be taken seriously.

Inspired Profit

This is about making good money, in both senses of the word. It’s both the payoff from having the crowd onside and the way you keep them: Happier, more productive employees do their best work and cost less; loyal customers build and promote your brand with their powerful global networks; business partners give you priority and find new ways to unlock mutual value; civil society, media, and regulators are onside when trouble hits, and investors stay with you over the long term. The crowd defends you when you need them, gives you answers, ideas, and solutions when you ask, and refers you to their friends when they trust and believe you.

This translates to more revenue, better margins, lower transaction costs, and more resources than your uninspired competitors have to reinvest.

The power shift is underway and the first movers are making traction fast. The payoff is real and it’s more realizable than ever. Data to support the benefits and return on investment is strong and only getting stronger. If you wait for more data, your business will not be in the data and it’s all the more likely that your competitors’ data will be. Which means they will be in front, fueled by the crowd. And you’ll be behind, forgotten by the crowd.

Inspired Companies are not perfect. That’s entirely unrealistic. However, a true commitment to the pillars of Mission, Action, and Profit is what will attract, build, and keep an ever-powerful crowd onside.

This book is for anyone who wants to participate in the upside

We’ve delivered this framework, core building blocks, and series of strategies to support those who want to authentically connect into the power of the crowd now and into the future. No matter who you are, this book will help you decide:

Who to buy from.

Who to work for.

Who to work with.

Who to invest in.

How to lead an organization that has the world onside.

The framework is practical and actionable. By design, the approach breaks down hierarchies and unites organizations, so it won’t matter if you’re in brand marketing, sales, operations, corporate affairs, HR, or the C-suite. The concepts we explore and strategies we suggest are functionally agnostic and can help anyone move the ball forward in some way.

The principles explored can be adopted by any organization – for-profit or otherwise. We focus on the corporate sector because that’s where we come from and where the market is demanding the fastest change to occur.

The good news here is that pretty much any company of any size can be an Inspired Company. The only exceptions? Companies whose business models rely on human rights abuses, environmental extraction and depletion or whose products, when used properly, make people sick or die.

Those businesses are on their own.

In the next two chapters, we spend time getting to know the crowd: who they are, what they want, how they use their newfound power, and what happens when you ignore them. Getting to know them is the first step to figuring out how to get them onside. In the remaining chapters, we dive deeper to provide guidance on how to move forward – from establishing an Inspired Mission to moving into Inspired Action and realizing the benefits of Inspired Profit.

A vision for an inspired future

We see a future not so far away where Inspired Companies reset the corporate playing field and reputation. They’ll reshape our expectations and experiences of companies, and move us forward to a place where shared value is bankable value.

Part of our optimism comes from companies – like Tesla, Ben & Jerry’s, Huawei, Starbucks, and Nike – that either don’t stumble quite as spectacularly as their peers or that recover fairly quickly when they do. Maybe they were founded on big ideas or maybe they’ve made enough serious mistakes in the past that they were forced to evolve earlier. Either way or both, these companies have more good days than bad ones, they are celebrated by the crowd when they take a stand, and we expect them to inspire us. Not just with marketing, but with everyday decisions.

This is a new environment and there is a ton of work to be done to navigate it. Whatever a company’s size or industry, adapting to the power shift is possible. It’s also imperative. Companies that are succeeding are driving forward-thinking missions with benefits for everyone and many supporters. They act on their missions with a fierce sense of purpose, a clear set of values, and impressive consistency. When established corporate norms and financing models get in the way, they create ways to work around them. Profitable growth – and there’s plenty of it – comes from embracing and harnessing the trust and power of the crowd.

With more people influencing the success or failure of brands than ever before, Inspired Companies will be positioned to turn an abrupt power shift into 21st-century competitive advantage. They will achieve what so few have in the past half-century: they will become companies the world is willing to get behind.

For almost a century we have underestimated the power of inspiration, big ideas, and authenticity to move whole populations and markets forward. But now the time to harness this power has come.

Today is looking like a great day to be a company.

Chapter 2

Power Shift:

The Rise of the New C.E.O.s

The chief executive officer is no longer the only one calling the shots

For as long as we can remember, the world has turned to the chief executive officer as the ultimate determinant of business success or failure.

That is no longer true.

We are at a moment when historically low levels of trust in the corporate sector have met the internet’s powerfully decentralized, crowd-driven social media platforms. The result is that someone else is now gaining increasing levels of power and dramatically influencing the performance of mainstream companies. While chief executives may not have a name for it, most leaders sense something new and uncomfortable is going on and that it’s happening fast.

If the appointed CEO isn’t the only one in charge anymore, who is? In Chapter 1, we talked about that large and noisy crowd of historically ignored stakeholders who are demanding more. They’re looking for inspiration and authenticity, and they are dramatically impacting business outcomes. They existed outside the corporate bubble for decades and have now found powerful ways in. They are players creating an entirely new game with a set of rules that don’t line up with the way business has been done for decades. Their influence is so profound that we call them the new C.E.O.s:

Consumers, Employees, and Outsiders.

In This Chapter

• The rise of the new C.E.O.s : the C onsumers, E mployees, and traditional O utsiders shaping the future of your company

• The specific ways the new C.E.O.s exert their influence, and why we’ve given them the most powerful title in the corporate sector

• Looking beyond millennials: their little brothers and sisters, parents, and grandparents are all impacting your business

• The choice facing every business leader today: share power with the crowd of new C.E.O.s and bring them onside – or ignore them and further erode their dwindling trust and fuel their collective will to work against you

Consumers, Clients, Customers – whoever buys from you. (To keep it simple, we tend to use Consumers throughout to reference an all-encompassing buying force.)

Employees – past, present, and future – full- and part-time, contractors, temps, candidates. (We shorthand this broader definition to Employees or workers throughout.)

Outsiders – a diverse set of players we’ve traditionally kept at a comfortable distance: civil society actors; regulators; federal, state, and local government; supply chain partners; media; the broader investment community; academia.

Assigning the most powerful title in the corporate sector to regular Consumers, Employees, and Outsiders is not something we take lightly, but we do it for a reason. We believe in the corporate sector and the caliber, training, experience, and intentions of many of its leaders. If you are one of those leaders, we need your attention: This crowd now has the power to make or break your business faster than ever. Here’s how:

Consumers will be painful brand activists or powerful brand ambassadors.

Employees will deliver their best work and be an invaluable army of brand ambassadors or underperform, undermine, and maybe even sabotage your entire company.

Outsiders – there’s a lot more they can do today with a lot more speed and impact:

• Business partners will put you first or last.

• NGOs will be watchdogs or defenders.

• Civil society will point fingers or lend a hand.

• Investors will grill you on short-term numbers or be long-term partners.

• Regulators will put up walls or pull them down.

• The media will rip you apart or tell your story.

The dynamic of having stakeholders for or against a business is not new. What is new is the speed and potency of their impact. It’s like nothing we have ever had to face in the corporate sector – and our companies are simply not wired to handle it.

It’s far more than managing a bit of bad PR now and then. This crowd of new C.E.O.s is shifting the very axis of the corporate sector. The power shift marks a permanent change in the operating landscape for business. Getting to know the crowd and forging meaningful relationships with them is the backbone of success for companies today. Companies that sideline them in a quest for short-term profits will experience headwinds that punish the bottom line in ways we have not experienced in the past.

On the other hand, companies that get it