Company Brands as Purpose-driven Lived Experience Ecosystems

stakeholders

By Venkat Ramaswamy and Nicholas Ind

With the COVID-19 pandemic curbing global travel in the first quarter of 2020, Airbnb, which had taken twelve years to build its hosting community and home rental business, saw 80% of its bookings vanish. The company lost around $1 billion in revenues in the first eight weeks of the second quarter and cut about a quarter of its 7500 workforce. Remarkably, by the end of the third quarter, Airbnb was in the black again. According to CEO, Brian Chesky, Airbnb got back to the core of its brand purpose of “belonging and connection”, after losing focus in pursuit of growth with forays into media, hotels, and transportation, and increasing its marketing spend.[1]

While Airbnb raised $2 billion in debt and equity financing to stay afloat and slashed about $1 billion in marketing expenses it also had to cover increased expenses.

While Airbnb raised $2 billion in debt and equity financing to stay afloat and slashed about $1 billion in marketing expenses it also had to cover increased expenses: it gave booked guests their money back, gave hosts approximately $250 million to cover lost revenue, created a “super host relief fund” of $10 million and engaged 200,000 hosts in providing housing for some 100,000 “front-line workers”. At the same time, it launched a new category of “online AirBnB experiences” (from artists to chefs to celebrities) which became their fastest growing offering ever. A key catalyst behind rebounding its core business was connecting with the lived experiences of its customers and hosts, and learning from, and adapting with them. At the end of the second quarter of 2020, Airbnb had uncovered a key strategic insight, in that while people didn’t really want to go to cities or travel on business, they did want to get out of the house in a car and travel somewhere up to 300 miles away. By the middle of 2020 Q2, it was doing more business in the United States than at the same time the previous year. By engaging together with customers and hosts, Airbnb pivoted its home page on its website to “Go Near”, with interactional flows of engagements crafted around both customers and hosts. About 90% of Airbnb’s traffic is direct, because as Chesky puts it, “we have a brand that’s kind of used as a noun or verb around the world and that’s because people are really passionate about the product we offer… People come to Airbnb to figure out where they want to travel to…so this is a really, really big opportunity, and we’ve really custom built this platform specifically for the Airbnb way of traveling”.[2]

Airbnb also did something unusual with its laid off employees. They were invited to opt in to an alumni directory where recruiters (even competitors) could reach out to them. More than half a million people visited, a number of them got new jobs and some got hired back, with others prioritized to be welcomed back as and when. Besides employees’ stock options, Airbnb made yet another unusual move when it allowed hosts to invest in $238 million worth of stock in its $3.5 billion initial public offerings (IPO). Given the doubling of its share price, post IPO, hosts felt appreciated as co-creators of value through the Airbnb platform. As Chesky noted, “Our hosts helped create this community and so it would be nice, if they want to, they can co-own the company.”[3]

To be sure, Airbnb has been beset by a large number of scandals over the years. It has come under fire from hosts who have felt ignored, from regulators especially in cities, and from customers who have experienced racial discrimination. In January 2020, Chesky had publicly declared: “We believe that building an enduringly successful business goes hand-in-hand with making a positive contribution to society. Increasingly, that is what citizens, consumers, employees, communities, and policy-makers desire—even demand. Serving all stakeholders is the best way to build a highly valuable business and it’s the right thing to do for society.”[4]

Figure 1
Figure 1: Co-Creating Purpose-driven Lived Experience Ecosystems

The Airbnb story draws attention to creating company brands, together with stakeholders, as purpose-driven experience ecosystems. This is to adopt a perspective that sees the world through the lived journeys of individuals-as-experiencers, as shown in Figure 1. To transform value requires business to construct purpose-built platforms that enable relevant and impactful ecosystem engagements and experiences. The implication of this is that managers have to understand and use brand purpose to configure interactional flows of engagements across the interfaces, processes, artifacts, and persons that compose digital platforms. This is a collective process in that the impacts of activities in the ecosystems in which it operates are shaped together with stakeholders in light of their lived journeys as experiencers.

