Paul Mackender:

Hi, I’m a Paul Mackender, the chief revenue officer here at Agent3 and in the latest of our ‘Agents of Change’ series, I’m here today with Richard Eyre. For those don’t know, Richard has had a very illustrious career in media marketing and business. Just some of the highlights, Richard was chief executive at Capital Radio and ITV. He’s held a number of non-exec director roles at the likes of Grant Thornton, Next 15, RDF and the Guardian media group as well as a number of startups and today is the chair of the Internet Advertising Bureau, and it’s also worth saying and really worth highlighting that also Richard was awarded a CBE for services to media advertising in 2014. So with that introduction, a big welcome and thank you for making time to talk to us today, Richard.

Richard Eyre:

Thanks, Paul. It’s an absolute pleasure.

Paul Mackender:

So with that in mind, Richard, just to kick off this conversation, what’s changed for you professionally since the pandemic?

Richard Eyre:

Well at a extremely local level, Paul, I’ve got an extra three and a half hours in my day because I don’t have to commute. And actually, I think I’ve made much better use of that than I would have done pre-COVID and before the kind of new rules of work. Because I haven’t just worked for an extra three and a half hours a day, I’ve done new things. So personally I think that that’s been for me a big change, I think in the world of business, I think we’ve all got a bit of that message and I think there has been a shift, a much faster shift between the objectives of profit versus purpose along with many things that have changed during the pandemic. We’ve moved much faster towards understanding the need for business to have a real purpose.

Paul Mackender:

And why do you think that is and why now? What really been the catalyst for that change?

Richard Eyre:

Well, I think one very significant one has been that the owners of publicly quoted businesses, the big financial institutions, have themselves thrown their weight behind businesses that do something worthwhile rather than just drive profits, which I think probably has created a much bigger change. There was already a bandwagon, probably started by Unilever, I guess, with their sustainability process. Brands had already started to market themselves in that way, but I think when Legal and General, BlackRock and others with trillions of assets under their management, when they weighed in, that really did put all chief executives on notice and chairman of boards on notice that they were looking for something from their investee companies other than just three monthly profit followed by three monthly profit. I think that’s probably the biggest single change.

Paul Mackender:

Yeah. So I suppose one obvious thought is we’ve seen in the media about employees and customers being empowered more and more, often through things like social media. Has that been a contribution as well in your view?

Richard Eyre:

Oh, absolutely. I think that because of social media, word of mouth is now the biggest advertising medium on the planet. And I think particularly if you look at generation zed, or gen Z for our American viewers, I think that you would find that recommendations from friends, families, from social media play a much bigger role in the decisions on what to buy, what to share, what to rent than any other forms of formal marketing.

But the other aspect of that, Paul, that I think is really important is that because the social media companies have given a platform to us all, there’s nowhere to hide for companies. So when they are taking shortcuts in their supply chain, for example, people jump onto social media and say, “These guys are running sweatshops.” Look at what’s happened in Leicester with booboo, it happened to Apple with Foxconn and their supplier companies out in the Far East. And the supply chain was something that was pretty much in the dark to their customers and it really isn’t anymore. So these factors have come together to make purpose not only a good thing to be pursuing, but absolutely essential for you to pursue if you want people to stay in touch with, in relationship with your brand.

Paul Mackender:

Yeah. And so bearing in mind, to use your language, there’s nowhere to hide, this isn’t going to go away. What’s therefore the implication to the board and to people like yourself in the non-exec director role?

Richard Eyre:

I think this is very hard for boards. I think change is hard for boards because I think in truth, even in relatively early-stage companies but certainly long-term established companies, I think that boards are set up to avoid risk. Each year in the annual report, we have to make a risk report and that report has got longer and longer and longer over time where we identify all the possible things that could possibly go wrong and what our mitigating steps would be and then give them a traffic light so that the investors know what we regard are our risks. And so I think for boards, risk aversion is one of the primary criteria, one of the things that non-executive directors think that they’re primarily there to do. But when things are changing quite so fast, your risk aversion makes you sit on your hands.

We use phrases like, “If it ain’t broke, don’t fix it.” I mean, seriously. The point where things are changing so fast that you’ve got to fix them and “We are doing this in the tried and tested fashion.” Really, tried and tested in circumstances that no longer exist. It’s a recipe for failure. So I do think things are tough for boards and I think change generally is tough on boards, but the pace of change and the acceleration of change through the pandemic I think has thrown a really difficult hand into the boardroom.

Paul Mackender:

Yeah. And so maybe one of the question related to that then is, if you’re looking to change, does there need to also be a change on the board? Different diversity on the board to enable that change and to stand that change, give a new direction to organizations?

Richard Eyre:

Yeah, I think that’s a really good question. I think there is an important point about diversity and I think it is important for our society and our culture that boards are not full of middle-aged white men. I say that as a middle aged white man because our echo chamber is pretty small. I think that the move to improve the gender representation on boards is really good and of course Next has three non-executives who are all female on the board and two executives who are male. I think that is undoubtedly good and I think now also it’s important for society and for our culture to go further and ensure that there is a racial diversity on boards. It just isn’t good enough that such a significant proportion of our society aren’t represented in the primary decision-making parties of our major companies.

