In my article ‘Neo-Naked Economics’ (under EBooks) I set out a new economic model based on social purpose from which would come a new kind of marketing I define as purposeful value creation. (In the 30 years since I co-founded a marketing agency called ‘The Added Value Company’ it would appear that I’ve progressed from seeing marketing as adding value to creating value, subtle difference). In the article I had to skate over some big topics and I intend to use the blogs to expand on some of them. The core of the new value-based economics/marketing would be to let people ascribe all the value a product/service/business offers, not just intrinsic value, not just extrinsic value to the buyer but social value. And businesses would be required to carry their full costs, not just variable, not just fixed but social costs as well.
So how can you ascribe social value? It might sound hard but it really isn’t. It’s done all the time. There is the Kitemark, started in the UK but now operating in 193 counties. It uses a range of things to assess the safety of a product. Michelin Stars are awarded to restaurants according to how they measure up to a wide range of things not just how tasty the food is (you can lose a star if the wine cellar is too limited or if your loos aren’t up to scratch). In South Africa they calculate BEE (Black Economic Empowerment) scores based on a complex list of criteria, and the score has consequences for how you do business. Above a certain size a poor score will exclude you from doing business with government and a good score can give you an advantage in winning private sector business. We measure complex things and ascribe aggregate scores all the time.
There are only two challenges. Firstly, what do you measure? In the article I set out 5 social purposes for economics, just my point of view but I think the list would be well received by most people who care about society. For a business you could take that list to look at their performance against some desired outcomes that benefit society – diversity, equality of opportunity, conservation etc. The second challenge is the tough one – who makes the adjudication? For the Kitemark it’s the BSI (British Standards Institution), for the Michelin Stars it is a group of inspectors whose identity is kept secret, for BEE in South Africa it is a government department. Who would ascribe social value? It could be a government department, an independent global institution, it could include a people’s panel or board of governors.
Larry Fink, CEO of BlackRock Investment believes “society is demanding that companies, both private and public, serve a social purpose” something he put in a letter to all the CEO’s of the companies in which BlackRock have an investment. He thinks this can be measured and intends to do so.
How easy would it be for people to just look for the social stars when purchasing? It could have one star or five stars. And people wishing to make a difference could try wherever possible to buy from companies with the most stars, all other things being nearly equal. I say nearly because some people would trade some part of intrinsic/extrinsic value for more social value.
There is a lot of virtue signalling going on – why not value signalling?