The Principled Company: How Taking a Stand Can Make you Stand Out

The last few years have ushered in a rise of companies seeing success by competing on purpose. In an age where products and services can easily be replicated, customers (and employees) are increasingly drawn by what a company stands for not just what it sells. Nonprofits, B-Corps, or just companies with strong principles, can all benefit from developing values into positioning, embedding them across your company and leveraging those values to differentiate in the market.

Last fall in an interviewOpens a new window with Vogue Magazine, Victoria’s Secret’s then-CMO Ed Razek was asked why the company’s marketing and annual fashion shows don’t feature plus-sized or transgender women. “Because the show is a fantasy,” he answered. “It’s a 42-minute entertainment special.” His underlying assumption — mired in decades of a flawed narrative — suggested that only certain types of women are desirable.

In an episode of the Growth ShowOpens a new window , Heidi Zak of ThirdLove describes that interview as a turning point for her business. Zak founded the up-and-coming direct-to-consumer lingerie company because traditional businesses weren’t serving the sizes and lifestyles of a diverse range of women.

Celebrating and providing options to all women is one of ThirdLove’s core values. So when Zaks and team saw an industry giant dismiss whole swaths of women, they ran an open letter in The New York Times. It’s worth reading in full,Opens a new window but here’s the gist: 

“Dear Victoria’s Secret…You market to men and sell a male fantasy to women…Your show may be a “fantasy” but we live in reality. Our reality is that women wear bras in real life as they go to work, breastfeed their children, play sports, care for ailing parents, and serve their country…We’re done with pretending certain sizes don’t exist or aren’t important enough to serve.”

The results? An eruption of social media chatter, news coverage, and yes… sales.  “It was immediate and intense and overwhelming,” said Zaks. “I had no idea how far-reaching it would be.”

Also Read: How to Find New Points of Amplification in Your Product Launch StrategyOpens a new window

It’s not what you sell. It’s what you stand for.

In the last few years, more and more companies have seen success by competing on principle. In an age where products and services can easily be replicated, customers (and employees) are increasingly drawn to what a company stands for, not just what it sells. Mark Barden, partner at branding firm eat big fish, calls companies, like ThirdLove, that question common assumptions and approaches, “Challenger Brands.”

“The thing all Challenger Brands are doing is trying to get Goliath to blink,” says Barden. “It’s a brand with big ambitions to change the way the world thinks about a category. If you don’t have resources, you need a strong point of view, to break conventions and code, to do brave things.”

He continues, “ThirdLove has been able to identify a shift in the culture, a different conversation wanting to happen here. Over time categories establish conventions and codes, a way of engaging consumers that gets tired. Brands don’t keep up, and [Challengers] see that cultural moment, lean into that, and offer a new point of view from their leader.”

ThirdLove challenged an established competitor in their open letter, but you don’t always need a Goliath to rally against the status quo. Basecamp, a B2B project management software company led by David Heinemeier Hansson and Jason Fried, has made a name for itself by advocating against the culture of overwork that’s become common in modern offices — particularly in tech. They’ve written extensively on building a “calm company,” which doesn’t sacrifice values or sanity to grow at any cost. In an industry that often celebrates “the hustle,” this principled approach separates them stand out from their peers. For a productivity tool designed to make your life less chaotic, the message also fits perfectly with their product and audience.

One strand of principle-driven companies, the benefit corporation — a business with over $100M in revenue that also address an environmental or societal problem — has seen a particularly sharp rise. According to B Labs, the nonprofit that certifies them, “[B Corps] meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose.” In the last three years, the number of registered B CorpsOpens a new window ,, has risen 65% from 1,700 to more than 2,800 across 150 industries in 64 countries.

Kate O’NeillOpens a new window , former Netflix executive and author of Tech Humanist sums up this phenomenon wellOpens a new window : “Humans crave meaning. We just do. We seek meaning, we’re compelled by meaning; when you offer meaning to us, we can’t resist it.” She describes this search for meaning as our most distinctly human trait.

From sentiment to strategy: Turning principles into differentiated positioning.

Having principles and upholding them across your operating system, product and decision-making are two very different pursuits. Your company cannot market on principle if that work has not been done internally. Google famously struggled with this when its critics juxtapositioned its internal “Don’t be Evil” motto with what they believed were unethical corporate policies and decisions. Leading on principle doesn’t stop with a marketing strategy: it has to be embedded in everything your company does.

“Ask people how what they’re doing right now helps the company to achieve its purpose, not its profitability,” says Nicholas PearceOpens a new window , clinical associate professor at Northwestern University’s Kellogg School of Management. “If people look puzzled as though they’ve never been asked that question or never considered it, it tells me that the purpose is just a statement on the website. It is not the very lifeblood that animates everything happening in the organization.”

While a business is a few like-minded individuals, operating by a set of principles is inherently easier. As a company scales to an enterprise of thousands, values can be hard to keep consistent. As with any other business-critical protocol, differentiating on value only works if you embed principles into every channel of operation:

• New hire training
• Incentive structures
• Performance reviews
• Product development
• Sales process
• Customer service standards
• Marketing materials
• Company reporting
• Partnership standards

 

Unless your processes reflect your principles, you may not be ready to differentiate on mission in the market.

Also Read: Better than Google: 3 Companies That Have Found Growth by Investing In CustomersOpens a new window

Facing The Risk of Failure

In 2018, my own company, HubSpot, adopted the tagline “Grow Better”: It’s not enough to grow bigger — you have grow in a way that prioritizes your customers’ success. We embedded this idea in everything from our product decisions to our executive incentive structures. We even codified it in the Customer Code, a set of customer-first metrics by which we measure our own performance every year.

We put these ideas out into the world with a lot of passion, but also some pit-of-our-stomach dread. EWhat if we don’t live up to the code? What if we unintentionally do something that goes against it and get called hypocritical? The answer to those fears is a dose of reality: Of course you’re going to mess up and make mistakes along the way.

The formula for recovery is simple: Own it. Repair it. Repeat as Needed.

That tension is healthy, and keeps you fighting for those principles as you grow. ThirdLove found that listening to customers is the best way to assess whether their actions matched their values. Zak recounts a particularly prescient email from a customer named Hope:

“[Hope is] about 50 years old, and she wrote an email which got forwarded to me basically saying,’ I love your bra, […but] I got your catalog in the mail and I was paging through it and no one in the catalog looks remotely like me in terms of my age.’”

Zak took it to heart. Many of ThirdLove’s customers were over 50, but they weren’t represented in marketing campaigns. For being a company built on inclusivity, this error needed addressing.

“We were being ethnically inclusive and diverse. We were being size-inclusive and diverse, but we were not representing women at various life stages,” explained Zak. In response, ThirdLove launched a fall campaign featuring women of all ages and life stages.

That one gaffe has not undermined the company’s success in the least. On the contrary, their deep trust with consumers, built over the years through their clear display of values, gave ThirdLove the leeway to make mistakes and recover. For audiences drawn to principled companies, authentic effort to be better is required. Perfection is not.