The Values Economy: How to Deliver Purpose-Driven Service for Sustained Performance

VALUES

CHAPTER 1

INTRODUCTION

"The pace of change has never been this fast,

yet it will never be this slow again."

Justin Trudeau¹

We are living in extraordinary times – volatile, uncertain, complex, ambiguous. As President Trudeau said when he spoke at the 2018 World Economic Forum in Davos, Switzerland, the pace of change will never be this slow again. Little could he have foreseen the extent to which his words would ring true some two years later. In the service sector, many traditional approaches are no longer relevant because the landscape of brand identity, employee engagement and customer experience is changing… all at the same time, all of the time and at an accelerated rate again since early 2020 with the turbocharged disruption caused by the impact of COVID-19.

There are many influences on the new business agenda that is emerging, notwithstanding the pandemic, and we believe that just three factors are combining to create a fundamental shift:

1.The way people make decisions is changing. Previously, decisions were made on a rational, often financial basis, whereas, increasingly, people (especially younger ones) are making decisions at a more emotional level, based on what is important to them and to express their opinion and identity.²

2.In our super-connected world, social media facilitates transparency and amplifies all stakeholder opinions in what some are calling the age of the naked organization.³ Authenticity, from the tip to the root, has become the new holy grail. Whereas previously it was possible to invest in marketing and PR to ‘tell a story,’ now, and increasingly in the future, the publicly shared views of stakeholders hold greater sway. This shift in power means that organizations are no longer what they say they are but are, instead, what others say they are.⁴

3.Organizations no longer ‘own’ their brands. The role of customers and employees (past, current and potential) as ambassadors for their organization has, in some ways, replaced the traditional marketing function.

These three factors are all leading to a transformation from traditional, fixed, singular organizational ownership and push marketing to a less rigid, more complex concept of brand co-ownership and pull marketing. A perfect storm of values-driven choices, the shift of power to stakeholder opinion and the concept of shared brand ownership has created a new paradigm that we refer to as the Values Economy.⁵

"I’ve learned that people will forget what you said,

people will forget what you did, but people will never

forget how you made them feel."

widely attributed to Maya Angelou, among others⁶

THE SERVICEBRAND® APPROACH

For any service-focused organization, the tried-and-tested SERVICEBRAND approach can provide a means to sustained performance against the backdrop of the emerging Values Economy. First and foremost, it is a pragmatic operating tool that provides a framework for the day-to-day leadership of the organization (as opposed to some sort of purely conceptual or theoretical model). The essence of the methodology is the alignment and coordinated execution of the three areas of Brand Identity, Employee Engagement and Customer Experience, supported by Systems & Processes and Measurement & Insight. A structured framework enables any organization to assess its performance, explore opportunities to do things differently and assist business planning, using the framework on an ongoing basis to maximize organizational alignment in ‘business as usual.’ It can help to mobilize everybody representing the organization in an aligned way, rather than relying on the CEO or other leadership functions, and it helps to prevent organizational structures and in-company power dynamics adversely affecting the organization’s direction and performance. It is, in effect, a business excellence model, which aligns activities to deliver measurable impact and creates a culture of customer-focused, high-performance, continuous improvement. We provide an introduction to the concept in Chapter 3: SERVICEBRAND and an in-depth examination of the approach in Part Two: Framework.

BRAND IDENTITY

In our super-connected, increasingly transparent world, we suggest that organizations no longer own their brands. Instead, we believe that brands are co-owned by organizations and their stakeholders (customers, employees, outsourced service partner employees, owners/investors and local communities). Some years ago, it was possible for organizations to fabricate a marketing and PR ‘front,’ but now the truth gets out – fast. Decisions by all the different stakeholders to buy from or to be associated with a ‘brand’ are being driven by more than simplistic, rational criteria and instead by deeper, emotional drivers – in other words, values.⁷ A fine example of this is Coca-Cola’s huge, purpose-driven marketing campaign across ten markets in Western Europe, which seeks to position the drink as one that unites people in what it sees as an increasingly divided and hostile world. The longterm campaign uses the tagline: Everything is better when we’re open. It is part of a vow from Coca-Cola never to shy away from social issues, be that LGBTQ rights or sustainability. The brand’s own research and social listening have identified that advertising based around empathy will be key to driving its newly crystallized purpose.⁸ While organizations are increasingly realizing the importance of purpose and values as a fundamental aspect of their brand identity, research reveals that there is no correlation between the cultural values a company emphasizes in its published statements and how well the company lives up to those values in the eyes of employees.⁹ There is still much to be done.

