Business Unusual: The Pandemic Forces a Social Reset

Commerce, as traditional economists see it, is a theater where rational and impersonal actors transact, exchanging goods and services for payment. The burgeoning field of behavioral economics has taught us that these actors are not rational, and since March 2020, we’ve learned that these actors aren’t impersonal, either. They are human, and this tremendous acceleration of a human-centric mindset in commerce is one of the defining forces that will shape business strategy for the foreseeable future.

In the long months since the pandemic first struck, humanity has taken a hard look inward. We’ve seen it in the weary faces of health care workers, in the throngs gathered to demand equity for the marginalized, and in the depth of profound suffering worldwide. Once, we were comfortably numb, buying cheaper, bigger, better; now, the pandemic has wrought grief and trauma, and the introspection it has prompted has exposed our fragility.

The pandemic has changed us, and now we seek more from commerce. We expect fulfillment, not just consumption. We expect the brands we patronize to be not just manufacturers and retailers but active, helpful contributors to our society. In this transition lies one of the most significant resets for the modern brand. This new social reset is uncharted territory for most companies that now find themselves having to navigate new customer and employee expectations. They are being forced to see their stakeholders differently — as consumers who don’t just acquire products but have more complex needs, and as employees who don’t just contribute labor but hitch their identity to the brand. As if that weren’t enough, now consumers expect brands to play an active role in society well beyond their commercial remit.

The pandemic has changed us, and now we seek more from commerce. We expect fulfillment, not just consumption.

How to Navigate Uncharted Territory

In a highly polarized and flammable political climate, brands have to play a sociopolitical version of the arcade game whack-a-mole, constantly swatting at a multitude of issues that pop up with dogged persistence. Rather than responding reflexively, brands should be deliberate in their choice of action.

Don’t be reactive. Resist the pressure to react to every provocation, especially when a response is not warranted. (See below for when it is.) Popular media may suggest that brand activism in all things is the order of the day, but we mistakenly conflate how memorable something is with how frequently it occurs (a phenomenon known as the availability heuristic). For example, the state of Georgia’s restrictive voting law changes received some high-profile criticism from brands like Delta Air Lines and Coca-Cola, but if you started counting the number of Fortune 500 companies that took a vocal position, you wouldn’t get very far.

Be responsive. Taking a position on social issues, including responding to current events, is well warranted when doing so aligns with serving the company’s key stakeholders. Such a response goes well beyond internal or external marketing to introduce meaningful changes. After Texas’s recent abortion ban, for example, few companies took a stand, but those that did acted in the interests of a stakeholder. Uber and Lyft came to the support of drivers at risk of legal action, and Salesforce offered to relocate employees concerned about accessing reproductive care.

Build a foundation for response. By establishing a clear, well-informed process, companies can eliminate the risks that come from ad hoc responses while facilitating the ability to take quick, consistent actions. Without a clear process, even companies with a strong social track record end up vacillating, as when Starbucks waffled on whether to allow retail employees to wear Black Lives Matter pins and clothing. This foundation for guiding social action must be informed by a thorough understanding of stakeholders, the zeitgeist, and the company’s role. This is the new face of brand strategy: It’s as much about “who you are” as it is about “what you do.”

Foundation for a New Brand Strategy

For nearly two years, we’ve witnessed companies and consumers reacting to social stimuli of a sort they’ve seldom had to contend with. I have researched and written extensively on how companies are reshaping their strategies in the face of emergent social movements like the demand for racial equity. At Forrester Research, we have created a consumer model based on a 4,700-respondent survey that provides an unvarnished estimate of the segment whose purchasing behavior is influenced by their social beliefs. My work in these areas shows that the path to constructing a new brand strategy that reflects the social reset must embrace multiple modalities, such as a customer’s propensity for action, the employee experience, and corporate values. This new brand strategy has four parts:

1. Know your customer’s mind. Many general surveys show that consumers at large want brands to be socially active. But do you know how your own customers — who make purchase decisions that impact your bottom line — feel about the matter? We built a segmentation model at Forrester to identify consumers who felt strongly about social and community issues and regularly made purchase decisions based on them. We found that, on average, 18% of the U.S. adult buying population was motivated to reward or punish brands based on their social positions. But averages don’t describe any specific brand; our demographic analysis suggests that brands with younger audiences, like TikTok, will over-index on values-motivated consumers in comparison with brands that cater to an older segment, like Consumer Reports. Do the math for your brand.

2. Commit to your employees. Losing a good customer is bad for business; losing a good employee could be disastrous. Faced with the “Great Resignation” and tightening labor markets, companies are competing to attract and retain the best talent. But in this social reset, employees bring their whole selves to work and want more than a paycheck from their employers. As workers have recalibrated their expectations, companies have realized that catering to them is business-critical. Adidas, for example, rolled out an extensive diversity and inclusion program encompassing internal and external efforts — mandatory training, clear hiring targets, and scholarship funding for students of color — introduced by its CEO with this message: “Many employees told us — and told me personally — that they believe there are not enough equal opportunities for all. This is not acceptable.”

3. Adapt to be relevant. In tandem with the acceleration of social purpose in business, there have been significant ongoing structural changes, especially among the world’s youngest citizens. In the U.S., minority children will be the majority by 2023. In some Tokyo public schools, a gender parity rule that succeeded in bringing more girls into the educational system is now keeping many out, despite performing better on admissions tests than boys, in order to maintain a 50-50 gender ratio. American Girl now has a boy doll, and Mattel has a gender-neutral one. To remain relevant in a future that we know will look very different from today, companies must adapt to evolving needs and preferences. Marketers must do double duty as sociologists. Target has been down this road for many years when it comes to changing gender perceptions. The company has altered signage, displays, inventory, and even its restroom policy (despite strident opposition) to strip them of gendered stereotypes and build a brand experience more attuned to an evolving consumer mindset.

4. Tune your values compass. The success of your actions will be dictated by how authentic they are to your brand, but finding this compass to guide authentic action is not easy. A lucky few have it — for example, Mod Pizza is defined by its commitment to offer a second chance to those exiting the criminal justice system. Most companies, however, lack a meaningful and usable values framework. (Corporate communications-polished mission and vision statements do not count.)

To build that compass, start with the company’s original intent. IBM, a leader in fighting discrimination — its equal opportunity policies predate the 1964 Civil Rights Act by over a decade — looks to its history to plot a future path: “The character of a company … is shaped and defined over time … formed over nearly 100 years of doing business.” Ben & Jerry’s has announced that it will stop selling ice cream in Israeli-occupied territories at the end of 2022 because doing business there “is inconsistent with [the company’s] values.” The highest levels of leadership must agree on precepts that guide the company’s behavior and actions.

The long-term value of a company is determined by its ability to remain relevant to its stakeholders in a manner that is credibly authentic. A brand strategy guides this journey, the exact nature of which will depend on customer characteristics and product category dynamics. Not every brand needs to take the same road or get to the same place. But every brand ought to have a reliable brand strategy road map at its disposal to navigate this new social reset.