Exterior view of the Prada NYC Soho location. The store had displayed ‘Pradamalia’ characters, which sparked criticism for resembling blackface and have since been removed from the storefront.Prada store accused of depicting blackface, New York, USA - 14 Dec 2018

How can brands still be getting it so wrong? In an age where the most-desired market segments — Millennials, Gen X and older Gen Z consumers — are driven by values, and especially diversity and inclusion and the positions that brands take, the fact that brands still release racist products and ads is mind-boggling.

Nowhere is this more evident than in the fashion industry. Just last week Gucci and Adidas joined the ranks of H&M, Dolce & Gabbana, Prada and others in releasing products and ads that convey racist messages, whether intentional or not — presumably not. Gucci’s balaclava-style sweater evoking blackface imagery and Adidas’ all-white shoe in a line meant to celebrate Black History Month is not just embarrassing to the companies but potentially damaging to their reputation and internal morale.

When you think about all the stages that these products, designs and ads had to go through before making it into the public eye, we have to wonder whether, truly, no one in these companiesat any step along the way, said, “Don’t do this, it looks racist.” Or maybe the more likely scenario is that the voices of dissenters were ignored or denied by the decision-makers.

Both Gucci and Adidas apologized and withdrew the offensive products, and most companies are good at reacting quickly. But the harm remains and leaves an impression that the company leaders are out of step with societal values.

Missteps like this serve to not only alienate your target markets but also your workforce. The best way to avoid them is to have a diverse and inclusive organization.

Alienating Your Target Market

Let’s look at the external impact first.

Gen X, Millennials and Gen Z are known to be less loyal to brands than older generations. They are also more conscious of looking for brands that are consistent with their own values and that take positions that are aligned with their own on societal, cultural or political issues of the day. A recent survey by CompareCards showed that 35 percent of Gen Xers and 33 percent of Millennials have boycotted a company or product they once supported after it went against their personal values.

Alienating Your Workforce

In its apology about the offensive sweater, Gucci said, “We consider diversity to be a fundamental value to be fully upheld, respected and at the forefront of every decision we make.”

Hmm. If that were true in practice, they would not be in this position.

In fact, most employers these days talk about the importance of having diverse workplaces, saying that it brings business advantage. They have a written set of values that likely talk about respect and inclusion and diversity but, as these recent stories reveal, it is questionable how many fully live up to those values in reality.

If you truly have a diverse, inclusive workplace, people will speak up about issues of concern because they know they will be listened to. When that happens, your entire workforce becomes the guardians of your culture and values. Your employees will put you on notice if the company’s actions violate those values.

Furthermore, younger generations, in particular, don’t just want to buy products from what they perceive as responsible brands, they want to work for employers whose values reflect their own.

Modern leadership-thinking indicates that companies should want their employees to not only like their jobs, but to also be fully engaged with the company and the brand. Employees who are passionate about the brand and become true brand advocates deliver the brand message in all of their interactions with customers, coworkers and the public. Not only do engaged, satisfied employees drive profits, but they drive brand reputation and support brand messaging as well. As these attributes break down, the brand invariably suffers damage and its brand damage from within. The brand, its consumers and its external partners all suffer.

Getting It Right: Inclusion and Diversity as Business Necessities

These examples from the fashion industry illustrate why achieving inclusion and diversity are business necessities — not luxuries or pie-in-sky targets. Only by having more diverse voices at the table, only by having those voices welcomed and listened to, can businesses avoid these kinds of debacles and avoid brand damage both within the organization and with consumers.

When that happens, companies can get it right from the start.

How do you get there?

First, the leaders of companies that have established values need to live by them. The tone is set at the top.

Second, the notion of a values-driven culture has to be embraced by other senior executives.

Finally, the mechanisms for leading and managing a values-based organization must be cascaded down throughout the entire organization.

Once values are embedded in the culture this way, then mistakes are more likely to be caught somewhere in the product development and marketing journeys. Every company has a rigorous process for creating product and creating advertising, all with management oversight and approvals along the way.

If the values of diversity and inclusion have been embedded throughout the organization, then someone, somewhere along the product development and marketing journeys, will raise their hand if they see something objectionable and say, “Wait a minute! That looks racist!” And the company will listen and change its course.

Michael Stone is the cofounder and chairman of Beanstalk, a global brand extension licensing agency, and the author of “The Power of Licensing: Harnessing Brand Equity” (Ankerwycke).

Stephen M. Paskoff Esq. is the founder and ceo of Eli, a firm specializing in increasing inclusion, diversity and respect in the workplace. He is the author of “Civility Rules!”