The Main Scoop, Episode 07: Compliance and Sustainability’s Impact on Brand Value and Technology Choice
This episode of The Main Scoop discusses the constantly changing regulatory and environmental, social, and governance (ESG) landscape and the difficulties organizations face in increasing value for stakeholders. IT leaders need to formulate plans to reduce risk and enhance value throughout their companies. Rebecca Levesque, President and Chief Revenue Officer of 21st Century Software, joins Greg and Daniel as they will explore the need for a comprehensive approach to address the new factors that influence brand value and trust.
It was a great conversation and one you don’t want to miss. Like what you’ve heard? Check out Episode One of The Main Scoop, Episode Two of the Main Scoop, Episode Three of the Main Scoop, Episode Four of the Main Scoop, Episode Five of the Main Scoop, and Episode Six of the Main Scoop, and be sure to subscribe to never miss an episode of The Main Scoop series.
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Greg Lotko: Hey folks, welcome back to The Main Scoop. We’re here for episode seven, and we’re going to be talking about how compliance and sustainability impact brand value and technology. Now, we know there’s a lot of things that make brands valuable. We’ve got Rebecca Levesque as our guest today, but I’m going to start off by talking a little bit with Dan. Dan, what’s your perspective? What are the things that make brands valuable?
Daniel Newman: Well, Greg, it’s always great to be back. Brands gain value from a lot of different things. There’s very structural things that create value in brands. The financials and the metrics and the customer counts, and the value of the services they deliver. And then there’s more ephemeral things that make brands valuable. It’s the way brands make people feel. We all know that those reference brands that we all like to call out, a lot of times we’re like, well, why is product A better than B?” And people are like, “I don’t know, I just like to use it. Or, why am I stuck using one type of mobile device versus another? Because my kids only believe in one type of text messaging. Or, why do you buy coffee at that particular shop versus another that actually does hand drink versus this other place that I’m pretty sure serves it out of a microwave?
But in the end, the brand is created because of the way it makes us feel. And then of course, the way it makes us feel drives greater customer investment. Customers spend more money, then they can pour more money back into it. But it can be the tech, it can be the product, it can be the service. But in the end it’s going to be those two things, Greg. It’s the structure of the business, and then of course, it’s that softer side of brands that people love that are in people’s hearts, always perform.
Greg Lotko: Well, I think about it. And of course, it’s the value that it brings and how you feel about it, how you think about it, but there’s that other element about the expectation, the consistency that… You think about when you go out to a restaurant, why do you go back? You go back because you liked the food or you liked the service. And the things that kill a brand is if they don’t live up to the expectation that they’ve already set, right? If you go back to that restaurant and all of a sudden the service wanes or the food’s not as good, maybe they changed out the chef or they couldn’t get the ingredients. I think that’s why we attract ourselves to brands. It’s that consistency, that repeatability, that either meeting or raising the expectations and the experience every time.
Daniel Newman: And by the way, Greg, just as a note, consistency can mark a scalability that allow businesses to become big. I mentioned certain burger joints, incredible consistency. No matter where you eat the fries, anywhere in the world, they taste the same.
Greg Lotko: Yep.
Daniel Newman: But it doesn’t always act as a mark of quality, and we know that. So, obviously putting together both consistency and quality is probably the ultimate outcome. And I can think of a very small number of brands that have incredible market cap because they’ve found a way to do those two things in the eyes of the customer. So Greg, that brings a whole ‘nother question. We’re in a massive shift from one generation to the next. We’ve got a younger group entering the workforce, we’ve got social, we’ve got digital, we’ve got new mechanisms for reaching and engaging with customers. How does this shift the way we conduct business and the way we think about creating a brand and creating value for our brands into the future?
Greg Lotko: Yeah, I think it’s also about the greater awareness in the world and access to information. It used to be that we’d focus on the product or how we interacted or just the result, but there’s this raised awareness of what’s going on in the world and an urgency and to want to understand how people are conducting their business, how they’re interacting with people in the world, with governments in the world, how they’re interacting with the environment and what that means for long-term sustainability.
