Character: We develop Characters and Story Frameworks for brands.


bad scrooge

The Scrooge Effect

By David Altschul

I read The Economist, and I generally agree with their point of view, especially on matters of business and finance. A couple of months ago they did a special report on corporate social responsibility, and they began by asserting the classical position that a public corporation has no business pursuing any goal beyond increasing shareholder value. I understand the principle—that the shareholders, not managers, should decide how to spend the profits of the corporation—but in my daily practice of looking at companies and brands through the lens of story, I find almost the opposite to be true. My experience suggests this:


A company that seems to have no purpose other than making money for its shareholders will have an increasingly difficult time making money for its shareholders.

This observation raises a very interesting question for me: Are concerns about purpose or mission simply a part of the marketing and public relations function—a way to wrap a mask of public interest around a core of disinterested financial calculation—or is there a deeper and more strategic connection between brand purpose and the pursuit of shareholder value?

The way I see it, marketers are eager to develop a connection between their brands and their customers that feels authentic and emotionally compelling. Such a relationship is the only way to command loyalty, and loyalty leads directly to lower selling costs and premium pricing. For their part, most customers have no trouble understanding that a company has to have a money story—a way of acting in the world that generates profit and allows the company to survive and grow. But the money story is not the place where customers are likely to connect with a company or brand emotionally. The money story is all about the rational transaction—the cost/benefit analysis. A company that seems to have no purpose in the world other than to make money for its shareholders will consequently fail to develop a deeper relationship between its brand and its customers—and in today’s highly fractured markets filled with an abundance of high-quality choices, that kind of failure is likely to have a serious impact on the bottom line.

In the world of story, a character who pursues money for its own sake is generally the villain. Ebenezer Scrooge is archetypal. The essence of the Scrooge character is that he has no emotionally satisfying relationships with anyone because everyone understands that he loves only money. We call it “the Scrooge effect” when a brand’s audience begins to suspect the same about a company.

Wal-Mart is a really interesting case in point. Sam Walton was a driven, competitive individual who channeled his ambition into bringing the material attributes of the good life to small communities that were underserved and overcharged. He built the company around a very compelling story powered by the conflict between service and leadership. At its beginnings, and for many years after, Wal-Mart seemed a kind of scrappy underdog character. But after Sam died and the company became the largest retailer in the world, the service energy in the story slipped away, and for a while the company seemed to be driven by the idea of success for its own sake. From a story point of view, it is not surprising that Wal-Mart seemed to transform from an underdog into a bully, emerging as Scrooge in the larger category story.

In the past year and a half, Wal-Mart has made huge efforts to recapture its role in the retail category as a “servant leader.” Starting with a clear articulation of its story framework, Wal-Mart has embraced the conflict in its story, used that story to find a sense of purpose, and made strides on many fronts to bring that story to life in everything the company does. As a result, in a very difficult economy Wal-Mart’s stock price hit a 52-week high on May 1, up nearly 22 percent since the beginning of the year. And more important for the long term, Wal-Mart has positioned itself to pick up market share during the economic downturn and hold on to it as conditions improve.

I suspect that an intuitive awareness of the connection between the character of a company and its profitability is behind the surge of interest in brand purpose and the attention being paid to the nature of the relationship between a brand and its audience. Of course purpose and relationship are the province of story. Trying to find a larger purpose and establish a meaningful relationship using the current metaphors of marketing—war and science—is tackling the problem with the wrong tools. Such an effort seems likely to end up as an exercise in “taking the bird apart to see what makes it fly” unless the process is firmly grounded in a deep, strategic understanding of the metaphor of story.

If you are responsible for building a brand, one way we’ve discovered to approach purpose and relationship is to think of your category in terms of story and ask yourself, what role does my brand play in that story? What kind of character is my brand? What is its objective? And how does it act in the world in order to achieve its objective? That’s where you begin to get at an authentic purpose—the thing (over and above making money) that the brand exists in the world to do.

good scrooge

Most people remember Scrooge the miser—just as many people still think of Wal-Mart as the bully. But by the end of A Christmas Carol, Scrooge found enlightenment and re-engaged with the world in an authentic and compelling way. Wal-Mart, for its part, has done a lot recently to embrace its conflict and find ways to live a more authentic and compelling story. And its shareholders have a lot to be thankful for as a result.

So, are having a higher purpose and increasing shareholder value the same thing? Not exactly. But it’s clear that they are becoming more powerfully connected. It’s also clear that the conflict between them is the kind of conflict that might connect a brand to its audience and power an emotionally compelling story.

David Altschul is the founder and President of Character, LLC.
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