How can neuroscience help make business more sustainable? Richard talks to Dominic King, Senior Principal at Accenture Research about his work on a World Economic Forum report on sustainability in business. Dominic talks about digging deeper into the schism between how important sustainability is to business leaders and their actions to make their companies more sustainable. Implicit testing helped to understand the areas where companies can reasonably take action toward a more sustainable future!
Brandon Wehn (00:06):
Welcome to the show. This is Brandon Wehn and you're listening to the Understanding Consumer Neuroscience Podcast, brought to you by the folks at CloudArmy. In this episode, Richard talks to Dominick King, senior principal at Accenture Research, about his work on the World Economic Forum Profit versus Sustainability Report and the importance of neuroscience research that uncovered opportunities for companies to be more sustainable.
Richard Campbell (00:37):
Hi. This is Richard Campbell. Thanks for listening to Understanding Consumer Neuroscience. Today my guest is Dominick King, who's the senior principal at Accenture Research focused on the sustainability and responsible business practice. Dominick, thanks so much for coming on.
Dominick King (00:50):
Thanks, Richard. Good to be here.
Richard Campbell (00:52):
And so you're one of the authors of this World Economic Forum report. I see your name front and center on it. Although, I mean, it's interesting to me. I always think of Accenture as the group that goes in and writes security profiles and technology and those kinds of things. Sustainability wasn't the first thing I thought about. How did you end up here? That seems like an interesting role.
Dominick King (01:13):
Well, I think to be honest, every business needs to be aware of sustainability right now. Accenture is a consultant first and foremost, yeah, tech consultant. Really we're talking about how do trying to help our clients grow. And I think sustainability is one of the ways in which businesses today need to... It's an area they need to be aware of, because it's an area which can offer a huge amount to them in terms of competitive advantage, in terms of knowing their customers better, in terms of better use of materials, in terms of employee engagement. All those areas, all those different areas are what at Accenture we would term and define sustainability as being all of those things. It's all the non-financial considerations that a company has. And if a company is not aware of those and not clued into them and not thinking about them and not thinking about how to improve them, it's going to struggle.
Richard Campbell (02:12):
I guess the term sustainability has changed so much, because you think there's no profitability in not being in business, so you want to sustain your business. And one of the ways you do that is by sustaining your customers as well. Everything should be sustainable. But how has the word sustainable changed in this context? Is it specifically around environmental concerns?
Dominick King (02:32):
Well, I'll be honest with you, I think it's been hijacked, to be honest. The word sustainability for me means long-term viable. Now, if you think about an ecosystem, think about the Amazon rainforest, people say we're killing that. What does it mean? It means for the Amazon rainforest to be used sustainably, it needs to be around viably in 20 years time. And that means for all different types of groups. That means in terms of the biodiversity that dwells there. It means in terms of the Indigenous peoples who live there. It means in terms of the people who live in and around it and maybe use it for some sustainable logging, of some sustainable farming. And I think in the same way for a business, sustainability for me is long-term financial.
Richard Campbell (03:19):
Right. Right. You can't just focus on quarterly returns.
Dominick King (03:23):
No. 100% not. Quarterly returns are important to investors. Get that. But if you're not thinking about the longevity of your business, then what are you doing there? There's loads of businesses which have gone out of business because they haven't thought about the long-term. And I think for me, that's what sustainability is. And it so happens that right now thinking about some of those other stakeholders, your employees, your customers, your communities, your suppliers, all that is important to the long-term viability of your business. And yes, environmental concerns are important. That's because your stakeholders care about them and also because those environmental concerns will come back to bite you in terms of your supply chain, your premises, lots of different things that companies are dealing with now with weather events that can come back to bite different companies. So it's important companies are aware of this stuff.
Richard Campbell (04:19):
And incorporate it in. And I think most companies are aware. And your report reflects that. It's like the vast majority of leadership is like, "Oh, yes. This is important," but now you get it into this sort of greenwashing problem where it's like, "I'm saying it's important, but what am I doing about it?"
Dominick King (04:34):
No. 100%. And imagine you're the boss of a big tech company when employees ask them to cancel a lucrative government contract. We could probably think of an example there.
Richard Campbell (04:43):
Easily.
Dominick King (04:45):
Or the boss of a big mining company trying to work out what to do with its most profitable but yet most polluting business line. Or you're the head of a big consumer products company and you're thinking, "I want to switch to a more sustainable supplier of palm oil, but it's going to cost me 25% more." How do companies respond in those situations? Because on the face of it, you've got profitability in direct conflict with sustainability there. And as you say, I think a lot of companies know... The moral case I think is pretty clear. The problem companies have is the business case.