Daniel Newman: Yeah, I think you make a lot of great points there. Having children… And by the way, I have them spanned over almost what, 20 years now, my oldest being 21 and my youngest being six. And even just seeing the difference from how they’re going to be interacting with technology, how they’re building relationships with brands, I mean it’s going to continue to change, and it’s going to become incredibly important that we make sure, across a plethora of different digital platforms, that we understand our customer, we understand our constituency, and we understand how to make them meaningfully want to do business with us, or else the lifespan of companies, and we’ve seen the Fortune 500 change over years, that lifespan will continue to get shorter and shorter for what are the most influential companies. And I’ll make a call right here, Greg, before we bring in our guest. At some point in the next 10 years, there will be an absolute giant that will fall because of the way disruption will come in and take a company that we would think is invaluable and that will become unvaluable.
Greg Lotko: Let’s bring Rebecca Levesque in. She’s from 21st Century Software. You’ve kind of heard what we’ve been talking about.
Rebecca Levesque: Yeah.
Greg Lotko: We’ll open it up to you to comment on that if you’d like to start that one.
Rebecca Levesque: Oh, I would love to. It’s so important. And I can’t agree more. I mean if you think about it, the younger generation, there’s so much more concern about sustainability, and if we don’t address that within our world that we live in. It’s an important piece. Some of the data centers, they say that the data centers in the world can use up the emissions of 26 million homes. So, that is something that the younger generation knows. They know those numbers, they know those stats, and they’re very concerned about that. And they’ll do business. They’ll really make financial and buying decisions based upon the ethos of a company, not always what their product is, not always do they like the product. In fact, they’ll stay away from a product they like if it doesn’t fit what they feel is part of their own personal moral compass, which is around, a lot of times sustainability right now, because they’re very worried about what their future will be. So, it’s a very important subject.
Greg Lotko: You used the term kind of around their moral compass. It’s about how folks feel companies should be interacting responsibly in the world, and then the consumers interacting with them will reward the appropriate behavior and they’ll stay away from products if they don’t see them being responsible corporate citizens.
Rebecca Levesque: No, that’s exactly right. And it’s part of what they’ve become. It’s part of who they are. And I think that’s really important for us to take into consideration. And then we talked earlier about, and you brought up the point that because companies need to be aware of how they’re dealing with their teams internally. How are they promoting their own organizational team members? How are they working within their organizations? How are they seen by the world at large? Visual is so important. The internet has made everyone subject to scrutiny. Your world can change with one good or bad blog. And so much of what we do is based upon very finite pieces and finite pieces of what companies may or may not do that’s right. You talk about resiliency, one bad event. You talk about compliance, not making sure you’re compliant to the nth degree that you should. If you can’t prove you’ve done everything you could, if something happens, people are going to call you accountable for it.
So, it’s really important that we really think differently about the pieces that we used to think were either insurance or nice-to-haves. They’ve become more, you need to be doing that.
Daniel Newman: So, let me ask you a question. You kind of weighed in a little bit and you mentioned sustainability. The whole theme of this show, we’re talking compliance, sustainability, the business impact here. The last couple years have been really interesting though, Rebecca. On a macro level, the technology industry absolutely swelled. It boomed over the last couple of years. And things like ESG, sustainability, DEI, compliance investments, and kind of trying to be better companies, you talked about moral compass, it all came to the surface. Companies were spending big, they were putting out new ESG and sustainability reports every year. They were making that part of their marketing story. They were selling it as part of their hiring story. And now, we’re in kind of a slowing period, possible recessionary period, and suddenly you hear things. I just read an article in, I think Washington Post yesterday about DEI programs being cut. Suddenly, you hear less about sustainability. What’s your take? Posturing versus progress? I mean, is this something that’s going to sustain, or is this only something companies are going to do when the tailwinds are behind them and it’s easy?
