In this new interview series Warren Davies, the managing director of All or Nothing, speaks to experienced marketers who use foresight to look beyond this month’s sales activation or latest offer. This week, Warren interviews Tom Donald, the head of strategy at The Royals about the true meaning of brand purpose and why we need to have a ‘moral reframing’. 

It will have escaped nobody reading this that we’re in ‘unprecedented times’. But our responses often are ‘precedented’ – perhaps as a response to the uncertainty and fear we feel.

It’s easy to do ‘the done thing’ when confronted with pandemic, unemployment and existential angst in our workplaces, community and the marketplace. But there are alternatives to doubling down and covering our arses/taking the cheque.

I’m part of All or Nothing – a creative agency from Melbourne turning our hands to big ideas for the people and brands the planet needs. In this series, I’m taking a look at one of the systemic issues marketers can bone up on to avoid bad decisions in the workplace, for their brands and for their own sakes. Short-term thinking can be good for the board reports and the stock market but it’s digging your own grave at times, literally (hello coal and gas industries). 

In the first of four chats, I caught Tom Donald between meetings on a weekday afternoon on the rooftop at The Royals office in Sydney. He heads up strategy at the well-known creative agency, and with more than two decades of experience under his belt, thinking beyond the short-term is part of his modus operandi.

Warren: I feel like in 2021 we’re asking businesses to reassert what their license to operate is. We’re asking, if not ‘legally’,  ‘are you within the law?’ or ‘morally, are you acting with a moral framework that’s correct?’ In essence, we are asking: Why? Why are you here? I’m curious to know if you’re seeing more of that kind of attitude [purpose-driven] or kind of conversation either in your personal life or in your work life at The Royals?

Tom: I mean, I definitely see it in both. And I think not just talked about, but actually acted upon. I do think there’s a lot that is more stated, then when we actually look at a lot of shopping behaviour you don’t see it reflected. But nonetheless I do think that’s beginning to tip. But at work definitely particularly with bigger brands and bigger companies it is absolutely becoming an issue, partly because people within their supply chains, customers and shareholders are asking this of them. 

For example, a large company like Woolworths in Australia, under the leadership of Brad Banducci, is asking this of their suppliers. Now it’s baby steps. And it’s easy to be really cynical about it, but at least it’s a step and it’s happening. So a lot of companies who supply them have to start to put these things in place. I think it’s probably coming primarily from activist shareholders as well as people reaching C-suite levels who are beginning to give a crap about this. And beginning to get really worried about their children’s future.

Do you think this attitude has been warmly received in terms of the marketing or agency community? The notion ‘we can do more’ or ‘we can make money and be sensitive to people and planet’?

I do think it’s very easy to sit back and poo-poo. And sometimes it’s really good to bring some cynicism to the job, but I don’t think cynicism gets you anywhere. At the corporate level, increasingly large corporations, when they’re thinking about a business sustainability perspective, sustainability doesn’t just mean environmentally friendly. It means we’ll have a business in 50 years – not ‘we trashed the planet’. We’ve been driven from large operators because we’re having a failure of leadership and governance in the Western democracies and bizarrely, the real push from this is coming from centrists to left wing corporations.

Yeah. It’s interesting: Mike Cannon-Brookes saying, “Well, you know, if you’re not going to be something about it, I will.” The book ‘Green Giants’ talks about brands like Tesla, General Electric – Unilever is a famous one – as examples of consumer brands that haven’t always done the right thing but are looking to make the right moves now because it’s smart in lots of ways. The win-win.

It’s not necessarily from a point of view that, ‘I want to protect my backyard and I want the view to be the same’, in 50 years, but ‘this is the future of my business, I have to design systems’. Basically, systems that are going to be around rather than are going to be knocked flat. 

It’s interesting what you said about the large businesses – do you think, you know, some of these leopards can change their spots and say,we haven’t always been about this, but we’ve always been about long-term thinking and profitability. So we have to change. I think some will change their spots and some will file for bankruptcy. But I think we’ve got to give them permission and incentives and support when they try and not get cynical or jaded – not take them up when they don’t move as fast as the progressive left might want. 

I think when either an individual or an organisation begins to make moves in a direction that we think is positive, we need to praise them. People grow through praise, not criticism and indeed it’s the same with corporations. Some will fail too because change, as we know, even on an individual level is really hard and organisational change is even harder. So it’s going to take extraordinary leadership.

Milton Friedman said business has only one responsibility, which is “to use its resources and engage in activities, designed to increase its profits. So as long as it stays within the rules of the game.” Do you think this holds true today and what are the rules of the game?

