Tomorrow's Company is the Company You'll Keep

Hewlett Packard Consulting Building Your Company's Vision Conference Thursday, 8 July 1999, Chelsea Harbour

Sir Robert Worcester

It is a great pleasure for me to be asked me to speak to you this afternoon on a subject close to my heart, one with which I have been involved with for all of the 30 years that my firm, MORI, has been in existence here in this country. For all of these years I have taken an interest in the role of the corporation in British, and indeed European, society, looked at the public's expectations towards the modern corporation, conducted over 1,200 studies of attitudes to various corporations here in Great Britain, and over 200 studies of corporations in other, over 30, countries. Some of the knowledge I have gained from this work I hope to share with you today.

When MORI was first established in Britain, in 1969, among its specific aims was to develop and establish the study of the public's attitudes to companies in Great Britain. During this past decade we have been working with the Royal Society of Arts, on its Tomorrow's Company initiative, led by Sir Tony Cleaver, now chairman of AEA Technology, formerly Chairman of IBM UK and also with Sundridge Park on the British Quality of Management Awards.

The RSA Inquiry into Tomorrow's Company concludes that 'Tomorrow's company develops a clear success model of its own with an inclusive approach which differentiates it from yesterday's companies' by:

• defining and communicating its purposes and values
• developing a unique success model and applies it through matching measurements
• valuing reciprocal relationships
• working in partnership with stakeholders
• maintaining a strong licence to operate and healthy reputation.

You all know 'what gets measured gets done'. You work for a company which values and knows its customers ('market focus'), and its staff, and is committed to measurement. The Hewlett Packard people here can tell what they do -- it's called the 'HP Way'.

You do not need the 'wake-up call' so needed in so much of British business. You don't need to establish task forces to examine your navel, articulate your culture, set your objectives and define your goals (in the way the Mars corporation had to a decade ago when I was called in to be a member of the task force of senior Mars' managers worldwide that set up the 'Five Principles of Mars'). (That's not the 'Mars Group that Collins and Porras talk about in their HBR article).

You don't need to show commitment to corporate excellence, or employee recognition: you have your commitment to R&D, to obsoleting yourselves, to delegation, to flexibility, to 'bootlegging', to staying close to the customer. You have a strong culture and well established principles...don't you? You've all these things in place...don't you?

So now knowing that you do, don't you, what do you do for an encore? If you do, why are you here, and why was I asked to address your gathering? Because, I dare say, that in your company, as with so many of my clients, you are among the best, because you are running scared, constantly looking over your shoulder and realising that there are others coming along who are just as smart, just as dedicated and just as committed as you are, and that is you don't innovate, don't develop, don't change, don't change, you die.

Perhaps the message of Jack Welsh, chairman of the General Electric Company in the United States gives us a clue: He said that there were only three performance measures he thought he needed to keep his eye on: his cash flow, his customer satisfaction ratings and his employee satisfaction ratings.

The European Foundation for Quality Management Model provides a framework for companies to develop their own success models. (Figure 1) The MORI Excellence compliments this. (Figure 2)

It is based on the belief that while different audiences have different priorities in its reciprocal relationship, there are common threads based on a customer relationship hierarchy. These follow where Abraham Maslow led over sixty years ago, in his seminal paper 'A Theory of Human Motivation' which introduced his Hierarchy of Human Needs. As his psychological approach can be applied to individuals and a sociological approach to peoples and countries, so we believe it can be applied to corporations using the MORI Customer Relationship Hierarchy. This rests on a model we've been building over more than 30 years. In an earlier formulation, I devised a simple model of effective management of a company's communications programme. It seems simple, yet in this morning's newspapers, on the television this evening, you will see many companies whose advertising or other communications will fail, because it is not based on the sequential building blocks of:

1. Awareness: Here's who we are.
2. Involvement: Here's what we can do for you.
3. Persuasion: Here's what we think.
4. Action: Here's what we want you to do.

