Delivering long-term equity through cultural legacy planning

Amidst the mounting distrust of institutions derived from concerns over the negative impact on human, cultural and world issues; businesses must come to terms with the fact that not only are they duty bound to act responsibly in culture, but more critically, that public opinion has now reached the point where they will be asked to justify their right to exist in the world. To rebuild lost trust and increase cultural relevance, businesses need to demonstrate how their role in the world is going to create a positive ‘cultural legacy’.

The evaporation of trust

Trust in business is at a tipping point in its ability to retain consumer support, let alone exploit new growth. According to Edelman’s 2015 Trust Barometer, we have witnessed “an evaporation of trust across all institutions”. Last year’s research reports a decline for business trust across 16 of their 27 surveyed countries. Meanwhile, in a report also published last year by the World Economic Forum entitled: The Evolution of Trust in Business: From Delivery to Values, the situation is described as “the global crisis of trust”. In this report, the World Economic Forum points to what they term ‘the need for a new settlement’, stating that business can no longer rely on economic output as justification to exist.

“This mismatch between the contribution business makes and how it is perceived is creating a pressing need for a new settlement between business and society. Today, solely generating profits is no longer sufficient on its own to justify a business’s licence to operate.” - WEForum report 2015

 This sentiment echoes a similar agenda co-authored by Harvard Business School’s Professor Michael E Porter and his associate Mark Kramer in their 2011 work entitled: “Creating Shared Value – How to Fix Capitalism”. Their treatise sets out the need for business to focus on what they describe as: “generating economic value in a way that also produces value for society by addressing its challenges”.

In the five years since this work was published, what is clear is that business is now more accountable than ever for acting in the interests of society. Business today must put the needs of culture first, in order to earn the trust of consumers and the right to generate profits. And yet most business leaders do not think this way, with many of them locked into a cycle of short-termism driven by the pressures to report positive quarterly gains to shareholders.

The need to look ahead

“I think we need to reorient how we think about capitalism. Anyone who is willing to postpone the long-term strategies to make the short-term numbers is in route to going out of business”. - William George, Professor of Management Practice, Harvard Business School

It is by setting a long-term commitment to cultural contribution and acting to deliver these commitments consistently that business can rebuild lost trust and continue to grow.

In 2014, BlackRock’s CEO Larry Fink, one of the world’s most influential institutional investors sent a letter to every company in the S&P 500. This is what he had to say: “Many commentators lament the short-term demands of the capital markets. We share those concerns, and believe it is part of our collective role as actors in the global capital markets to challenge that trend… It concerns us that, in the wake of the financial crisis, many companies have shied away from investing in the future growth of their companies.”

So it would appear that it might be the statements of influential and wealthy individuals that can provide the licence business leaders’ need to look further ahead.

Leading the Long-View

There have been many famous business leaders who have pledged their wealth to contribute to culture. Whether it is J Paul Getty’s support of the arts, or the Bill & Melinda Gates Foundation supporting world health and education issues, or most recently Mark Zuckerburg’s pledge to give away 99% of his lifetime’s wealth - each of them has acted to individually contribute back to culture from the economic outputs of their business successes.

In recent years we have also seen the rise of social enterprises placing this philanthropic code within their commercial core. Brands like footwear and accessories company TOMS, who operate their ‘One for One’ scheme, provide a tangible link between the consumer product purchase and the social beneficiaries in developing countries. Taking this stance they ensure that long-term business success equates to a bigger and sustained benefit to society. Alternatively, outdoor clothing company, Patagonia, has proven itself a long-term pioneer of ethical and responsible corporate standards, working to ensure every facet of its business is committed to the interests of societal needs.

In larger and often more mature corporations these efforts have manifested most commonly through Corporate Social Responsibility (CSR) initiatives. These initiatives vary in their degree of commitment, often constituting little more than a marketing effort designed to manage the expectations of public opinion. But as the public opinion of societal needs continues to evolve, a simple CSR initiative will fail to meet the future expectations of what a company should be contributing to culture.

Building the Case for Cultural Legacy

It is clear that there is a need and urgency for businesses to identify and plan a long-term legacy strategy where the company’s growth is intrinsically linked to benefiting society.

In order to establish a legacy strategy, firstly requires a significant reorientation in the way business leaders perceive the role of their business. In simple terms, leaders need to think culture first. Not business first, not brand first, not even consumer first, but culture first. To initiate this change in thinking, the first strategic question to resolve must be: What will our business contribute to culture? By answering this question, business leaders will be able to set clear goals of how to invest and measure the value of it’s contribution by way of consumer trust – the true measure of cultural value.

To help in answering this question, there are three tenets that must inform the outcome: 

1. From Purpose to Legacy

The first tenet is to identify the how to shift from purpose to legacy. While businesses and brands may have adopted a purpose that steers their actions, it is often only that – a directive for behaviour. A legacy strategy should push this thinking further and bring more tangible goals into focus. What specifically is the organisation seeking to achieve to deliver on it’s contribution – What does success in terms of cultural contribution look like?

1. From Transparency to Authenticity

Second, is to shift from transparency to authenticity. Edelman’s Trust Barometer indicates that for companies looking to innovate, ‘transparency becomes the fuel for discussion of innovation, the rational backbone’. From this backbone of corporate behaviour the strategy should be evolved to consider a continuous course of action that will build and reinforce authentic practices and integrity into the business. If we assume that transparency translates as an open and honest dialogue between the business and culture, then authenticity is the character that is shaping that dialogue.

1. Stop Borrowing, Starting Contributing

The final tenet is to stop borrowing from culture and to start contributing. Many marketing efforts simply borrow from culture. They leverage popular public opinion in a cultural issue or interest and then seek to gain consumer approval by association. However consumers are quick to recognise when a company is masking its’ commercial interests behind the fa?ade of a good deed and in the social age of transparency such practices can quickly undermine corporate trust.

By putting the contribution to culture first and employing authentic and orginal behaviours, a business can lay the foundations to build sustained consumer trust.

Toward a Legacy of Innovation

Adopting a legacy strategy means a business is committing to change its leadership outlook with a long-term vision for contributing to culture. But it’s not enough to change your vision without changing how you’re going to deliver on it. To meet the demands of putting culture first, leaders also need to get comfortable with a different approach to innovation - bringing culture’s influence into the business. This is enabled by fostering close relationships with cultural innovators and employing a collaborative approach to the ideation of new intellectual property, products and services. Finally, leaders must nurture the organisational conditions to trust innovation - accepting that a degree of risk and failure is a natural function of cultural innovation. Even when this is the case, authentic efforts which fail still have the potential to be perceived by consumers as worthy attempts by the business acting in pursuit of a clear legacy.

Cultural legacy holds the potential to unlock the next wave of long-term innovation and economic growth - by aligning needs of culture with the long-term value the business will contribute. It will achieve this by bringing authenticity back to business, establishing collaboration as the driving force of innovation and re-establishing trust as the measure of doing good business.

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