As the Airbnb example suggests, successful co-creation goes beyond the platformization of resourced capabilities per se. It means orchestrating interactional flows of engagements that enhance the creative developmental capacities of experience ecosystems, and positively impact the outcomes in the lives and livelihoods of all stakeholding individuals, together with them.

Purpose-built platformization of impact ecosystems of lived experiences

The exchange of goods and services has been the basis of the industrial revolution powered by water, electricity, computers, and now interactive intelligence. Although we are in a so-called “Fourth Industrial Revolution (4IR)”, companies have remained tethered to a view of market exchange to the exclusion of more directly focusing on interactional and creational flows of engagements.[5] The COVID-19 pandemic has, however, given greater emphasis to individuals and their life experiences (i.e., “lived” experience). This “lived experience ecosystem” revolution calls for the dramatic rethinking of company brands, from both the perspectives of stakeholding individuals as experiencers, as well as co-creators, within the broader ongoing movement of the firm beyond the traditional corporate form toward “purpose-driven” enterprises. The COVID-19 pandemic has catalyzed ongoing discourse, among academics and practitioners alike, on impact valuation and multi-stakeholder governance processes, and the legal articulation of a “purpose-driven” enterprise.

The COVID-19 pandemic has, however, given greater emphasis to individuals and their life experiences (i.e., “lived” experience).

This was made explicit in France in 2019, when a distinction was made between the legal entity of the corporation and the creativity and innovation of the enterprise itself. Core to the distinction was the desire to give emphasis to corporate purpose and to oblige companies to consider the social and environmental implications of their activities. In this context, Levillain and Segrestin have argued that we need to conceptualize the modern business “enterprise” as a form of “collective creation” that emphasises scientific invention, new communication systems, and innovation toward “desirable futures”.[6] This new entreprise à mission model raises the question as to, “How can this collective creation be best oriented toward the collective interest?” Today’s innovative and global business enterprise cannot be thought of as a private actor pursuing its own interests. As an engine for the production of society, its governance should certainly match the requirement of the general welfare.

From a business perspective, operating in a hyperconnected interdependent world has been a reckoning for CEOs of companies who are “genuinely struggling with their role at a time when employees, customers, investors, and society are demanding ever more of them”.[7] As Airbnb navigated its way out of the crisis, Chesky noted in a Fortune interview: “I think what ends up happening with companies is they usually just serve one stakeholder—shareholders; they look at only certain types of metrics—financial metrics; they look at them over a short period of time—quarterly; and so human beings get reduced to numbers on a spreadsheet… It is possible to design systems where everyone can benefit… People have this erroneous notion that there is a thing called tradeoffs and that you must prioritize somebody over the other… I just call that an incomplete design.”[8]

Even as the pressure toward becoming purpose-driven is becoming more intensive, the locus of brand value innovation has rapidly shifted beyond traditional goods-services operational activities toward environments of experience ecosystems in the lived journey of experiencers. Consider, for instance, the case of Danone, a French based, multinational food giant, whose North American arm is the largest Public Benefit Corporation in the world. The parent company became the first listed entity in France to adopt the entreprise à mission model, which makes the stated raison d’etre (which defines the company purpose and can differ from the interests of shareholders as such) legally binding for its directors by integrating it into its charter and undergoing external reporting and evaluation. Danone’s ex-Chairman and CEO, Emmanuel Faber, notes that managing the diversity of stakeholders is a “fact”, as manifest in the realities of business.* Creating shareholder value requires the enterprise to engage in multi-stakeholder governance, and report and deliver on the four key objectives of health, planet, people, and inclusive growth in its business ecosystem. In other words, it is becoming the standard. In the case of Danone, Faber notes that food is undergoing a vast revolution: “People are reconsidering the role of brands when it comes to food. They had entrusted their parents and trusted brands with the guarantee that the food they were eating was the right food. They found out it was not always true and some of the unintended consequences like diabetes, obesity, and depleting natural resources, etc., and a whole generation is now questioning that”, and this all across the world… “there is a need to rebuild trust and I think that big brands have a place (and whereas they have lost market share in the last decade) and are ready to be branded on a mission, they can make a change. And what we see in the COVID crisis is exactly that opportunity to come back into the preferences of people if they can behave properly… Consumers are craving change. They expect large organizations like Danone to bring our scale of impact to change the world for the better.”[9]

