Business is risky. This banal statement has been commonly understood throughout time, but is sometimes overlooked. It is implausible to accurately determine what lies in the future; the market fluctuates between cycles of virtuous and vicious directions and risks are prevalent from all corners of the business atmosphere. From the operations to the very investors themselves, all these tangible/intangible factors are indisputably ungraspable. Predictions are constantly being made to the best of our ability, or the best of the analysts’ ability, but at the end of the day there is only one factor that is retainable — that is the corporate shared value (CSV). The CSV is a long-term strategy that, if withheld, generates economic value in a way that produces value for the society. A shared value of a company that aligns with that of the society reconnects a company with social and economic progress. CSV also happens to be what Paul Polman, CEO of Unilever, has come to master.
Unilever is a Dutch-British multinational consumer goods giant with its main offices in London, Rotterdam. It has a net profit of $6.13 billion (up 5.2% in the past year), a revenue of $58.31 billion (down 1.2% in the past year), and a market capitalization of $171.69 billion as of October 16, 2017. Revenue was down in the past year but has recently been yielding high growth in response to exposure in emerging markets (including Asia, Africa, the Middle East, Russia, Turkey, and Ukraine). Ironically enough, Unilever’s competitors, Proctor & Gamble and Nestle, who are also working in emerging markets, have seen no such revenue growth. In fact, the revenue growth of both of Unilever’s competitors is on a downward trend. Perhaps they should learn a bit from Polman.
Polman stresses the importance of CSV in a company. He expounded on this ideology by stating, “If you want to be in a business for a long time, which I think is an objective for most companies, you need a business model that responds to long-term [value creation], which requires responding to multiple stakeholders.” Therefore, for a company to succeed throughout all the chaos and unpredictability that the business world brings, at the core one must have a societally accepted value and fixate not only on the shareholders, but also the stakeholders. The stakeholders being your employees, consumers, suppliers, partners, and shareholders. People want inclusivity and transparency — they want to be associated with companies that make positive contributions to the world.
Start with the value and the money will then follow.
Said principle is shown to be true through Unilever’s total shareholder return that has nearly quadrupled in the last nine years. Additionally, top analysts including Warren Ackerman have glorified Unilever as one of the best stocks for investors toward 2020. In the words of Ackerman, Unilever “offers the best combinations of revenue growth, margin and cash returns to shareholders.” Again, the promotion of sustainable practices in a company attracts stakeholders to your company. Polman, the only business leader who played a role in drafting the document of the United Nations titled Sustainable Development Goals is also playing a role in the betterment of his company.
Simon Sinek explained this concept exquisitely in a Ted Talk titled, How Great Leaders Inspire Action. He propagated the importance of value by reiterating, “People don’t buy what you do. They buy why you do it.” He then went on to explain his theory of the Golden Circle that reveals how people respond to why your company does what they do, not what they do or how they do it. Sinek used Apple as an example and explained how their marketing lures people. He said if Apple were to announce, “We make great computers… they’re beautifully designed, simple to use, user-friendly… want to buy one?” no one would be confident in buying the computer. It is in the way in which Apple delivers the computer to its consumers that is focused on value, not product. He then went to say how Apple announces, “Everything we do, we believe in challenging the status quo, we believe in thinking differently… the way we challenge the status quo is by making our products beautifully designed, simple to use, and user-friendly. We just happen to make great computers…Want to buy one?”
Again, start with the value and the money will follow. These days, with an abundance of companies and thousands of products, it is not enough to have the best product out there — you need to also have the best reason out there. Then, and only then, will you attract millions.
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