I know that Milton Friedman was used by many people and has been now criticised for basically putting shareholder value above anything else. What’s that great quote? “Growth for growth’s sake is the ideology of a cancer cell.” And that’s what we’re doing. So I do think we need to have a moral reframing. The challenge is that the entire system we built is predicated upon constant growth. I think that the terror of collapse is so bad, frankly, that I think we’re going to have to figure a way out. We’re in a weird spot. We’re in the mucky middle.

Marketing – I knew we’d get there! I’ve been thinking about,  and talking, to people like yourself about short-term vs long-term thinking for business and brands and how that impacts our decisions each day about sustainable business,  for people and planet, but also profit. What’s the value in optimising for the short term? 

Well the upside is mostly for the people who grow something. That rapid growth –  let’s use Instagram, as an example – has resulted in them basically dominating that entire market. What we saw with the Internet was like the development of the railroads and telephones. You saw a very quick land grab for very, very valuable territory. So the upside for the innovator and the investors is to maximise the land.

For a more mature market, for example, I know you’ve done some stuff with say Coopers,  in the bigger picture, what’s the upside to having a quick spike in sales or running a campaign? 

Look, I’m speaking in very general terms, but the quick lifts are very rarely sustainable. Booze, telcos and financial services, right? Banking term deposits, which are most of those mature categories that I’ve worked in. You almost always have to have some price or offer-led mechanism to do that because they’re mature. People are not that engaged. It’s not a new land grab.

So because of that, the minute you turn that off the spot normally goes away. The benefit can be to hit a number to hit this particular shareholder report or to help a CMO hit their KPIs. So they get their bonus. But there’s usually not a longer-term benefit to the business. And often it’s negative because you’ve retrained the market as to what that thing might actually be worth.

For some of the younger marketers out there, or people who’ve grown up just working in this era of activation and grabs for users, how do you do a promotion –say ’20 percent off a slab’ – but also grow a brand like Coopers?

I think the emergence of so much evidence in the last decade has been really revolutionary for marketers. I think the Byron Sharps, the Binet & Fields, and more, have actually provided an evidence base for new behaviours and given marketers the ability to push back against ‘short termism’ from the CEO or from the board. I would rather be a junior or up-and-coming CMO today rather than when I first got into this game 25 years ago because you’re able to go to the board with real numbers to say why we need to be doing long-term brand building.

I think we’ve got enough evidence to know that if you’re not doing that long-term brand building in most categories, you’re just managing decline. You’re managing either fast or slow decline because you’re not doing anything to justify a price premium from the brand.

Buffet and others have been pushing back against quarterly stock-market reporting in the States because it just leads to that kind of outcome. Whether you kind of go for something huge, like an Instagram, or a business with steady growth, is there some kind of nuance that we should be thinking about? If you were Brad at Woolworths or another CEO: What are the other things that we need to think about, if not just money?

I mean, all the stuff that you’re involved with at All or Nothing. Impact on people, probably firstly your customers and your staff, probably on an equal level impact on environment and supply chains. The only measure that can’t be the dollar figure on a P and L, if that’s the only way we measure the value of a company, what a terrible lack of imagination on our part. We’ve got to measure these companies in different ways other than just the P and L.

It’s really fascinating working with Coopers because they’re a privately owned company. They’re not beholden to shareholders at all. And they are a Christian family. They own and run that business and have for nearly 170 years. I think it’s the first time in 25 years I’ve worked on a business where growth for growth’s sake is not what they’re about. It’s not part of their culture. They want to have a good business. They want it to be there for their children and their children’s children. They make some decisions for the community and on because that’s important to them.

I think the future is interesting. Elon Musk alluded to this in an interview recently when he said, “Privately held companies are where it’s at”, because the minute you get on that shareholder thing, you’re on the crack cocaine of the quarterly or annual thing. And that whole thing is now… I dunno, it’s got to go.

Most seasoned marketers understand the value of brands. They’ve been nurturing them for a while. But some are less familiar with the other imperatives we’ve been discussing. Young marketers coming through are more aware of these things however they have less experience stewarding brands. How can we bring these two different perspectives together?

That’s a great question. Look, I think at the smaller companies, it’s going to happen organically, There’ll be a small team and there’ll be a 50-year-old and 25-year-old. If both are open-minded there’ll be a mutually beneficial exchange of experience and ideas. Bigger organisations should establish mentoring. I don’t think anyone goes into marketing these days and survives very long without understanding that the long-term view is required of them. If they don’t have that, they’ll learn it pretty quick. I hope young people get into marketing, it is such an interesting discipline.

Warren Davies is the managing director of All or Nothing.

Tom Donald is the head of strategy at The Royals.