Title: Grow: How Ideals Power Growth and Profit at the World's 50 Greatest Companies
Author: Jim Stengel
Publisher: Virgin Books, an imprint of Ebury Publishing (2012)
GREAT businesses naturally have many things in common: well-designed products and services, exceptional customer experiences, outstanding talent and teamwork, and inspiring leadership. However, according to Jim Stengel in this book, great businesses have something else that keep them going strong through good times and bad.
Great businesses have great ideals. At the core of Grow: How Ideals Power Growth and Profit at the World's Greatest Companies is the Stengel Study of Business Growth that first began as a project for Procter & Gamble (P&G) to benchmark itself against the world's most successful brands. Stengel, who was global marketing officer at the conglomerate for seven years, has managed big, sometimes troubled P&G brands such as Jif peanut butter, Crisco vegetable shortening, Cover Girl make-up and Pampers nappies. He commissioned the initial study, to challenge his marketing team to benchmark their practices against the world's fastest-growing businesses and brands, no matter what category they were in. Stengel's expectation was that they would learn how the fastest growing businesses were allocating resources to digital media, balancing innovation with their core products and services, streamlining global operations, handling HR issues and so on.
The team did obtain these insights but the thing that leapt out was unexpected and much bigger. The study did not set out to test the business value of ideals as Stengel and his team went strictly looking for superior financial growth and what top-ranked businesses were doing differently from competition in their categories. However, when they probed further, they found again and again that “the world's fastest-growing enterprises were organised around ideals of improving people's lives and activated these ideals throughout their business ecosystem.” The study has since been expanded, refined and branded by Stengel.
The study leveraged on Millward Brown Optimor's (the WPP-owned research group) BrandZ database that values more than 50,000 brands in 31 countries, tracking consumers' loyalty to brands alongside their financial growth. Looking at absolute growth, rate of growth and growth versus category rivals over a decade, the study uncovered 50 brands with “extraordinary growth” and unusually strong connections to consumers. These brands, termed as the “Stengel 50”, covered companies from Accenture to Zara.
The book, touted by Sheryl Sandberg, chief operating officer of Facebook, as “a must read”, marks a bold and rare attempt by a corporate executive with direct field experience to craft a broad new theory of business. Its main premise: “maximum growth and high ideals are not incompatible they are inseparable.” The 10-year study showed that an investment in the Stengel 50 would have been 400% more profitable than in the Standard & Poor's (S&P) 500.
As Stengel points out, “the counter-intuitive fact is that doing the right thing in your business is doing the right thing for your business.” Stengel shows us in Grow how “numbers alone can't be your North Star”. As we speculate about the true intentions of corporate social responsibility activities, sustainability reports and the like, it is refreshing to hear Stengel say that a brand ideal is “not social responsibility or altruism but a programme for profit and growth based on improving people's lives”.
The research compiled in Grow is not only rooted in numbers but is also the fruit of many interviews with executives, academics and consultants.
Stengel also offers detailed insight into his work at P&G repositioning Jif peanut butter to appeal to health-conscious mothers or resolving a culture clash between head office and the newly acquired Cover Girl business. He also talks about his post-P&G consulting work done with clients such as Toyota, Dell and Pizza Hut and his board positions. To support its key points, the book also presents a collection of instructive case studies.
Stengel provides examples of both brand achievements (e.g. Apple's stores, how Jack Daniel's has managed to keep its brand ideal of “celebrating and evoking pride in personal authenticity, independence and integrity” relevant and growth inspiring since 1866) and brand missteps (e.g. when Discovery drifted away from science into “tattoo TV” or Pampers lost market share by focusing too narrowly on nappies' dryness, before redefining its brand ideal as “helping mothers care for their babies' and toddlers' healthy, happy development”) to illustrate to us important leadership-building “culture cues.”
My favourite story was the saga of Method, a self-styled David among Goliaths in its category, which served to bring Stengel's “Ideal Tree Framework” to life. Since its brash appearance on the scene with the 2001 launch of its first line of surface cleaners, San Francisco-based Method has achieved annual double-digit sales growth and has been a game-changing innovator in a mature but highly competitive category (with giants such as P&G, Unilever and Clorox). When Eric Ryan (who worked in consumer packaged goods marketing) and Adam Lowry (who worked on environmental science issues) were faced with the task of cleaning the house they shared, they realised most cleaning products had harsh toxic ingredients that required wearing rubber gloves, and were dangerous to small children and pets. Searching for more eco-conscious products, they learnt that “if it's green, it doesn't clean”. Wanting a better solution, they took the first step of founding Method. Their unique mantra of “Keep it weird” has helped them build an army of “people against dirty” advocates. It has led to partnerships with a national retail partner and also world renowned designer, Karim Rashid (whom they cold called), who was persuaded by their brand conviction to design the container for their liquid dish soap on a revenue-sharing basis.
While I was, by the end of the book, totally sold on the merits of corporate idealism, I felt that its actual content was scant but padded up by recurring layers. Its main messages, while impactful, were not many. Still, Stengel's practical advice grounding his high ideals and call to action to create “a new narrative for business” will resonate with many readers. In the end, in an environment that seems increasingly galvanised by greed, we all secretly want to believe and need big businesses to see that improving people's lives and having a positive social impact are the best prescription for their long-term success.