In Relationships We Trust
Our previous two articles (January's "From Purpose to Profit" and April's "Reap the Rewards of Purpose Activation") explored how company leaders use the power of purpose to drive long-term results: by activating and galvanizing stakeholders around a purpose statement, then by activating that statement one step at a time. The results are measurable: increased purchases, loyalty, advocacy, engagement, press mentions, brand equity, happiness, etc.
Now let's move on to showing how these positive, purposeful interactions can build trusted, long-term stakeholder relationships—and how these deeper bonds are crucial to the success of purpose-led organizations.
TRUST TRANSCENDS PRODUCTS AND SERVICES
Innovation, operational efficiency, and competitive pricing have been, and will continue to be, critical to success. But in today's ultra-competitive, technology-driven environment, these disciplines alone only get you so far. Your business may be profitable in the short term, but your competitors will catch up—whether by replicating your products, matching your pricing, or copying your business model—and your advantage will evaporate.
The key to a sustainable advantage is a laser focus on building and investing in long-term, trusted stakeholder relationships. You'll transform your company from a mere vendor with which a customer transacts to a trusted and integral part of that customer's life—a unique advantage that cannot be copied.
PARTNER RELATIONSHIPS FOSTER INNOVATION
A powerful illustration can be seen in relationships with a company's suppliers and partners. Trusted suppler and partner relationships result in engaged suppliers and partners willing to collaborate and invest in people, innovations, and technology that benefits you.
But partner relationships characterized by distrust—such as frequent or unreasonable pressure to reduce prices or speed up production—stifle innovation and lead to apathy, dissatisfaction, and lack of engagement.
A 2010 article in the MIT Sloan Management Review backs up this idea. Using the automotive industry as an example, authors John W. Henke and Chun Zhang point out that suppliers typically reserve their best technologies for the customers they have the best relationship with. "Such innovations," the authors conclude, "can provide customers with the superior manufacturing capacity, improved product performance and customization capabilities required for long-term competitiveness in the marketplace."
Suppliers are willing to invest in these types of customer-specific innovations only when they believe they have a long-term, mutually beneficial relationship, and trust that the customer—you—has their best interests in mind.
The authors' study identifies three ways to build the kind of trust that fosters a supplier's willingness to bring exclusive innovations to the design table: (1) involve suppliers in product development and other processes; (2) demonstrate openness and share timely information with them; and (3) help suppliers become more competitive in cost and quality.
Here are three steps to aligning with your purpose statement and building trust with stakeholders.
1. Conduct an external environment assessment. Identify industry-specific issues and disruptive factors relevant to your company. Map out market and strategic growth opportunities in order to understand trends and assess the potential impact on your customers and partners.
2. Undertake competitive benchmarking. Conduct social listening and competitive research (on competitors and trendsetters from other industries). Map your company's current definition of purpose to develop an understanding of your market position and performance and the potential for repositioning your purpose.
3. Conduct a purpose integrity assessment. Evaluate your company's current purpose statement, core, and story. How well has your purpose been communicated and activated? What insights can you glean related to strategic brand position, permissions, and integrity?
Once your organization has established and activated a purpose statement by following the steps above, it can pursue the relationships that will give you the competitive edge. You'll be ready to move past transactional relationships and realize the power of trusted relationships.
Woody Driggs is the global advisory customer leader and a principal in Ernst & Young LLP’s Advisory Services Performance Improvement practice. He is based in Washington, D.C. Jeffrey Stier is a principal in the Global Customer practice of Ernst & Young LLP. He is based in New York. The views expressed herein are those of the authors and do not necessarily reflect the views of Ernst & Young LLP.