Big businesses and startups – the authenticity conundrum
- 15 November 2016
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Startups may be able to establish an ethical business policy as a cornerstone of their brand, but can established multinationals do the same and still be ‘authentic’?
‘Doing good and doing well’ is increasingly the goal for many businesses. For optimistic startups, embracing an ethical approach to business and committing to these standards can be an important way of establishing the authenticity of a brand.
So why is it harder for many larger established multinational businesses to focus on ethical policies while maintaining authenticity?
Tia Smallwood is the executive director of World's Most Ethical Company recognition program and a strategic advisor to the Ethisphere Institute. Ethisphere objectively measures companies globally against a set of benchmark ethical standards, recognising the world’s leading ethical companies. She believes that the main differences between startups and established multinationals centre around scale and history.
“Startups will normally include a small number of like-minded people who are focused on a single business challenge and have direct contact with their business partners, sales channels, supply chain, and so on,” she says. “The folks involved often share a set of core values and are driven by the same objectives, and often problems can be solved directly and quickly. Today, startups often share a common vision in terms not only about what business they’re in, but also about how they’d like to conduct that business.”
As businesses expand, their corporate relationships, supply chain, objectives, business processes – and everything else – expand, too. As the scale increases, they face a widening range of complex new ethical issues that can be extremely challenging, particularly for a business on a multinational corporate scale.
Digital and social entrepreneur Martin Leuw believes that ‘core purpose’ is at the heart of enabling larger established organisations to focus successfully on ethical policy. “This goes well beyond CSR, and is about establishing why we are in business and what purpose do we serve. It fits with the ‘golden circle’ approach adopted by the likes of Apple – 'Why? How? What?’ in that order,” he says. “In my experience, a ‘top-down’ approach does not work well – it needs comprehensive employee consultation to get buy-in, but then must be led by the top rather than dictated by senior management.”
Smallwood explains: “We find that organisations of every size can proactively create and maintain an ethical organisation by engaging in what’s become known as ‘radical transparency’ – that is, moving beyond typical compliance standards and establishing the type of environment where everyday employees understand not just what their individual goals are, but how they should behave in achieving them.”
Identifying and measuring the impact of ethical policies is a crucial component, Leuw says: “For-profit social businesses – particularly those which follow the B Corp framework – make impact a core part of their organisation, with a focus on all stakeholders: employees; customers; community; environment; and investors.”
“Companies should measure the differences between their ethical goals, their policies and their actions,” Smallwood says. “It’s rare to find a company that doesn’t have a great mission statement or set of core values. And most – if not all – companies will say that they’re committed to following industry regulations, government law, and so on. But if their policies don’t match up there’s a disconnect.”
She says that a true culture survey among employees can get beyond what the company thinks its culture is to reveal “how employees actually perceive the company – at all levels, and in all locations”.
“However, unless doing good is at the core of the strategy,” concludes Leuw, “then authenticity can become a real issue and be counterproductive, as the brand will become less trustworthy if it is found to be not authentic.”
How to do it right, in five steps
- Establishing core purpose – For large organisations, establishing core purpose – why they are in business and what is their purpose – should be at the heart of an authentic ethical policy.
- Doing good – This must be at the core of the strategy, otherwise, authenticity can become a real issue as any disconnect between aims and outcomes can undermine trustworthiness.
- Comprehensive employee consultation – Get employees on board to get buy-in. A genuine culture survey to establish how everyone inside perceives company culture can identify – and address – any gap between corporate aspirations and reality.
- Engage in ‘radical transparency’ – Move beyond typical compliance standards to establish an ethical environment where everyone understand goals and the way they should behave to achieve them
- Identifying and measuring the impact of ethical policies – Focus on the impact of ethical policies for all stakeholders: employees; customers; community; environment; suppliers; and investors.
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