There is no reason for anyone to listen to your message if they do not know who you are and what you represent, so that the first of these building blocks to a consumer franchise is awareness. My own fieldforce area managers tell me that they are often approached by interviewers who work for other market research agencies (there are about 600 in this country, how many can you name?) and who say they would like to work for MORI, as it is so well known and people are much more likely to agree to be interviewed if it is MORI rather than the XYZ market research company. This is true of ICI's salesmen, Heinz's soups, Mars ice cream bars, and Shell's petrol at the pump. Former Shell chairman Sir Peter Holmes estimated that at least 10% of their world-wide profits was attributed to their good corporate image, now under renewal under the 'Profits and Principles' rubric.

And they won't listen long, either in the corridors of power or in the supermarket if they don't see, clearly and quickly, what's in it for them. People pay attention, read ads, listen to the message, if they see how it is going to affect them in their daily lives. So involvement is important. Build it in, and be explicit about it. Tell them exactly what you can do for them, and they'll listen, and be more susceptible to be persuaded to your point of view. The next stage is:

Persuasion. The British are prone to understatement. I find that endearing, and one among many of the reasons I like living here. In America I always feel I am being shouted at; in Britain, I'm spoken to politely, most of the time anyway. But you must be explicit, not too underplayed. Be clear what it is you believe in, whether it is your product, your people, your financial promise, or your position on an issue of public policy.

If you have dug the foundation of awareness and built the framework of involvement, people will listen to your argument, and be willing to be persuaded.

So that you can make it clear to them what action you want them to take. Again, the British way is one of softly, softly. Ask for the order, don't expect the potential customer to ask you for the pen and ask where he or she should sign. Tell the Minister why you want him to change the government's policy, and how he can go about it so that he will be the hero to your industry and benefit therefrom, and why his action will gain him political credit. Too often the advertisement leaves you thinking 'that's cute, but what's it got to do with me?', 'What are they trying to tell me?', or 'Now what am I supposed to do?'.

The MORI Excellence Model starts with a foundation of familiarity or awareness, how well people, your customers and prospects, your suppliers, the local councillors, local government officials and the public in your plant communities, your 'own' MPs and MPs and peers on key committees and departments, relevant senior civil servants, the investment community, and others of importance to you, feel, perceive, understand, think, about you, your products, your after-sales service, your culture, your staff and the effectiveness of your management, your financial strength and 'political' power, for good or ill, your role in society.

This leads to favourability which in turn develops trust, and as we know, nine times in ten with the general public anyway, Worcester's second law of public opinion research pertains: 'Familiarity breeds favourability, not contempt'. This then leads to transaction, the sale to the customer, the signing on of a prospective member of staff, the handshake with the MP or local councillor, the extension of banking facilities or the half point off the rate.

If the relationship then proves to be a good one, based on experience, this leads to satisfaction, which if repeated then becomes loyalty, the 'old-friend' concept, which leads to customer reference, the employee who will recommend their friends join the workforce because 'it's a great company to work for', the confidence in the corridors of power, the optimal business success that maximises the corporation's power to reward its staff and its shareholders by enriching the lives of its reciprocal relationships.

The MORI Excellence Model rests on these propositions:

• Business success depends upon building and continuing to develop mutually beneficial relationships with critical audiences
• Among others, these audiences include customers, employees, regulators and investors
• Companies which achieve high levels of customer and employee satisfaction, regulator satisfaction and investor satisfaction, and loyalty, will achieve long-term business success
• A company's relationships with key audiences can be defined according to the critical dimensions of these relationships -- as defined by the audience, and these differ by audience, prescribed by each audience's own value structure
• Different individuals have different value mix, but collectively tend to be shared within each audience.
• Each audience's value structure can be measured and the success against criteria measured and updated over time
• Successful companies' values are in tune with those of their key audiences, or they are either in decline or in the wrong businesses
• These values should penetrate the corporate culture and underlie its communications

Values and perceptions drive behaviour. Behaviour affects relationships. Relationships drive business success. Relationships which are mutually supportive drive business success; those which are not damage the basis of business success.

