It is Christmas time in Europe. Like Diwali in India, it is the festival of light, held just after the shortest day of the year. The old continent is gradually shutting down until the first week of January, to spend time with family and friends. It is the season of sharing and reflection, looking back at the year past and imagining how we could make next year better.
We have flown to Amsterdam, to take part in this annual ritual and to meet up with colleagues, clients, family and old friends. It has been nearly a year since I was in Europe, the longest absence in the five years we have been living in Delhi. And yet, it always feels as if such a break sharpens your view. This time it struck me that there seems to be a deep shift taking place—at least in the Netherlands—that has parallels in India.
In India, there is a mood of renewed nation-building since the current prime minister took office. The country looks forward again and feels more optimistic. India’s story of modernization is back. Not just modernization of technology, but also modernization in social relationships. A prime minister who talks of his tea-seller past, calls himself the country’s “prime servant", and looks for equality for girls and women is bringing a fresh wind. And as such, India is in search of new meaning—a way to make sense of the changes that are happening and to connect them to its past.
In the Netherlands, it struck me how utterly complete the project of nation-building is. In my view, the country is more or less finished. The roads are perfect, it is safe and clean, healthcare is superb, the cities are pleasant, gross domestic product-per-capita is among the highest in the world, we rank high in global happiness surveys, the legal system is impartial, we have an open economy and a strong liberal democracy, and the list goes on. The Dutch always complain, but that is because it is a national pastime—not because there are mind-blowing problems.
There is a real issue, though. And that is: what’s next? What do you do as a nation when the material aspects of your wellbeing are in place? My sense is that the Dutch are a bit clueless. And we are not alone. Europe has run out of big ideas. It is not a problem of luxury, as I believe that sweeping change is happening. Like in India, people across Europe seem to be challenged to look for new answers to the question of what is significant in life. Not prompted by modernizing changes, but because the project of modernity is reaching saturation levels. In a word, people in large parts of the world look for purpose.
And there is a profound parallel with the world of business, which strengthens my conviction that these forces will come together very powerfully in the next decade. The demand for purpose is on the rise in business, too. As discussed in an earlier column, in my view there is a profound shift happening in our economic system, where shareholder capitalism is making way for stakeholder capitalism. From a system in which the social responsibility of business is to increase its profits, we are moving to a system where the purpose of business is to synthesize the interests of all stakeholders—including investors.
While shareholders increase the pressure on companies to demonstrate improved short-term financial performance, society is stepping up its pressure on companies to demonstrate their contribution to the common good. The chief executives of many companies are torn between these opposing forces. People such as Paul Polman of Unilever and Feike Sijbesma of 100-year-old chemical giant DSM are railing against the storm of short-termism. Such people need our respect, support and sympathy. They are taking head on the monumental forces of narrow shareholder capitalism that have defined the global economic system since the industrial revolution.
Meanwhile, the advertising industry is lagging worryingly far behind. In a system of stakeholder capitalism, the role of communication changes. The role of company communication is no longer to project a desirable image to customers, so that they might buy our products and services. It is no longer about managing the perceptions of shareholders by the investor relations department and to develop a so-called “employment brand" in the labour market by the human resources department, etc. The key role of communication in stakeholder capitalism is to mutually coordinate the behaviour of all the company’s stakeholders. The company can no longer be seen the way it is seen in shareholder capitalism: as an autonomous, legally independent agent amid other free autonomous agents (i.e. competitors, suppliers, investors, employees, regulators, etc.). Instead, it must be seen as an agent in an ecosystem of interdependent agents, who require each other’s long-term trust and commitment in order to survive and flourish.
To achieve this, communication must be based on a central, relevant organizational purpose (beyond money). If this purpose is not communicated well, stakeholders will not adequately buy from, invest in, work for, supply to, support and host the company. As a result, massive value creation potential is lost. Communication becomes a key value driver. Not every purpose can serve that foundational role. To drive the sort of communication that creates stakeholder coherence and helps unlock the company’s true potential, the purpose must be: widely relevant yet specific, distinct yet recognizable, truthful yet inspiring, ownable yet participatory. The current approach to advertising, whether offline or digital, does very little of this. It still lives in the world of shareholder capitalism, even though society has moved on.
Classical advertising is dead. Long live advertising. But in a new form: as a driver of value creation, aligning all stakeholders. This might be something to think about under the Christmas tree.
Tjaco Walvis is managing director of brand consulting and advertising agency THEY India, and a speaker at the Outstanding Speakers’ Bureau. He writes a fortnightly column on the softer cultural aspects of marketing that often tend to be ignored by marketers