According to marketing guru Jim Stengel, if you’re in business right now you’ve got to ask yourself one question: What’s my ideal? You also might want to take a look at who’s leading your company. Is it an artist? Or an operator?
Stengel believes things like ideals and artistry are now real business mandates, but, since this is an ex-P&G marketer we’re talking about, he set out out to prove his assumptions with hard data, conducting a multi-year study of more than 50,000 brands together with research company Millward Brown Optimor. Stengel delves into the results of the study and discusses his views on what makes successful businesses and brands in his new book, Grow: How Ideals Power Growth and Profit at the World’s Greatest Companies.
Stengel has a little more credibility than most marketing "experts." As former global head of marketing at Procter & Gamble, Stengel commanded one of the biggest marketing units (and budgets) in adland, and raised the profile of P&G as a creative marketer. After 25 years with the company, Stengel lit out in 2008 and started his own brand consulting business. He’s also been leading a marketing program at the UCLA Anderson School of Management.
In the new book, Stengel discusses the "Stengel 50," companies that have shown significant growth by demonstrating and adhering to ideals—companies like Discovery Communications, Red Bull, Coca-Cola, Starbucks, Louis Vuitton and, of course, Apple. An investment in these companies over the last decade, says Stengel, would yield 400 times the return than a bet on the S&P 500.
Here, we talk to Stengel about ideals, and about "business artists," those leaders who think beyond quarterly results and safeguard the "soul of a brand."
Co.Create: The premise of the book is ideals. What are you referring to when you talk about a business ideal?
Jim Stengel: The whole book is based on the premise that the businesses that grow faster and grow longer have something special driving them and something attracting people—attracting customers, attracting employees. And that is what I call an ideal. Some people call it a mission, some call it a purpose. I like the "ideal" word because it has idea in it. All of this is grounded in ideas. To me, it’s why we’re here as a business or a brand, it’s the difference we’re trying to make, the impact, the force that attracts people. That’s what I think an ideal is. It’s not a marketing slogan, it’s not cause marketing, it’s not CSR, it’s not any of that. It’s the essence of the business that is embraced by everyone including the top, and everything they do in the business is about amplifying that. And that’s the tough part—I think there are a lot of examples of business that start to get it right and then it all falls apart.
What are some examples of businesses and their ideals?
Every story I tell I tell in the book is an example but I’ve got two that are maybe favorites. First, Pampers (a P&G brand—Stengel oversaw Pampers marketing during his time at the company) because it’s so personal to me and I think it’s such a wonderful example in a big company of how to do this and that it is indeed possible to do this. When I interviewed (author and pundit) Seth Godin early in the journey of this book he said, I love what you stand for but it’ll never work in big companies. That’s one reason I love the Pampers story. I was involved from the beginning so it was trial by fire for me and it had personal resonance. It’s a great example of pre- and post—a brand that had stood for a very narrow functional benefit and then stood for something that was important to mothers and babies and tripled their size through all of that.
And I like the example of Discovery. They’ve been all about satisfying curiosity since John Hendricks founded the company in the ‘80s. And that ideal permeates everything they do and their growth is extraordinary. One of my favorite interviews was with their HR head. She talked about curiosity and how how they recruit people, how when they do their work plans every year they look for attributes that drive satisfying curiosity as things they want to reward. Everything they do—the general managers, the HR people, the production people, it’s all about curiosity. And they are never complacent. When they get off track they get back on track and they’re even stronger when they do that.
And that’s something that I found in so many of these companies I talked to was the amount of time and concern that senior leaders put into recruiting. Companies like Zappos, Innocent, and Method, they put an incredible focus on it and the idea that one bad hire is highly toxic. I thought that was a highly interesting surprise as I went through the research for the book.
What’s the biggest barrier in the typical large corporation to being run this way—in terms of being guided by creativity, or ideals?