At the same time, the production of food and the business of agriculture itself has undergone dramatic change in the 4IR, as Information Technology (IT) has become part of physical farming products. Consider the case of the John Deere brand, which is almost two centuries old with its roots in agriculture. As Docherty and Porter note: “John Deere talked with local farmers, who spoke of their frustrations with their old plows, most of which were designed for the sandy soils common in the eastern United States and were, therefore, unable to shed the sticky soil of the Midwest. John Deere built a new plow of highly polished steel that was self-scouring, allowing farmers to plow their fields uninterrupted. In 1837 he created the company that bears his name.” John Deere’s focus on helping farmers ultimately built a brand trusted by farmers.[10]

Over the past two decades, Deere has undergone a remarkable purpose-driven digitalized transformation based on an experience ecosystem configured toward the lived journeys of farmers as experiencers. In the early 2000s, Deere began experimenting with global positioning systems (GPS), along with a wide variety of biosensors on their combines and tractors with on-board sensors that can measure the oil content of grain or tell the difference between weeds and crops. GPS-guided steering of tractors and other machines establishes repeatable accuracy and eliminates overlaps in the treatment of farm areas, reducing costs to the farmer in time, fuel, labor, and chemicals, while fertilizers and herbicide can be applied according to the needs of the soil in a farmer’s area. The modern farmer can keep track of equipment remotely, access remote diagnostics integrated into the system, along with predictive analytics to avoid costly surprises during the planting or harvesting seasons. John Deere created the Intelligent Solutions Group (ISG), comprising “hundreds of system architects and developers centered on developing advanced farming technologies”… to help capitalize on “the use of technologies such as GPS, vision, sensors, robotics, and machine learning”… and provide “software and data-based solutions that work with equipment and analyze outcomes to solve complex problems on the farm”. Deere is connecting not only farm machinery but also an ecosystem of connected services through irrigation systems, combined with weather data and seed optimization for an advanced “precision farming brand experience ecosystem”.[11]

The Deere brand offering is oriented around the farmer-as-experiencer paying attention to the lived journey of farmers through which value emerges for the farmer via Deere platformized capabilities as a service.

The Deere brand offering is oriented around the farmer-as-experiencer paying attention to the lived journey of farmers through which value emerges for the farmer via Deere platformized capabilities as a service. Over the past decade, it has systematically become focused on the individual jobs a farmer has throughout the entire growing season, starting with the process of field preparation, planting or seeding, applying (nurturing and protecting), and harvesting. It includes all the analysis and planning that goes into farm management to assist farmers, as they stand in their fields or sit in their combines, as to how their businesses could be run better overall using mobile interactive platforms. Farmers can harness machine and agronomic data to enhance the long-term health and sustainability of their operations, while promoting their stewardship of the land. They have a sense of control over their data and can share it with whomever they choose to with appropriate access and decision rights.

Engaging stakeholders as co-creators

With growing recognition of the importance of the United Nations Sustainable Development Goals (SDGs), to achieve a better and more sustainable future for all, there is increasing emphasis on focusing on multi-stakeholder impacts. As the World Economic Forum notes, the company is “more than an economic unit generating wealth. It fulfills human and societal aspirations as part of the broader social system. Performance must be measured not only on the return to shareholders but also on how it achieves its environmental, social and good governance objectives.”[12] This move to involving stakeholders in co-creating the enterprise entails a shift in the strategic management of brands toward orchestrating platformized brand experience ecosystems. The connection of brand value creation opportunities with resourced capabilities, enables stakeholders, as co-creating experiencers and organizing actors, to co-design environments of emergent experiences and enact valuable embodied experiences through those environments over space and time.