But I think there’s another point Paul here, I think it has to do with diversity of thought because I think one of the major areas of diversity that boards need is diversity of aversion to risk. And we all know people who we would be regard as risk takers, we know people who we’d regard as being extremely conservative. And the fact of it is, if the board is made up of too many of one or other of those sorts of people, then it’s not going to have a good enough discussion about when to take the risk, when to go, when to build, when to buy, all the other million decisions that take place in the life of a company. So I think finding a way of ensuring that you have a diversity of risk seekers or avoiders on the board of a company, that’s not something I hear talked about a great deal, but I think that’s really important.

Paul Mackender:

Fascinating. One thing that I picked up on as well, and I’m not saying this is a catch-all, is this idea of B Corp, providing almost a framework to codify this idea of looking at people, planet, profit. I suppose two questions related to that, one: Do you see a great shift towards B Corp? And two: Do you see ultimately B Corp as almost a silver bullet or just one of a number of things that boards need to consider?

Richard Eyre:

Yeah. B Corp is an American approach to essentially applying some metrics to your area statements about how well you’re behaving in relation to the planet and your suppliers and your employees and basically you’re a good behaving company. There are a lot of others and there are many others within the UK as well. But I think the important thing here is that they do at least codify your commitment. So rather than just assuring everybody in the annual report that “We’re doing the right thing” and so on, B Corp accreditation is a really high bar. It’s a really tough test to take. It starts with 200 questions about your behaviors as a result of which they will then work with you. And they’re not like policemen, they work with you to help you change for the better.

So I think that’s for sure a good thing and I suspect that it will play well with the investors who are pushing their companies to be more astute in those kinds of areas. That said, when you look at it, I don’t think there are many, if any UK public companies who are B Corp accredited. There may be one or two now, but last time I looked there weren’t any and that is because it is a very high bar. And because you are signing up to make commitments that might at first sight look like they are at odds with your commitments to do your very best for the shareholders in creating a successful business.

So this begs the whole question about what do we now mean by success? But I think to be honest, legally, there is an issue around for public companies at the moment in pushing forward with this but I think it’ll happen, Paul. I genuinely think that whether it’s B Corp or one of the other accreditors, that I think that companies are now being run by people who understand and who get that profit is not the only criteria on which they’re being measured and therefore will want to find as good metrics for non-profit objectives as they have for profit.

Paul Mackender:

Yeah. And whether it’s B Corp or something similar as you just alluded to, do you think there’s a risk potentially of some boards paying lip service to this profit and purpose piece versus seeing it as a real catalyst for change, a destination you want to get to? And I suppose added to that, as a non-exec director, do you feel that it’s possibly the role of a non-exec director to ensure that it isn’t lip service but actually it is more of a change in strategy?

Richard Eyre:

Yeah. Again, I think that’s a very good point. I think after Unilever first came out with their sustainability objectives and we saw that advertising for Dove, which was “The pursuit of natural beauty” using proper models, proper people rather than finely tuned models. The fantastic work they did with lifebuoy soap in India. It’s just worth searching the three minute ad that you’ll find on YouTube. Even Ben and Jerry’s, sourcing all the ingredients for their ice cream from fair trade providers. And I think you saw there a company going full-on, all-in to this kind of behavior. And I think it put on notice a lot of other companies that, “We need to be seen to be doing this.”

And at first I’m afraid that what you saw then, Paul, was a bit of a marketing bandwagon. And I suspect that a lot of companies outsourced this thinking to their agency saying, “How can we line up our travel company with purpose?” “How can we sell more of these sweets with reference to purpose?” And I think we all saw some pretty hopeless grafting on of purpose to the brands didn’t really deserve it and where it didn’t really make sense. And some of them would really terribly bad. “If you buy this packet of cereal,” which I’ve mentioned, “we will give a sum of money to this charity for every pack that you buy.” To which people said, “what if you just give it anyway man? Why have I got to buy your cereal? Just give it anyway.”

So I think there were some poor attempts to respond to this, but I think that the movement is different now. I think that as we’ve said, the impact of social media, the effect of the different impetus from the big owners of companies, the big financial institutions who buy and sell shares more than any individual, I think those put companies on notice that this isn’t a marketing thing that they can graft onto their existing operations. This is a change in their existing operations.

Paul Mackender:

So the final question, Richard, to wrap up this discussion is, what do you think the lasting effects will be with regards to profit and purpose? And where do you see organizations focusing most?

Richard Eyre:

I think up to now, there’s been a fair degree of optionality in companies about how fast they pursue a digital relationship with a customer. And so if you look at the continuum, at one end you’ve got companies which would describe this as digital first companies. At the laggard end, you’ve got companies who are worried about cannibalizing their core product, don’t really see the need to produce a digital product. So I think the movement of that has of course changed dramatically during the course of the pandemic, the most obvious example of that is e-commerce. But I think it goes much further than that and I think that probably it has put companies on notice that if they don’t have the digital way of relating to their customers, then they are now fighting with one hand tied behind their back.

So I think that’s a big change. And I think the other one, and I think this is probably a point that’s been driven into us by generation Z and maybe millennials, is that I think that people are much more interested in experiences now than words. For sure people like storytelling, but when you look at the growth of online video during the pandemic, you can see that this has been a logarithmic, exponential growth, where it was growing steadily before. And I think it plays at this point about experiences rather than text, rather than product and I think that when you look at the future use of the high street, for example, I think we’re going to see much more experience driven use of the high street than just the pure retail. I think generation Z in particular is interested in experience, finds experiences interesting above and beyond statements and sales pitches.

Paul Mackender:

Yeah. Great. Well, Richard, as always fantastic to talk to you, thank you for your time and your insights and talk soon.

Richard Eyre:

Thanks a lot, Paul.