The Social Dynamic of Modern Consumerism by Andrew Shaun Thomas

Every few years, innovation disrupts what we understand about the way to do business. These innovations are mostly technological, but every now and then, social change reinvents what's important to consumers.

In the video shown: Audrey Choi - CEO of Impact Investment at Morgan Stanley, speaks on the commercial viability of socially conscious enterprise.

Here she outlines how the companies which have driven forward with a moral efficacy and social consciousness have outperformed conventional enterprises focusing solely on profitability.

These findings are also not exclusive to Morgan Stanley's books of business or Al Gore's clever investment portfolios. There is definite evidence to support the claim that ethically grounded and socially conscious enterprise succeeds in the modern market.

Castlefield is an investment management group based in the UK, specialising in "responsible and sustainable investments". They have found in their market research that investors are beginning to recognise sustainable funds with long term vision are likely to do well. 51% of investors think that companies which are trying to make a positive contribution to society and the environment are more likely to succeed long-term and in turn their investments are likely to perform better over the long term too.

Consumers are concerned with the social and environmental impact of the products they purchase and this consumer behaviour is only increasing.

Nielsen Study

The Nielsen market study "Consumers Who Care" takes a sample across 58 countries. Between 2011 and 2013, the amount of customers in the sample group willing to spend more on products which are ethically sound and socially conscious increased by 5%. To some, this may seem like a relatively small segment, but this would mean that the amount of customers with a socially conscious spend increased by 9% in just 2 years. If this rate of growth is sustained year on year and truly representative of a global market, the world could be facing a very different type of average consumer by as early as 2018.

But what does this mean for the way we do business?

Essentially, in the same way we have seen technological and social innovations change the way business has been conducted and marketing employed in the past. This new social dynamic will change the way that companies large and small interact with their customers and their value chain. Companies are now going to be required to go beyond the box-ticking exercise of Corporate Social Responsibility and begin the re-engineering of their culture, procurement and manufacturing processes, or face the reality of their customers taking their business elsewhere.

With concepts such as Fair-Trade, Responsibly Sourced and Living Wage becoming an increasing part of the contemporary dialogue, this new social dynamic of modern consumerism presents an opportunity for acknowledgement and appropriate response from leaders across industries. Who may either create a marketing message to appease the shift in consumer concerns, or capitalise on this innovation by engaging with its disruption, strategising for change.

Past innovation, such as the rise of e-commerce has forced companies to rethink marketing strategy and discover new consumer behaviour previously. In a business environment that can quickly become change-or-die, socially conscious consumerism is not a shift that can be ignored or absorbed without change.

The inevitability of disruptive innovation presents a challenge to be understood and surmounted by enterprises that find themselves able to embrace the dawn of a progressive capitalist economy.

 

Knowledge is Power by Andrew Shaun Thomas

It is said that 9.6% of wealth generated in The United Kingdom comes from the Financial Services Industry (Click here for more info). That being said, it's quite a scary thought to consider that the majority of people i've met, both inside and out of the financial services industry are not actually sure how the Capital Markets work.

Not only does this present the concern that for most of us, the way a significant amount of western wealth is produced is unclear.

It also disqualifies the everyman from accessing and/or replicating the way that wealth is generated, independently from the system.

In regards to knowledge: I have heard it both defined as "Power" and "Potential Power". In both instances I think the sentiment is the same, knowledge and understanding gives the mind traction with which the opportunity to generate wealth is created. but why is this of any significance?

Essentially, A knowledge and confidence with which to engage financial markets presents an opportunity to lay hold of its prospects. To actualise this into personal gain an individual needs to educate themselves of its products, services, language and characteristics. Without this, there is an unhealthy reliance on those in positions of perceived (and potentially feigned) knowledgeability to make decisions for our benefit.

This is what's known as principal-agent theory. Its the idea that there is a relationship of trust between a capable service provider and a person who requires that service.

However, as with any service agreement, in the case of private wealth management, there are two major assumptions the customer is forced to make:

What does a good financial investment look like?

What does a good financial investment look like?

 Not only are we required to trust that the IFA, Pension Management Firm or Investor is capable of making better financial management decisions, but we are also required to assume the service provider is actually willing and determined towards the results we, the customer, actually want.

An example of this would be the classic incentive driver bonuses Independent Financial Advisors were able to gain from recommending specific investment products to customers. (Click here for the FCA article)

The problem being, the IFAs judgement in providing a suitable product for the customer is impeded by the incentive of personal gain if a certain product is selected.

With all this in mind the question needs to be asked, how can customers ensure financial service providers operate in their interest? Do service providers need to do more to ensure customers are able to understand the functions of the products and services they purchase?

How can customers monitor the performance of their funds? And if this provision is available, are they able understand what is and isn't a good outcome?

These are all areas which need to be encapsulated into making smarter investment decisions and the knowledge of these things, brings about the power to strive toward good outcomes for investors.

By equipping one's self with the knowledge, understanding and capability to engage and respond to subject matter in the financial space.

A Return to Form by Andrew Shaun Thomas

An entry like this should probably start with an analogy or an anecdote, however it won't. It will start with an acknowledgement.

An acknowledgement to the persistent and the successful. Entrepreneurs like Florence Adepoju, Amahra Spence and Terrol Lewis. Visionaries who started with nothing and built from the foundations, enterprises that nobody else could see when they started out.  

It's truly amazing to witness firsthand (and via Instagram, Facebook, Youtube, The Evening Standard and for some.... the Financial Times) the process of progress for business with meaningful vision and clarity of purpose.

With all that said, some may wonder where I've been the passed year, what have I been up to and what happened to Strategy for Life, The Youtube Channel, The Blog and all the SME Consulting.

Well.. in honesty, none of those reasons (or excuses) are anywhere near as interesting as what the future holds. The important thing is: I'm back (to stay).

So here's to Dreams, Visions & Action. Stay tuned.

ASTHMS