CUSTOMER EXPERIENCE

Customers’ expectations are increasing, and they vote with their wallet or contactless card. Consider the growth of the Fairtrade brand, with sales of €9.8 billion in 2018¹⁰ (started in 1994) or the rise of green consumerism, where people (particularly younger generations) are willing to pay extra for eco-friendly or sustainable products.¹¹ Brands like North Face, Apple and Tesla are now connecting with their customers at a deeper, more emotional level. Notwithstanding all that is being said and written about AI and the digital world, people are still a critical factor because the behaviour of the people representing the brand strongly influences customers’ perception. We know that customers’ brand perception is significantly influenced by their experience with the organization’s employees¹² and 96% of customers say customer service is important in their choice of loyalty to a brand.¹³

The area of Customer Experience has exploded in recent years¹⁴ and is still put forward as leading-edge thinking in many areas of business. It might therefore be a surprise to you that the phrase ‘the experience economy’ was coined in 1998.¹⁵ This was more than 20 years ago… in the previous century. Have we not moved forward from this? We believe that we have: that an ‘experience’ is no longer enough for a customer; that customers want to know more deeply about the organization providing the service, what it stands for and what it believes in before they decide if they want to be ‘associated.’¹⁶ This customer interest extends beyond the organization to its supply chain, as demonstrated in the film about the clothing industry, The True Cost.¹⁷ Companies must begin thinking in terms of transparencyby-design to bridge the gap and safeguard brand resilience through trust-building. Companies can’t simply say ‘trust us’ when people are demanding ‘show us.’¹⁸

We predict that the successful organizations of tomorrow will be those that establish a sense of shared values with all stakeholders (customers, employees, service partners, owners or investors, and local communities).

EMPLOYEE ENGAGEMENT

It is not just about the relationship between organizations and customers. Employees attach more importance to a sense of meaning and fulfilment than a monthly pay packet¹⁹ and also want their voices to be heard, as witnessed in November 2018 when an estimated 20,000 Google employees held a wave of walkouts to protest against the company’s handling of sexual harassment.²⁰ And ‘outsourced’ does not mean ‘out of mind’: employees working for supply chain service partners often represent the organization just as much as directly employed employees, sometimes more so because of their customer-facing roles. And the outsourced services sector continues to grow rapidly.²¹

AND MORE…

In other areas, investors are making decisions based on more than the short-term financial return²² (in January 2020, Blackrock committed to sustainability as its new standard for investing)²³ and new partnership models are being applied to supply chain management.²⁴ Previously, decisions were made on a narrower basis focused on the value of the product or service, remuneration for a job or the rational benefit being received. Increasingly, now, people are expressing their views and opinions through the choices they make, whether this is the organization they work for,²⁵ the products and services they buy, or the organizations they are associated with. By way of an example, Elon Musk understands that people want to be part of a project that is not about selling cars but changing the world.²⁶ And it also makes good business sense: based on Corporate Responsibility Magazine’s 100 Best Corporate Citizens list, Gensler reports that the companies on this list outperformed the Russell 1000 by 26 percent. Balancing the needs of stakeholders – consumers, stockholders, community members – allows companies to create value beyond products or services.²⁷

It is important to note that having sincere good intentions is a fundamental prerequisite for all the above. An organization that adopts the SERVICEBRAND approach as some sort of marketing or PR exercise as a strategy to gain market share or support its ‘employer brand’ will be found out, sooner or later. But for those that are committed to adopting the approach in practice, there is the enviable prize of being appreciated and recognized as an authentic organization by all stakeholder groups and gaining the positive power associated with this position of trust.

"Authentic brands don’t emerge from marketing

cubicles or advertising agencies. They emanate from

everything the company does."

Howard Schultz²⁸

HOW TO USE THIS BOOK

We have written this book to show how leaders of any service-focused organization – irrespective of size, geography and industry sector – can use a tried-and-tested approach to increase their chances of sustained performance. We share insights into how and why the methodology works in the emerging business landscape of the Values Economy as well as practical examples and stories. The SERVICEBRAND approach has been successfully adopted by large and small companies, across sectors, all over the world.