I talk in the book about CEOs who are "artists not operators," and that’s one of the big issues. We hire, train, and reward operators and not artists. That has to change. These businesses in the book are generally run by people who are very whole-brained; they think long-term, they spend their time in different ways. They really do take time to think and communicate and be with people.
The CEO of P&G when I joined said, "We think not in quarters and years but we think in decades." We need more of that. We need different kinds of leaders—they need to think about how they spend their time, they need to think longer term, and they need to understand their role is to ensure the ideal is right and that it’s activated everywhere. That’s a very different kind of activity system than most people who are in senior roles out there. To me that’s whats getting in the way. It can happen, I’ve seen it happen but we need to take it from the exception to the norm. That’s why I wrote the book.
So what’s the default for CEOs and other leaders? Are people just thinking about meeting some specific small set of metrics?
Yes, I think some of the metrics are off, they’re not adequate. Certainly we have to measure the volume and the sales and the margin and cash, etc. Those are table stakes. But I did a whole chapter on measurement in the book and tried to show that what’s important is you have to be measuring the ideal. And you have to be measuring your progress on the ideal with customers, but you also have to be measuring the ideal with your people and how they’re bringing it to life. That’s why I love the Discovery story because they do that. I think a lot of what we measure in business is necessary but not sufficient to live the ideal the way it needs to be lived to grow faster. So measurement is a part of it but there are other things as well.
Someone has to be accountable for the soul of the brand and the ideal of the brand. In too many companies there isn’t a person who is accountable for that. And I think a lot of the stories we tell over and over about the Apples and the Starbucks of the world are about that—they have a person in there who has continuity, who has understanding, who can trust their intuition and be courageous. But the good news is we’re seeing more of that in large companies. We’re seeing people stay in jobs longer, we’re seeing people match a person’s passion with the business.
LVMH—they have a couple of brands in my top 50—they really believe that brands are run by artist and stars and they have to be in place a long time. Red Bull is another example.
We need to have people who stay in roles longer who are passionate about the brand, who are accountable for everything around the business and spend their time in different ways.
How do you see American corporate culture changing in the next several years?
I do think what’s happening is that we have this wonderful confluence of things—people are starting to understand that running a business has a lot of artistry in it, but we also have a tremendous potential to understand things through advanced analytics. So to me, whats happened in culture and why I think senior leadership is interesting is that you need people who are comfortable with ambiguity and artistry but also appreciate the deep understanding that analytics can bring. You can understand anything now. So I think that is part of where culture is going, and people who understand this blend and this mix and welcome it are going to be very successful.
I also think companies are becoming more human. It’s interesting to me that we’re seeing more companies putting their own employees in advertising. You saw that in the past here and there, where Wendy’s would use Dave Thomas, etc. But now you’re seeing it more; you’re seeing IBM showing their employees, or Southwest Airlines. It’s remarkable to me how much of this is going on.
To me it’s all about behavior now and people really appreciate brands and companies that walk the talk. I think that if you state the ideal, the game is over if you’re not living it.
I also think cultures are becoming more connected more interdependent, with more ideas coming from emerging markets. All that is going on in culture which I think is creating the culture for the ideas I talk about in the book to flourish a bit more.
You’re also an educator. Are ideals being taught in business school? Do the next generation of business leaders place more of an emphasis on this stuff?
I think it is changing. If you’re tracking the number of people who are writing about education and the need for that to change, there seems to be a groundswell. So I think it’s happening from top but I also think students are also less tolerant. They can get information in lots of different ways. So if the education experience is not immersive, if it’s not about leadership, if it’s not about broad exposure, discussion, and thinking then they’re going to leave it. I do think it’s evolving but maybe not fast enough. I think the new skills in education are going to be more about blending the practical with the theory. I think it’s going to be about the appreciation for artistry and design, it’s going to be about whole-brain leadership. At the end of the day most of what we do in business is about communication and about leading toward some change, some impact; more of our education has to be about that.