Richard Campbell (05:22):
Yeah. And I wonder if it is a direct conflict because isn't there a whole campaign I can make around getting a better source of palm oil? This seems like, "Yeah, I'm going to raise the price, but I'm also going to make a better product that my customer is willing to pay more for."
Dominick King (05:36):
No. Absolutely. And I think there's definitely an argument there for green products and companies launching green products, but at the end of the day, whatever consumers might say about their desire for greener, more sustainable products, at the end of the day, it's price, quality, convenience which matters to them. Those are their tier one priorities. I say their. I mean they are tier one priorities when we're buying it.
Richard Campbell (06:06):
Right. We are consumers also.
Dominick King (06:07):
Yeah. Exactly. We sometimes forget that, them and us. But no. We make those decisions. Will people pay more for a sustainable product? On surveys, they say they will. Comes to the supermarket or the grocery store, they don't. The companies know this. They have to hit those three things first.
Richard Campbell (06:27):
The right way. And certainly this has been an ongoing conversation on this show has been that same schism you have in leadership about what we say we care about and what we do, the same thing happens with our consumers and why we use neuroscience to actually get past what you said on the survey versus your actual actions and your emotional actions when we bake a product that is more sustainable but perhaps costs more.
Dominick King (06:53):
Yeah. Absolutely. I mean, I think the thing with leadership is we know that they are, as I say, convinced by the... Let's call it the moral case for want of a better terminology. But they're convinced that sustainability is a good thing to be thinking about. What they're not convinced about is that it's a tier one priority. And we've done a bunch of research looking at improving that it's not a tier one priority. When you force execs to choose between different priorities, sustainability comes out tier two. And I think what we wanted to do next with this research is sort of say, "Well, why? What sits behind that apparent, the perceived trade-off between profitability and sustainability?" There's a narrative around sustainable business that it's more complex, unreliable, less practical. Is that narrative true? And can we get closer to what's really going on? Because without knowing what the real blockers are to sustainable business, not what people report, but actually what the blockers are, when push comes to shove and people have to make business decisions, without knowing what the genuine barriers are, we're going to struggle to make any progress.
Richard Campbell (08:13):
Interesting. So you did these studies to actually drill into that problem. What'd you find?
Dominick King (08:19):
So we found interestingly that yes, there's this overarching narrative around sustainability being very challenging. And I don't think what we found disproved that, but business is challenging and change is challenging. And what we're asking companies to do by becoming more sustainable is fundamental organizational changes, moving away from that decades' long focus on short-term profitability towards longer term thinking, the types of things we've been discussing about long-term financial viability. And that's hard. But what we found in this study, by looking at what survey data said and looking at what people told us, we identified these perceived barriers. What we then did is using implicit association testing, we went a level deeper and said, "Are those barriers... Is that the truth?"
Richard Campbell (09:09):
"Is that the convenient answer?" Yeah.
Dominick King (09:11):
Yeah. "Is there social desirability in that response? Is that what they're telling us to almost excuse themselves from inaction and say, 'Sorry. Sustainable business is too hard. It's too complex. It's too expensive. We don't know if it's going to work.'?" So we went that level deeper with the implicit association testing and we uncover, we tested these five headwinds, as we call them, the things I've described. And what we found surprised us because we expected all those five headwinds to be barriers. We expected them all to be headwinds, all stopping businesses from becoming more sustainable. We expected them to be of different strengths, sure, but we expected them all to be headwinds.
(09:55):
What we actually found is that two of them work the other way. So two of them are tailwinds. So cost and complexity are actually pushing businesses towards becoming more sustainable. And what does that mean? It means that business as usual is becoming more costly, more complex. There are challenges that remain with becoming a more sustainable business, especially the ones we found were speed and reliability. So people don't know how fast some of this stuff will scale or whether it will ever scale at all. And those are challenges which do need to be resolved. Those are challenges to mitigate. But cost and complexity, businesses can lean into those.
Richard Campbell (10:32):
Right. And those are easy ones to challenge. There's no leader that's going to be in trouble because they went after cost and complexity.
Dominick King (10:40):
No. Exactly. And you think about... A good example is the automotive industry. Think about making money from the internal combustion engine now. How hard is that? Internal combustion engine, business as usual. Electric vehicles, we would say are more sustainable. Right?