The purpose of the book is to:

•Provide a practical and theoretical context by sharing information about the relevance of values in an organizational context alongside the story of how the SERVICEBRAND approach was created and has been developed over time (Part One: Groundwork)

•Explain the underpinning framework of the SERVICEBRAND approach in detail with tips on how to use it (Part Two: Framework)

•Provide a practical perspective with a variety of mini case studies featuring organizations in different sectors, geographies and stages of maturity (Part Three: Practice)

•Stimulate your thinking about how today’s broader context contributes to the relevance and power of the SERVICEBRAND approach by providing an introduction to some topical themes, a deeper exploration of the role of the workplace and an examination of the increasing impact of disruption (including as a result of COVID-19) (Part Four: Implementation)

•Encourage you to implement what you have learned about the SERVICEBRAND approach in some way, large or small, to create value

We have used a simple structure of ‘bite-sized’ chapters so you can explore in the way that appeals to you. You can read from the first page to the last page or dip into the book in a more ad hoc way. The content is divided into clearly labelled parts and chapters to help your navigation. How you make use of the book is entirely up to you. We have made a conscious effort to keep the style accessible and practical, supported by academic and business references where appropriate. We have also signposted carefully chosen additional resources (books, articles, posts and videos) to help you explore a range of topics more deeply if you want to.

One way to think of the book is as a practical reference guide to understanding the new paradigm of the Values Economy and why and how the SERVICEBRAND approach can create so much value. However, it is important to realize that the SERVICEBRAND approach in itself is not what will make the difference. We think that ‘content’ is vastly overrated and what is far more important is ‘context.’ It is the way the SERVICEBRAND approach is implemented by the people in an organization for its own situation that will determine the level of value creation.

We have been delighted to receive feedback that the book achieves a rare sweet spot of presenting a deeply-thought-through concept in an accessible way supported by robust academic theory and offering tips for practical application.

WHO IS IT FOR?

We have written The Values Economy for a global audience. It is for progressive leaders all over the world who consider the topic of values to be important in an organizational context and who want to optimize performance through comprehensive values-driven alignment. The book will be as valuable to senior executives and team leaders in small or medium-sized enterprises as it will be for those in large multinationals in any sector or in the public sector. It is relevant to business-to-business and business-to-consumer environments as well as to the public and third sectors, and even to internal service/support functions within an organization. It is likely to be of interest to you if you have a role in the functional areas of marketing, brand, HR, culture, employee engagement, employee experience, customer experience or organizational design, or if you have a more academic interest in these areas and others such as cultural transformation, workplace, leadership and behavioural science.

Throughout the book, we bring together thinking and practice from great academic minds and well-known achievers in business, and we also introduce real day-to-day stories from our personal experience of working with leaders, being leaders ourselves or observing others. Our personal perspective is multifaceted, combining 40 years of work experience and organizational leadership (co-author Alan) with a totally current and fresh, post-millennial point of view enhanced by the knowledge and experience of a first-class degree in international business plus several workplace experiences (co-author Sam).

PART ONE: GROUNDWORK

The first part of the book sets the scene, providing some background information to help you navigate and understand the rest of the content. We share some of the thinking, research and philosophy that makes the values topic the cornerstone of the book and introduce the concept of the Values Economy. We also introduce the SERVICEBRAND approach and how this invented word differs from and relates to other similar terms, such as ‘product,’ ‘service’ and ‘brand,’ before highlighting the core underlying principle of the approach. This part finishes with the story of how the approach was conceived and evolved. The general background provides a practical and theoretical context for the detailed explanation of the SERVICEBRAND approach that follows in Part Two.

PART TWO: FRAMEWORK

Here, we provide an overview of how the five Elements of the SERVICEBRAND framework are inextricably interconnected to create maximum value, and we introduce the terminology used in the book. We help you to understand what is involved in starting the virtuous circle that the SERVICEBRAND approach and framework support. We then present the central part of the framework, examining each individual core Element in detail and bringing the whole approach to life with stories from our own and others’ experience.