Rebecca Levesque: We’re going to have to see that. If you think about… The EU is putting some teeth behind it. They’re trying. The EU is always very good about regulating things, right? So, they’ve regulated some resiliency right now with [inaudible 00:08:58]. They’ve put some regulation in place for sustainability. So if those teeth come to bear, then yes, and then they’ll push it forward. If you think about it… I was reading something. I forget where it was. It could have been Forbes. It was 85% of organizations speak to having something that they are driving from a sustainability. But then the percentage, I think it was within the twenties, thirties, was companies that actually had real plans or were really doing it. So, there is a difference between the conversation and the reality. And so we’re going to have to see whether or not. It’s generally driven by regulations and have-tos. It’s generally not done when economic times are down, if it’s just a nice-to.
They’re not going to always consider it. So, it’s going to have to really either come out of the pocketbooks from the consumer, or they’re going to be forced to through regulations. It’s going to be one or the other, in my
Greg Lotko: And Dan, actions speak louder than words. I agree with you. Whether it be around sustainability, ESG, DEI, a lot of companies were talking about it and it was an imperative to have a statement about it, a position. It’s the actions that matter. And you can see those that, whether it be supporting their employees and how they’re interacting with them, making opportunities available, what they’re doing in the marketplace broader than just their own customer set, their own employees or their own customers, those are the things that I think will stick.
Daniel Newman: And if I could add though, I think this is a moment for IT and technology, because measurability and accountability have to come with data.
Greg Lotko: Right.
Daniel Newman: So when you look at these different net zero announcements… And hey Greg, the Newman family’s going to be net zero by 2070. So, I just gave you a 48 year commitment that I’m going to be net zero. Imagine if your company said, “Well, we’re going to be X revenue by 2040,” but you don’t actually give guidance or even report your numbers for the next 18 years. People will be like whatever, that’s not real.
Greg Lotko: There’s got to be a path. There’s got to be progress. And you touched on the point about how important IT will be across all of this. It doesn’t matter what industry you’re talking about, farming, agriculture, fashion, shipping, whatever, IT is the one common thread through all the industries and all the interactions of the world.
Rebecca Levesque: And what’s truly important is we also have to recognize, because we are core across all industries, everybody uses technology to some level to run their business. And because of what they’re calling now, these shortfalls in employment opportunities, there’s 3.4 million people shortfall for cyber resiliency. That’s just one area that I happen to have a number on. So if we have shortfall in the ability and people to fill the areas that we need, then we have to really be considering what is our business going to do in order to draw the quality of people in that we need in order for us to be able to sustain our businesses. So, sustainability is not only sustainability in the truest sense. Sustainability is really important as organizations because we need to sustain ourselves with employees that are willing to work in our industries. And so many times, I hear within our platform, well, legacy. I’m sorry, everyone’s legacy practically at this point, right?
So, it’s across everyone. And in order for us to really have an active role in making sure the future of all of that’s happening in all industries is really key on us as software, as IT in general to be able to say, “Hey, we’re in the forefront of pushing these agendas and making sure that we’re doing the right things.”
Daniel Newman: And I also like that you’re kind of looking at this very holistically. I think another thing by the way that’s going to come to bear… And maybe this was part of the World Economic Forum conversations that were going on over the last few weeks. We’ve talked about sustainability. We talked about compliance. Another area that I think is going to be so important for IT in the coming years is going to be security, cybersecurity. And this is where the type of technology, the kind of modernization approaches we take are going to be uber-critical, because we all know that… And by the way, cybersecurity does not care about the macroeconomic conditions. Sure, your modernization strategies may have to be slowed, but what’s the risk of getting that wrong, and what’s the risk… By the way right now, I mean, we’ve seen the way the CHIPS Act moved forward. It was a national security thing. It wasn’t resiliency, which brings me a good question here for you, Rebecca.