Richard Campbell (10:56):
And I would argue 120 years of building the internal combustion engine, it's pretty [inaudible 00:11:01] machine and you're just trying to shave percentage points of improvement now compared to EVs and relatively young, lots of improvement to be had.
Dominick King (11:10):
Absolutely. And then you're thinking about the way regulation is going and you think of the way consumer demand's going. You think about the environmental movement. All those things are working against the internal combustion engine and pushing companies towards EVs. And the companies which didn't get into EVs quickly at the start are now paddling hard.
Richard Campbell (11:32):
Right. Racing to catch up. So a great example of you are limiting your sustainability by not moving and tackling this change. And certainly one of the things they say about pure EVs is they're a lot less complex machines. So you've made a more reliable, simpler machine that the customer seems to like.
Dominick King (11:53):
No. Absolutely. I mean, there are trade-offs under trade-offs. There are trade-offs in EVs in terms of where are you getting the metals and the minerals and the bits and pieces. How easy are they to recycle? Can you shift the employees working on the internal combustion industry to EVs? What about the upkeep of those cars that they need as much maintenance? All that sort of thing. All those things have got to be factored into this change. But I think on the surface of it, by going this level deeper, what we were able to find really surprised us. And it's a type of thing when you put it in front of a business leader as we have done, you can see them all going, "Uh-huh. Okay. No. I buy that. I can see that in my own industry."
Richard Campbell (12:39):
Well, even going back to your original scenario, I'm going to change my palm oil supplier, changing a supplier is hard, full stop. Doesn't matter what the difference in the supplier is. All of these changes are hard. So the idea that you're going to tackle complexity, maybe simplify your supply chain, and in that process, pick more sustainable practices doesn't necessarily make it any more harder than the change you were already going to do.
Dominick King (13:04):
No. Exactly right. And I think there's a... As human beings, we are programmed to avoid change. Change on the savanna meant you were probably going to end up dead because there was no food here or there was saber-tooth tiger there, whatever. That's deep programmed within us. And we don't like change on the whole. And the idea of changing this, some of these [inaudible 00:13:32], they're so complex, these businesses, some of the big ones. And exactly your point about supply chains is really interesting. We saw that during COVID, how the complexity of supply chains really challenged businesses. And so any of this change is hard. I mean, that's why we do this work essentially. We're trying to find and develop business models, show companies how to develop their own business models to move away, to move past this inertia of, "We're going to maintain the status quo. We're going to do things the way they've already been done," tiny incremental change." What we're saying is actually... And I'm not saying you have to change tomorrow, but actually you probably need to change today. You don't need to change the whole thing by tomorrow.
Richard Campbell (14:18):
Well, and I appreciate that part of the study you did here was to show, "Here's an area you can focus that does have obvious reward, is a recognized area that no matter what you're doing can be improved." Going after complexity in business is a good thing to do. But just adding that value statement of, "And we're going to do it sustainably," doesn't make it any worse. So you do achieve this goal that our leaders have been talking about of want a more sustainable practice, whether that's environmental, culture and so forth, but then also these were always good changes. These will provide returns. I think it's a great statement about neuroscience to unravel that problem and show, "Hey. You had all of these things, but when you study them better, there's a few ones that pop out that you'll get good returns from and it's a great place to start."
Dominick King (15:07):
No. If we'd done the study in a, let's call it, a traditional wave, we'd done it say by doing some interviews and doing a survey, we would've ended up with those five barriers and we would've said, we'd have had some statistics, "75% of business leaders say cost is a challenge moving to sustainable business." Now let's park the fact that what does that really mean, that 75%? What do you do with that? Then there's the second order thing is, do you believe that? And the third is, well, do you believe it, but how close is that to the truth? And what we got with the... Using neuroscience just got us to, exactly as you said, a level deeper, a level closer to the truth. And it got us to insights which surprised us. It's good being surprised.
(15:58):
We go in with hypothesis into all these research projects, and normally you get to a point where you hypothesis is proved. In this case, we disproved a few hypotheses, which is good, but as researchers, that's what we should be doing. It's not research to tell a preexisting story. It should be the research comes first and the story comes second. And I'll be honest with you on this research, we had to flip it around in a couple of places. We didn't get the results we expected. That's because we changed the method. And that's because working with CloudArmy and doing the neuroscience, it got us to somewhere unexpected. And as I say, I think it got us to somewhere which is a lot closer to the truth.