PART THREE: PRACTICE

Figure 1 - A rich variety of mini case studies

This part of the book features seven carefully selected mini case studies (see Figure 1 for a representation of the key components that support each case study). We share real experiences with you, using the SERVICEBRAND lens to identify areas of best practice, benefits and challenges that have been faced. This practical, operational perspective brings to life the thinking we share throughout the book. The principles and methodology remain the same whether you’re using the SERVICEBRAND approach in a single business unit in any country or for a global organization. It is industry sector agnostic. The framework accommodates varied contexts and we explore the implications using examples from quite different industry sectors, geographies and stages of maturity. In some of these the SERVICEBRAND approach has been used explicitly and in others we have used the framework as a lens to look at the organization’s performance. We summarize key SERVICEBRAND takeaways for each situation. Our deep gratitude goes to our connections in these organizations for making this part of the book possible.

PART FOUR: IMPLEMENTATION

In the final part of the book, we explore topical themes to highlight why the SERVICEBRAND approach makes sense in the Values Economy. The principles we talk about in this part come from the broader system and context that leaders and organizations find themselves in. We introduce some carefully chosen topics of relevance in the 21st century and take a deeper dive into others, including the relevance and impact of the global COVID-19 pandemic. Our intention is that by sharing these subjects through the SERVICEBRAND lens, we will enable you to develop your insight into how and why you could implement the approach to create value for your organization from an informed but practical, operational perspective. To finish, we offer a recap and summary.

As you make your way through the book, you will notice the illustrations introducing each chapter. The purpose of these is to provide a ‘values thread’ through your read and a continuous reminder of the fundamental principle of the SERVICEBRAND approach: everything in the organization is consciously designed to reflect and reinforce the organization’s values. We hope that you enjoy these as much as we enjoyed co-creating them with illustrator Simon Heath.

TO CONCLUDE

We are all too aware that there are many books about how to lead an organization. Despite the best attempts of business professionals, researchers, scientists, philosophers and thinkers, there is no agreed, fixed formula that will make an organization and all its stakeholder groups successful over a sustained period. Each individual, group and organization’s evolution is a process of constant interaction with and adaptation to the environment and context they find themselves in – which is why this won’t be the last book on the subject. However, the SERVICEBRAND approach does provide a framework that helps organizations to align and coordinate a range of activities in a sustained way. It offers freedom within the framework to allow each organization to design and implement its own unique, fit-for-purpose solution that can evolve over time. It enables synergies to be realized and duplication and waste to be minimized, and we have seen, first-hand, how it can deliver remarkable results across a balanced scorecard of measures. Of course, it is not a ‘fix-all’ solution – nothing is – and successful application depends on effort, discipline and resilience.

We trust you will enjoy The Values Economy and find much within the SERVICEBRAND approach that resonates with you. We hope it will deepen your knowledge and awareness of how and why you would want to create a purpose- and values-driven organization or be associated with one. Our book will help you to ask and explore some of the questions that might be helpful and stimulate ideas about how to design and deliver values-driven service for sustained performance. If, by reading our book, you are inspired to take at least one action, small or big, then we will have succeeded in what we set out to achieve. We look forward to hearing your stories of how SERVICEBRAND thinking and practice have enabled you to create an even more effective organization. Naturally, we would be delighted to assist you on this journey!

PART ONE

GROUNDWORK

The first part of the book provides an introduction and background information to help you navigate and understand the content that follows. Through an introduction to the role and the importance of values in organizations, an overview of the SERVICEBRAND approach and an exploration of organizational alignment, you will gain an immediate level of familiarization and understanding at both a conceptual level and a practical level. You will also become familiar with the terminology used throughout the rest of the book.

Chapter 2: Values shares some of the thinking, research and philosophy that make this topic the cornerstone of the book and introduces the concept of the Values Economy. We draw heavily on the chapter about values in the book The 31 Practices.¹ Chapter 3: SERVICEBRAND describes the meaning of this invented word and how it differs from and relates to other similar terms, such as ‘product,’ ‘service’ and ‘brand,’ and provides an overview of the SERVICEBRAND approach. Then, in Chapter 4: Alignment, we share our perspective on organizational alignment, the core principle on which the SERVICEBRAND approach is built. We explore why alignment – vertically and horizontally – is important for organizations, the benefits that can be enjoyed and the implications when organizations are not aligned. Chapter 5: Backstory is a brief overview of the SERVICEBRAND journey to provide historical background, starting from the creation of the approach and following its subsequent evolution over nearly 20 years. This chapter is more for general interest than essential reading.