How does this pivot to that, CIOs and the enterprises? So, we’ve kind of looked at the macro of how it’s overall in the economy, but CIOs, are they prepared for sustainability? Are they prepared to deal with compliance? Are they handling cybersecurity and the risk?
Rebecca Levesque: There’s still this thought that somehow this isn’t going to happen to them, unfortunately. There’s still that segment of society that has that belief that, yeah, that’s their problem. And they still may see it as insurance when it comes to resiliency and other areas of the business. It’s really been interesting. I’ve been doing that piece of the business for some time, and there’s two major problems. One is it takes the entire organization to take it in seriously. Whether you’re talking about compliance, sustainability, resiliency, all of these mean that it’s a top down, and they have to be taken seriously from the top. But we need to look at it differently. I was reading an article recently that said that we have to incorporate that into our daily thinking. It can’t be a side subject, and it really needs to… Risk and resiliency and compliance and sustainability just needs to be part of the conversation, part of how we develop and how we modernize and how we do all that we do, it just needs to be a part of it.
Greg Lotko: There’s also that challenge that there’s too many CIOs in the world that think it’s about chasing a particular technology, and they don’t realize that it’s not only a project in and of itself, but as Rebecca said, it’s got to be pervasive across all projects. It’s got to be part of the ongoing process. It’s not a state that you’re going to get to. It has to be part in the thinking of every project you do and everything that you roll out.
Rebecca Levesque: And it’s interesting, the DORA Act in Europe just said that. And in fact, they want you to go so far in Article 11, as to prove it through testing, periodic testing, right? So, it is becoming more and more important. It needs to be incorporated in the day-to-day thinking. When we’re modernizing, when we’re doing whatever it is that we want to do for our businesses to improve, part of that whole thought process needs to incorporate those areas that we’re talking about.
Daniel Newman: I just want to double click on something you said there, Greg, when you said about a certain type of technology. And all I can think about is these board mandates to move to the cloud. We’re going to move everything to the cloud. And I mean, what an absolute ridiculous, embarrassing set of mandates to come down from such overqualified human beings that really could have quickly assessed, Greg. And knowing that is not… There’s economic reasons it is not the right strategy.
Greg Lotko: Well, and it’s not the first time, right, Dan? I mean, the reality is there, there were moves to client server, or there were moves to… Everything was going to be done on a PC on the desk, and then now it’s cloud. It’s people chasing technology for a buzzword versus a capability. There’s some fabulous things about a cloud environment, which when deployed and used correctly, that that’s great, but it doesn’t mean that every workload should be there. And it also doesn’t mean if you go to cloud that you automatically get all these other things without investment.
Daniel Newman: Exactly.
Greg Lotko: You don’t get the sustainability, the resiliency, the security, whatever, unless you make those investments in that cloud environment with the right workload.
Rebecca Levesque: And you make sure it’s part of the writing. What happens a lot of times when customers go to the cloud, they ignore their responsibility around their backups, around their ability to be able to recover, the risks that are associated. They just let it go.
Greg Lotko: And they assume somebody else is handling it and-
Rebecca Levesque: Exactly.
Greg Lotko: … it’s not always the case, depending on the contract.
Rebecca Levesque: No. And even if it’s in the contract, it’s still your company’s data. So, are you so willing to just hand over responsibility. Because at the end of the day, is the customer that you end up leaking the data, or the customer, customer that ends up not being able to have access to something they want access to, are they going to look to the provider, or are they going to look to you, the customer? And is it your reputation? Yes, the provider will take a ding, but it’s your reputation, your business that will have the financial impact.
Greg Lotko: So, I mean, in fairness, let’s compare and contrast, right? We can talk about what this is like in a mainframe world. And you’ll hear people say the mainframe is the most secure, resilient platform on the planet. It isn’t if you don’t implement the technologies. You don’t get it for free or for not putting in the effort. The reality is the mainframe has been doing things like zero trust for decades, and the idea that you don’t trust anybody or give anybody access unless they have the need to get it. But you have to take the technologies, you have to take the capabilities and implement them in your environment to get to that state. We talked broadly about sustainability, and Rebecca started talking about skills. Obviously, we have a longer term experience with sustainability when you have a technology that’s been around for 50, 60 years.
