Future Foundation: The rise of soft power

The Future Foundation’s Karen Canty says media companies have long since realised the value of being open to criticism: “Sheer likeability is a seriously precious state these days” …

Slowly penetrating the lexicon of politics and business alike is the concept known – mostly in business school circles – as Soft Power.  Why should this detain us? What does it mean?

The world is filling with sophisticated, media-literate, techno-skilled, mutually supportive and increasingly prosperous consumers. Alongside them, a million journalists see it as their day-job to expose the bad doings of big business. And alongside them, there is many a regulatory body ready to tighten competitive rules and trading standards in every sector.

There are ever fewer market positions that could be described as cosy and secure. All over the world, every daybreak, CEOs reach the office and start juggling those balls – keep the customers loyal, improve the sales figures, motivate the staff, mollify the politicians (local and international), talk nicely to the journalists and the financial analysts and the lobby groups, get through the day without offending anyone / losing a contract or a customer / feeling egg fall on the corporate face.

In such circumstances, there is no company now which does not own some kind of “decency mission” – a claim of institutional virtue, a proclamation that profits are pursued with full respect for the environment and workers’ rights, an insistence on value-for-money for consumers, a desire to do good in a troubled world, etc, etc. It is not hard to find very good reasons why this should be the way things are.

Consider, in the chart, the numbers of people in the UK – and crucially the numbers of our wealthier citizens – who, when underwhelmed with a supplier’s performance, give him the sack. Loyalty is ever more hard-won.

This is an age in which diplomacy simply has to be boundless and in which the gentle touch is mightier than the hard sell. Media companies have long since realised the value of being openly, as it were, open to criticism. The BBC has its Newswatch. The Guardian has its Readers’ Editor. There is clearly a lot of brand value to be protected by the creation of formal steam-releasing mechanisms, allowing the disgruntled access to the microphone on even the company-owned stage.

In many sectors, it is relatively difficult for customers to change suppliers – banks, utilities, neighbourhood supermarkets – but, whatever the market context, there seems little point these days in allowing the limescale of emotional dissatisfaction to embed itself inside even the most regular customer.

Soft Power means a continuous willingness to hear complaints and find solutions – even though the brand or the sector concerned has the whip-hand and could, for instance, quite easily impose price increases or service reductions.

Sheer likeability is a seriously precious state these days.

Frequently, this means the occasional hard suck at the citric lozenge of humility. When the chairman of Toyota appeared before a US Congressional Committee in 2010, he said : “I myself as well as Toyota am not perfect. Quite frankly, I fear that the pace at which we have grown may have been too quick”.

Of course, this was in a time when the company was being obliged to recall a large number of cars because of brake defects – but also in a time when the company remained one of the world’s biggest, most successful and most popular suppliers of motor cars. But Mr Toyota knew that, with a hostile media and troubled American customers, this was not a good moment to crow.

And Soft Power is a profound customer service ethic. The Jinling hotel chain uses the term directly to describe its whole operational philosophy – using sophisticated IT systems to recall and retrieve customer tastes, preferences, first names – even after the lapse of years.

Even some governments – Brazil is a good example – also declare their Soft Power credentials. According to one of their ministers – “Brazil’s great skill [is] to be friends with everyone”.  Even some Chinese leaders reach for a similar use of language. This sense of it’s-really-nice-knowing-us permeates so much diplomatic vocabulary – whatever the issue under discussion. It is just not 21st century etiquette to wield power either too arrogantly or too clumsily. Best not to use the tackle when the dribble will do.

Fewer brands across the world are led by buccaneering, win-at-all-costs capitalists who exult out loud in jungle warfare. A new generation of leaders now say ‘please’ and ‘sorry’ and ‘you have a point there’.

Soft Power, when creatively employed, is a way of abandoning some measure of control over events – in ways that would have been abominated by management gurus a generation ago. No smart leadership wants a bushfire of discontent to spread from customers to politicians to regulators. And so, Soft Power becomes something of a hard option, involving as it most certainly does ultra-rigorous institutional discipline and self-control, whatever the problem and whatever the provocation.

Is CSR still the right acronym to capture the challenge of stakeholder management in the 21st century? Is Soft Power, in all its complexities and opportunities, the path to corporate self-preservation these days? We rather think so.