How can shared values help to create a sustainable luxury brand?
For years I have wondered about what makes a brand successful and that is why I decided to follow a Masters degree in Luxury Brand Management, with the intention of researching about the associations between luxury brands and sustainability’s conflicting principles. I examined the role of brand values in brokering the marriage between luxury and sustainability. Ethics, awareness and good business practices have always been under my radar, something I had to get my hands dirty with.
In 2010 Stanford University ran an instant gratification test called the “Marshmallow Experiment” with kids. If they could delay gratification by sitting in a room alone with one marshmallow until the facilitator got back, they would be rewarded with an additional marshmallow. If they cracked, succumbed to temptation by eating the marshmallow before she returned, they would not be rewarded with an additional one. Sort term vs. long term profit. What might seem like a silly experiment with kids has a lot to say about our tendency to prefer instant gratification to sustained growth and in the field of luxury brands even more so, an industry driven by hedonistic consumption motivations.
Sustainability is a diffuse paradigm. The dimension of complexity given the variety of stakeholders and conflicting opinions make it an arduous mêlée. A more philosophical definition of sustainability has come to support that a holistic and global approach must be implemented, it being that sustainability cannot be disconnected from the value systems of those involved in its execution and the societies in which they occur. After all, it is people who ultimately deliver the brand… and the bottom line!
Michael Porter and Mark Kramer from Harvard Business School were the first to introduce the concept of shared value, supporting the idea that business has been focused on enhancing short term financial performance overlooking wider influences for their long-term success. Shared value produces value for society by tackling its challenges, in other words, an approach that links business success with social progress.
Shared value is then about evolving with new management tools that capture value creation and destruction and create exponential business models in the appearance of progressive challenges. Shared value aims to meet the needs of the community and those of business through the same actions. When interests diverge, the resolution of this tension means recognizing that both the business and the community are collectives of individuals. The idea of shared value is that the brand no longer has to buy customer loyalty. They voluntarily give back to the brand given its position within the community and the trust and influence it has built around it.
You might be wondering what this all has to do with luxury and why I decided that this was a relevant subject iin this area. Contemporary economic and social conditions, perhaps even as a trend, sustainability has emerged to position itself at the frontline of many aspects of society. Important events in history, especially the financial crisis of the past decade, brings ethical interests of customers to the top of the agenda, suggesting that products and services should be aware of the continuous shift in consumer values and the need of business to constantly be sinchronozed with these societal evolutionary changes.
Although constituting only approximately 1% of the global population with a high in net-worth and power of influence, the so-called Global Elites have considerable importance in the creation of –and desire for- unachievable and unsustainable levels of consumption. Influencing the contours of capitalism and occupying the highest mark of social recognition their activities are examined, imitated, and benchmarked in the production of all our human activities, the power and knowledge symbolisms that underpin and demonstrate human success. In other words, the concept of luxury depicts the achievement of excellence and as such, luxury brands should face the sustainability challenge as an opportunity to embrace innovation and with it take market leadership and be recognized as and in fact be the group that is helping to take society forward.
The importance of the concept of shared value for the purpose of my research was that it sets a milestone; it goes further in integrating considerations of social value and embedding them into the business model of the company, where it is not longer about complying with the minimum policy, “ticking the box” by making –unrelated- to the business donations; but goes a step further than the Social Corporate Responsibility and philanthropic approaches. It understands that that the sustainability agenda is not just a communication and public relations strategy, but also an internal optimization process in business performance.
Sustainability and value creation provide an avenue of opportunity within luxury brands. Business in the field will have to evolve integrating sustainable management strategies into their business models. Given the historical leadership of luxury brands, if luxury wants to keep the high standard they are known for, it will have to take the lead in delivering unique value to its customers where branding is less of the design of a logo and more about the delivery of the brand promise (value). In order to remain relevant in today’s society, a company must escape the communication silo using targeted internal and external interaction and shared value strategies across all the brand touch points that guarantees the sustainability of the business. Now it is for you to decide if your business will eat the marshmallow now, if it’s worth the wait to be entitled to two… or maybe there’s a third option, a strategy to keep earning them continually and without restriction.