Measurement systems that are consistent, based on key audience values, repeated over time, and actioned, are essential to the effective implementation of the MORI Excellence Model. It can be used to help companies:

• Build their own unique success models, by defined the critical dimensions of their relationships with key audiences
• Develop appropriate strategies for building and developing key relationships by measuring their current strengths and areas and means of improvement
• Implement a programme of constant improvements by providing information on how perceptions and expectations of key audiences are changing over time and in response to the company's initiatives, and thereby,
• Optimise overall business success.

Research can define at what level a company is in its critical relationships and how it can move to the net highest level.

I define the corporation from the perspective of the consumer and other external audiences as 'the net result of all experiences, impressions, feelings, beliefs and knowledge that people have about a company', more subjective than objective. This is important, because these may or may not be true, but I don't measure truth in some abstract way, but perceptions.

In 1969, in our first co-operative corporate image study in Britain we asked the public "What two or three things do you consider most important to know about a company in order to judge its reputation?", and we found that industrial relations and treatment of its staff came first, with 35% volunteering this factor, followed closely by the quality of its products and services at 33%. Well behind were factors such as customer service, at 13%, or profitability, at only 7% in 1969.

The answers to this question have changed dramatically over the years, with staff treatment falling as low as 13% in 1983 and recovering to around 20% over the past four or five years; quality of products or services staying high through the 1980s, but falling to the low 20s earlier in this decade but now at 42%, nearly double; while profitability, of concern to only 7% in 1969 moving into the teens during the eighties and going to 21% in 1995, but now falling again to only 10%, only eighth among the most frequently mentioned factors.

Since those early days twenty five years ago the British public have lost some of their confidence in large companies. In 1969 we found a staggering three in four who believed that 'A company that has a good reputation would not sell poor quality products', a nonsense I know, but nonetheless the perception that was held by three quarters of British consumers. That figure has now fallen to 58%, still remarkable, but a drop of a fifth. Then, nearly half, 48%, were confident that 'Old established companies make the best products'; now, a sixth fewer, 37% are so confident. In 1969 over a third, 37% believed 'I never buy products from companies I have never heard of', another nonsense, and now just 29% say this. And then 37% also believed that 'new brands on the market are usually improvements over the old, established, brand', and that's now dropped to a third.

These are the public's perceptions, but, as the slave-philosopher Epictetus said in the 1st Century, 'Perceptions are facts because people believe them'.

Worcester's second law is that 'Familiarity breeds favourability, not contempt'. Nine times out of ten, the better known a company is, the better regarded. This is true of the general public, somewhat less so of more elite audiences we study, such as the City, Editors of national daily and Sunday newspapers, or Members of Parliament. It is true; companies get to be well known, most of them anyway, by doing good things for people, and by doing so, gain esteem. This in turn aids their ...

• recruitment and retention of staff,
• share purchase and retention, where they are publicly listed,
• the ear of the editor and journalist,
• consideration by the customer and potential customer,
• reflection by the politician and senior civil servant,
• respect from the pressure group.

I have to tell you that most people in Britain think 'As they grow bigger, companies usually get cold and impersonal in their relations with people', a view consistently held by about three quarters of the British public for 30 years. And yet seven in ten or more have consistently thought that 'large companies are necessary for the nation's growth and expansion'. So they think you are a necessary evil, they can't live with you and they can't live without you. They are pretty fed up with politicians and journalists and only ten percent of the public say they can trust what journalists have to say, and only under a quarter, 23%, say they trust what government ministers have to say. The good news is that over a quarter, 28%, say they trust what business leaders have to say, and for me, that nearly half say they trust pollsters.

I hope that you trust what I have had to say this afternoon, and that it has helped you to focus on how your company can optimise its business success in the future.

Thank you.