Richard Campbell (16:42):
And only closer. There is no perfect truth on any of this, least of all in the aggregate too. Every industry is different. Every company is different to some degree, but... Yeah,
Dominick King (16:51):
Absolutely. In this particular study, we didn't have the space in the study to look at the industry level, but you could imagine different industries, different sizes of company, different geographies, all of that playing a massive role into each of those five barriers that we tested. And no doubt they'll be higher and lower in different places, different types of businesses depending on what they're doing, but absolutely, the point about just being closer to somewhere which starts a more honest conversation, I think is key.
Richard Campbell (17:24):
We brushed briefly against the cultural side of employees being uncomfortable with particular customer, this idea of selecting down that customer. I don't know that you had the time to do the additional research, but I'd be fascinated in that sort of long-term view of when we chose culture over a particular customer that we supported our people. How did that change our people? I think that'd be a little more challenging to measure, but certainly I've worked with companies over the years where when they picked culture first, they got more of those folks and things got stronger, they moved faster. I mean, it's one thing to say, "Hey. I'll simplify my supply chain, manage some complexity and we get some returns on that and it's sustainable." The picking people first part, that's got to be a challenging thing to swallow.
Dominick King (18:15):
Yeah. And I think absolutely comes up against the short-term, long-term thing again. I think in the short-term, go after customers and go after their wallets, get them to spend more in your store today. What about, exactly as you said, thinking more about the culture, thinking more about customer engagement and boosting customer loyalty so that they might spend a little bit less in your store today, but they're going to spend tomorrow and the day after tomorrow and the day after tomorrow? There are great examples of... There's only a few, but there are some good examples of this, especially big clothing manufacturer I can think of which really encourages its customers not to buy its garments. And you think it's so goes against the grain of everything we know about it.
Richard Campbell (19:01):
Very counterintuitive.
Dominick King (19:03):
Right. Very counterintuitive and great marketing. And by the way, their fan base, you could call it fan, because they're more than customers, and I think that their fan base is so strong that the business itself remains a leader in its particular market.
Richard Campbell (19:19):
It is amazing when you get those things right and you see these. And again, it's easy for us pointing well, "Oh, that's a unicorn. That's a one-off," not that we could all be like that to some degree, but I think we could. I'm going to encourage folks to read the report. It is encouraging to say there's a way to take this problem apart, but I'm also appreciative that you've got to a deeper level of the truth, there is no whole truth, around this by doing some studies and really digging into it. As is typical of most research, immediately I see more research that could be done.
Dominick King (19:54):
Oh, yeah. And we'd love to. And I think after looking at the headwinds, the next question for us really was, "Well, what do companies do with that? How do you change? How do you drive change? How do you move along that?" And [inaudible 00:20:12] people overuse the term journey, but is a journey from going from a business as usual becoming a more sustainable business. How do you facilitate that change? And I think for us, there were three levers that stood out. One is around purpose. Again, purpose is an overused term, but what we really mean is has everyone bought into what you are trying to do and does your purpose... I don't mean that the little statement on About us section on the corporate website. I mean, what the whole organization is trying to do. Does that allow people within that organization to pursue sustainability?
(20:45):
So you think about a big car manufacturer moving from being a car manufacturer to being a mobility services provider. And what does that offer? Now, it might sound like it's cosmetic change, but actually if you think about what it allows people in the business to do, it allows them to go after different types of vehicles, leasing, digitizing stuff within the vehicle when people are moving.
Richard Campbell (21:08):
Sure.
Dominick King (21:10):
It's a big change on what we call pervasive purpose.
Richard Campbell (21:15):
Right. There was a couple of other aspects to that. I'm wondering if you're lining up with Daniel Pink's here, mastery, autonomy, purpose.
Dominick King (21:21):
I mean, the second one's around extended horizons, which is something we've talked about before, but it's moving away from short-termism. So how are you allowing a new sustainable initiative? How are you allowing it to upscale, to grow, to build?
Richard Campbell (21:43):
Just that mindset that this new project doesn't have to deliver this quarter, that it might actually take a year to deliver value.
Dominick King (21:51):
No. Exactly. I mean, there's two aspects to it. One is what we've talked about about, just general long-term thinking on the business side. Goes back to what we were just saying about the customer, but let's think about it in the employee as well. Do we sweat this employee as hard as we can so they deliver results for us over the next three months? Or alternative, do we engage with this employee, give them the type of environment that they want and make them a great employee for us over the next three to five years? You tell me which is a better route. It seems obvious.