You have to keep training the next generation. And the next generation brings their intelligence, their insight, their knowledge to the platform, and it continues to expand. It grows. It gets more and more hardened, resilient, and stable. So, it’s really cool the types of things that you see going on. But just like we talked about, CIOs not necessarily being prepared. It doesn’t mean they’re more prepared in the mainframe world versus cloud or distributed. They actually have to be aware. They have to know about the technologies and the capabilities, and then implement them and feed and care for them on an ongoing basis.
Rebecca Levesque: It’s the same as any other platform. If you are told by Microsoft that you have to apply a patch and you don’t need to apply the patch and you don’t, you didn’t.
Greg Lotko: Right.
Rebecca Levesque: If you’re running older technology, if you’re not staying modern, if you’re not bringing yourself to the most current, if you allow time to lapse between releases and upgrades and you just let it hang, then you’re not.
Greg Lotko: Or even proactively take advantage of the latest capability, the feature function and what you can do in that space, then you atrophy.
Rebecca Levesque: And you don’t need to come off a particular platform to improve. If you think about it, I was reading this thing by [inaudible 00:20:26], the journey matters. So if where you’re going to isn’t stronger, it isn’t faster, better, or smarter than where you’re at, at the right level, if you’ve absolutely brought yourself to where you should be within the technology of the platform and within all of the differentiator that your platform has, and then changing makes sense, fine. But if you haven’t gotten where you should be within where you’re at, and you haven’t taken into consideration all the expense with people, internals, customers being affected by the journey, then that also can affect you. You need to do that.
Greg Lotko: So, let’s summarize. Let’s kind of wrap this up. It’s been a pleasure having you on, Rebecca.
Rebecca Levesque: Thank you. It’s been a pleasure.
Greg Lotko: We’ve covered a lot of ground. You think about it. There were some really good pearls in there, Dan too. The future is always built upon the past. You’re going somewhere in a direction where you’re improving, but you’re keeping the things that really provided value as a foundation going forward. And we talked about sustainability, we talked about resiliency, we talked about, does that drive value for a brand or what is the important thing? The difference between a lasting brand and a flash in the pan is just that, sustainability, repeatability, security, resiliency, being able to come back and have an expectation about the experience, knowing that you can trust it, knowing that it’ll be consistent, knowing that it’ll be secure. So absolutely, I believe sustainability, compliance, all this impact the value of a brand greatly and make the difference between a flash in the pan, somebody who’s in the Fortune 500 for years or a decade or does it over enduring value. So, I think we’ve proven the point here. There is absolute value to it, and is important and core to brands and technology.
Daniel Newman: I think that’s a really great way to wrap it up, Greg. The Main Scoop, we like to tie the macros to the micros. We like to tie the entire sort of continuum of technology from the tech that’s been powering businesses for what seems like centuries, in the spirit of 21st Century all the way into the future and the new foundational tech that’s going to change the world. And it’s all really exciting. And look, compliance, sustainability, security, these are not going to go away anytime soon. So, what I would say is companies need to be building with both that resiliency and that sustainability in mind, but they also need to constantly be testing and looking to how new technologies can shift and make their businesses better and more fundamentally capable of surviving the winds of change, Greg, that are coming forever. So man, what a scoop. What a scoop.
Greg Lotko: That’s the main scoop. Thanks again, Rebecca.
Rebecca Levesque: You’re welcome.
Greg Lotko: Thanks, Daniel. I’m Greg. Thank you all for joining us on this episode of The Main Scoop, and we look forward to seeing you next time.
Daniel Newman is the Chief Analyst of Futurum Research and the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise. Read Full Bio