Multi-stakeholder perspectives of brand valuation, corporate social responsibility, and sustainability considerations have gained increased recognition in creating brands together. This builds on earlier emphases of brand value as a “multifarious construct that is affected by, or the sum of, a gamut of relationships”, which involves employees, customers, and other stakeholders in brand development, and all stakeholders in the enterprise network contributing to a “negotiated” brand, as its brand value develops over time. Multi-stakeholder perspectives also draw attention to balancing heterogeneous matters of concern, dealing with the loss of control over brand evolution, finding the middle ground between polyphony and cacophony, positive and negative freedom, and cultivating trust and ethics, and nurturing a sense of meaningful brand purpose. In addition, technological advances, such as in machine learning and artificial intelligence, also raise important questions of inclusiveness, privacy, and ethics in decision-making that impact brand relations in experience ecosystems.[13]

Co-creation has the potential to balance the invisible hand of free markets with the visible and united hands of the corporate brand’s diverse stakeholders. This demands a genuine will and an absolute commitment to listening to different stakeholders’ needs, expectations, and desires. However, unfortunately, too many organizations are still primarily concerned with meeting the expectations of their shareholders, even if they claim to engage in a dialogue with their different stakeholders. Instead, conscientious corporate brands promote an authentically balanced stakeholder perspective. Additionally, they are not only committed to listening to stakeholders, but most importantly, they engage them in their strategic decision-making processes. Conscientious corporate brands which adhere to this strategic view of co-creation, see their stakeholders as key strategic partners with whom they need to build long-term, trustworthy collaborative relationships. Here, stakeholders are seen as value co-creators, ‘rather than as entities to be merely managed by the enterprise’.[14]

Multi-stakeholder perspectives of brand valuation, corporate social responsibility, and sustainability considerations have gained increased recognition in creating brands together.

To enable a co-creative approach requires transformative, responsible, empathetic, and participatory leadership of company brands – transformative in that profits and purpose must be balanced with a commitment to using business to foster a positive transformative change in society, the environment, and the business landscape; responsible in that short-term and long-term objectives must be balanced; empathetic in that the expectations and demands of diverse stakeholders must be recognized; and participatory in that the voices and concerns of all stakeholders must be considered. Danone’s Manifesto brand model is a case in point. Its backbone is its One Planet, One Health vision, which recognizes the health of people and that of the planet are interconnected. It is a “call to action for all consumers and everyone who has a stake in food to join the food revolution: a movement aimed at nurturing the adoption of healthier, more sustainable eating and drinking habits.” This brand model “has as its unique starting point the focus on people, identifying the tension between a relevant insight and confronting it to the reality in which we live. This makes it possible to identify the legitimacy of the brand to operate in this environment.” What’s more, Danone has empowered its 100,000 employees to co-own this vision (with nine 2030 Danone Manifesto interconnected goals) through its pioneering “One Person, One Voice, One Share” engagement platform. It relies on an internal digital platform with extensive sharing and learning resources related to the company vision and goals, including content derived from collaboration with like-minded partners. All Danone employees have the opportunity to learn more and build on the issues, challenges, and opportunities that come with the goals. They can also voice their point of view on both the company agenda and the roadmaps of the 2030 goals, at local and global levels. Annually, 26 volunteers are selected to carry the voices of its 100,000 employees to members of the Board of Directors and the Executive Committee – the dialogue provides an opportunity for richer and more constructive discussions to feed into Danone’s strategy, which is then shared back with employees.[15]

Engaging stakeholders as co-creators, of cross-sector purpose-driven lived experience ecosystems, entails the co-creative transformation of brand management systems that support ongoing interactional creational flows to create valuable brand impacts together. A significant challenge is to configure brand experience ecosystem platforms with partners and other stakeholders, as they plug into or proactively build out focal digital infrastructures while enhancing developmental capacities. Sustaining the collective creation of purpose-driven experience ecosystems requires a continued emphasis on the positive generation and modification of its capacities to produce “surplus affects” of wellbeing while deftly managing strategic risks which are material to the business, as they arise.