Richard Campbell (22:25):
I'm pretty sure there's a Grimm fairytale involving a golden goose. These are pretty known things, but...
Dominick King (22:33):
You'd think, but I guess when delve into sort of dis-economies of scale and treating, how do you treat everyone in a massive organization as individuals or your customers as individuals? That's the goal anyway. But that second one, you call it extended horizons, and that's about long-term thinking, both in terms of business and then in terms of new sustainable initiatives. Are you allowing them the time to scale? Maybe previously, companies often demand an internal rate of return. Typically, that's over three years. What about if you extended that to five years, six years to allow that new initiative time to scale up?
Richard Campbell (23:08):
Yeah. Rather than killing it just as it was going to turn the corner?
Dominick King (23:12):
Exactly. Exactly. And not indefinitely, but thinking about this is just longer term thinking.
Richard Campbell (23:20):
Yeah. And the third?
Dominick King (23:23):
The third one is around thinking beyond financial metrics. We've touched on this before. For many years and still now, the leading metric of a company is its, exactly as you said, quarterly returns. You see that [inaudible 00:23:42] statements. You see it in a way in which the company, any company, is judged. And it's very important for companies to make profits. Profits are good. Profits allow a company to pay its employees more. They allow it to help their suppliers grow, allows it to offer new products and services to customers. It allows them to invest in community initiatives. So profits are important, but are profits the be all and end all? We'd say no. You've got to think a little bit more broadly. You've got to think about some non-financial indicators in there as well. Why? Because those non-financial indicators directly impact on your long-term financial viability. And you can think about that across multiple different stakeholders. You can think about it across biodiversity. There's so much of businesses is [inaudible 00:24:32] on biodiversity.
Richard Campbell (24:33):
This reminds me of the economic J curve too, that as long... You get caught on that low side of that J, and so you can only be so successful and you have to go down the curve to go up the higher side. You've got to give room to take some lumps and to deal with the inertia to actually break free and achieve the potential. And you see that curve occur over and over and over again.
Dominick King (25:00):
It's a really good way of thinking about it because you can think of each of those three levers on that J curve. You can think about the purpose being that end goal. You can think about the long-term thinking, getting over that trough. And then you can think about the 360 value, the way in which you actually go up the curve because you're thinking about things which are not necessarily important today but will be important tomorrow. You're thinking not just about, as I said, getting money out of your customer's pocket today. You're thinking about how do I deliver value in the jargon, but really what you're saying-
Richard Campbell (25:31):
Sustain that relation long-term.
Dominick King (25:32):
Yeah. Exactly.
Richard Campbell (25:33):
Yeah. It's fantastic. Dominick, really a fun conversation. And it's great to see digging into this research and not just throwing up our hands or even just knuckling down and doing hard things that we didn't need to do hard. There's easier ways to do this. I realized looking at the five where the headwinds still relaying the unreliability and the speed, a lot of those tend to get resolved when you deal with the costs and the complexity. All of this seems to fit together fairly well. Once you organize that way, it seems more obvious, but until you do the research, it never is.
Dominick King (26:07):
No. Exactly. And that's why I think what we did here was genuine white space stuff. I think it's new. I think it's differentiated. There's a lot of material out there which says, "There's a trade-off. This is how you resolve it." I think a lot of stuff I've seen is limited in scope to what people say the issues are as opposed to what the actual issues are. And I think by using neuroscience, that's what you get a lot closer to. You get under the skin of this really, really complex business issue. It's an issue which loads of our clients are wrestling with right now. They want to engage in sustainability. They talk a great game, but they're not necessarily walking the talk.
Richard Campbell (26:56):
Yeah. And not with any negative intent. Just like it's hard to know what to do next. And I'm sure they've got plenty of false starts. So doing that deeper level of research to say, "These are the areas we can make a difference, that begin the move along that curve can get us moving in the right direction."
Dominick King (27:13):
Absolutely. And that's what we were hoping to do with this research, just change the narrative. The narrative is, "It's costly. It's complex. It's unreliable. It's impractical, it's slow." And I think at least partially we've said, "hold your horses. It's not all of those things. Sticking to business as usual is more costly."
Richard Campbell (27:31):
Yes. And ultimately less sustainable.
Dominick King (27:33):
Yep. 100%.
Richard Campbell (27:35):
Yeah. Dominick, thanks so much for coming on the show.
Dominick King (27:38):
Pleasure. Thank you, Richard.
Richard Campbell (27:39):
And we'll talk to you next time on Understanding Consumer Neuroscience.