Our intention is that this general grounding will stand you in good stead for the rest of the book, making it an accessible, smooth-flowing experience. Part Two: Framework offers a more detailed exploration of the SERVICEBRAND approach and how it works in practice, Part Three: Practice examines a collection of mini case studies to bring the approach to life and Part Four: Implementation identifies some key topics to consider when developing and implementing the SERVICEBRAND approach in your own organization.

INTEGRITY

CHAPTER 2

VALUES

It ain’t what you do (it’s the way that you do it).

Fun Boy Three and Bananarama, 1982¹

In the eight years since the first edition of The 31 Practices² was published, the topic of values has caught the imagination of people all over the world. ‘Values’ are increasingly top of mind for a wide range of people, from political leaders to high-profile celebrities and a variety in between, all seeking to win support for their various causes. Values even took centre stage at Paris Fashion Week in February 2020, where several brands focused on strong values-based messaging alongside the style and seduction of their garments.³ World Values Day⁴ took place on 15 October 2020 and people in more than 100 countries have taken part each year since this annual event started in 2016. Values movements such as the Global Values Alliance and The Values 20 are emerging at a global level and also at a regional, country level (for example, in Brazil, Canada, Sweden, the UK, the USA). As the song lyric above says, it’s not so much what is done that is the most important factor; what matters more is how it is done.

Putting values at the centre of everything an organization does is the starting point to create a strong and authentic brand. This is particularly relevant for service organizations, where people are a core element of their proposition. But the focus on values needs to be sincere and authentic rather than a lip-service PR campaign. Witness the negative reaction to the McDonald’s marketing initiative of flipping its golden arches upside down on Facebook, Twitter and Instagram in honour of International Women’s Day in 2018.⁵

Simon Sinek’s excellent and popular Golden Circle concept⁶ is a good place to start understanding how this shift is happening. Sinek explains that it is not what people do that inspires them. Instead, it is the why (purpose) and how (values) that achieve emotional engagement, and we believe there are several other additional contributory factors (see Chapter 3: SERVICEBRAND).

In 2016, PwC’s CEO Survey of 1,400 CEOs in approximately 80 countries highlighted that 75% of CEOs are changing their values and codes of conduct to respond to stakeholder expectations in an environment of unprecedented change.⁷ It reported how values can provide a guidepost for creating internal cohesion to support achievement of organizational aims and assist in strategy execution.

"CEOs believe customers are seeking relationships with

organisations that address wider stakeholder needs."

PwC CEO Survey⁸

The Financial Reporting Council (FRC) has been perhaps the most influential source of governance advice around the world, as the originator of the widely copied Corporate Code in 1992. In 2018, the FRC tore up its previous code and replaced it with a radically rewritten version for consultation that stresses long-term success and proposes a new requirement for businesses to test their values across the business, from top to bottom. The new revised text is as follows: Directors should embody and promote the desired culture of the company. The board should monitor and assess the culture to satisfy itself that behaviour throughout the business is aligned with the company’s values. Where it finds misalignment, it should take corrective action. The annual report should explain the board’s activities and any action taken.⁹

The FRC itself is being replaced by a new regulator, the Audit, Reporting and Governance Authority, which will have enhanced powers and a brief for strong leadership to change the culture of the auditing sector.¹⁰ This creates a real opportunity for the topics of culture and values to be placed squarely at the centre of corporate governance. However, we suggest that an early statement of intent will be important to reset expectations and avoid ongoing criticism of lack of speed and insufficient censures or corrective measures as in the case of the collapsed construction giant, Carillion.¹¹

WHAT ARE VALUES?

So, if values are critically important, it is a good idea to remind yourself what they are. The word ‘values’ now appears so commonplace that sometimes the meaning is forgotten. Core values are traits or qualities that represent deeply held beliefs. They reflect what is important to us and what motivates us. For an organization, values define what it stands for and how it is seen and experienced by all stakeholders (customers, employees, service partners, suppliers and communities).

Values act as guiding principles – as a behavioural and decisionmaking compass.¹² In an organization, values (explicit or implicit) guide every person every day. They are the foundation for the way things work, providing