Conclusion

Over the past two decades, there has been growing recognition of the dual de-centering and democratization of company brands, within the broader umbrella of co-creating brands and co-creative brand management systems, and with the active participation of stakeholding individuals in creating brands and valuable impacts together. Ubiquitous information and communication technologies in a hyperconnected and interdependent digitalized world have transformed the business and societal landscape in unprecedented ways, accelerating the de-centering of value creation away from the goods-services activities of firms and institutions toward the experiences of individuals. It has spurred an “experience-first” frame of reference in value creation, not to mention “digitally native” business models (such as Airbnb), centered on networked flows of engagements and interactional creation of value through digitally platformized offerings. Simultaneously, there has been increasing democratization in the process of value creation as a “co-creation”. Prahalad and Ramaswamy originally articulated co-creation as a process of individuals and enterprises jointly creating customer experience value, where the individual was involved in this process.[16] They heralded a new frontier of co-creation of value based on the engagement of individuals through their environments of experiences on the one hand, and access to resources, skills, and capabilities of networks of firms and communities, on the other hand. They discussed how this was more than a mere focus on the user experience of goods and services. Instead, it entailed a broader emergent lived experience space in which individuals were an integral part, personally and collectively, alongside the rapidly evolving smart connected offerings that we take for granted today through multiple modes of interactions from new cloud-enabled mobile applications of artificial intelligence (AI), to the Internet of Things (IoT) and augmented/virtual reality (AR/VR). While digitalized technologies continue to evolve, so must company practices in imagining brands as platformized impact experience ecosystems. Keeping brands alive and connected with the daily lives and livelihoods of people, together with all stakeholders, in a hyperconnected digitalized world, is a new emergent frontier of value creation and innovation over the next decade.

(*) Since writing the article, Emmanuel Faber has left Danone. The company notes that ‘The Board believes in the necessity of combining high economic performance and the respect of Danone’s unique model of a purpose-driven company, built on the strength of its brands and enabled by the outstanding quality of its teams.‘ https://www.danone.com/content/dam/danone-corp/danone-com/medias/medias-en/2021/corporatepressreleases/PR-Danone-new-governance-march-15-2021.pdf

About the Authors

Venkat Ramaswamy

Venkat Ramaswamy is Professor of Marketing at the Ross School of Business, University of Michigan, Ann Arbor, USA. He is a globally recognized thought leader, idea practitioner, and eclectic scholar with wide-ranging interests in innovation, strategy, marketing, branding, IT, operations, and the human side of the organization.

Venkat’s book, The Future of Competition (2004), co-authored with C. K. Prahalad, introduced Co-Creation as a revolutionary concept. It provided a new frame of reference for jointly creating value through experienced environments and called for a process of co-creation—the practice of developing offerings through ongoing collaboration with customers, employees, partners, and other stakeholders.

Nicholas Ind

Nicholas Ind is Professor of Brand Management at Kristiania University College, Norway, and a Visiting Professor at ESADE Business School in Barcelona and Edinburgh Napier University. His work focuses on the intersection of co-creation, branding and corporate culture. He is the author of 16 books including Living the Brand, Branding Governance, Brand Desire and Co-creating Brands.

Before becoming an academic, Nicholas worked as a brand management consultant with a focus on defining brands and bringing them to life.

Endnotes

1 COMMENT

  1. […] With the COVID-19 pandemic curbing global travel in the first quarter of 2020, Airbnb, which had taken twelve years to build its hosting community and home rental business, saw 80% of its bookings vanish. The company lost around $1 billion in revenues in the first eight weeks of the second quarter and cut about a quarter of its 7500 workforce. Remarkably, by the end of the third quarter, Airbnb was in the black again. According to CEO, Brian Chesky, Airbnb got back to the core of its brand purpose of “belonging and connection”, after losing focus in pursuit of growth with forays into media, hotels, and transportation, and increasing its marketing spend.[1] […]

LEAVE A REPLY

Please enter your comment!
Please enter your name here