Doing business on purpose
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Purpose grows business. It motivates employees to perform, connects with consumers and directs innovation. Finding your purpose and aligning your business behind it can transform your category, brands and the world. And getting it right can be simple.
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Doing business on purpose
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Editor's Notes
- For many, a guiding purpose is fundamental to human life – it directs us, inspires us and gives us reason to strive for something greater than ourselves
- An esoteric topic Lets talk about the context that has made purpose relevant today
- As we’ve just heard from David’s presentation, the society that we’re operating in today has changed and is changing…
- People are more empowered than ever beforeThey’re wary of marketing spin and empty promisesTrust in companies is at an all time lowPeople have so much choice that the features and benefits you offer are no longer stable differentiatorsYou need to be saying something meaningful to them in order to stand out from the clutter
- What connects with consumers today is a rich story that sits behind the brand.. Something that connects with them at a human levelBut the story has to be real, felt and lived across all touchpoints in order for your customers to experience it
- We’ve seen a shift in social paradigms in the last few decades60s and 70s were about the needs of collective society 80s and 90s were about the individual and conspicuous consumptionCurrently we’re in the we/me age – where the needs of the individual need to be balanced against the needs of the collectiveWe enjoy the fast pace of life, and the hyper connectivity and hyper consumption that the pace bringsBut at the same time it leaves us feeling a little emptyThe return to valuing values that David mentioned earlier means that we look to fill that emptiness by connecting with people, ideas, products whose values reflect our own, who can add meaning.So adding R2 for hope when you’re buy a KFC burger, or buying responsibly caught fish makes sense because it’s the kind of thing that makes the time, money and energy we spend a little more meaningful.
- Business has been forced to change as well
- For the longest time, business has operated under the principle that business exists to maximise shareholder value, and that the business of business is to make money.But the placement of shareholders as the primary stakeholder leads down murky waters, and the likes of Enron, Lehman Brothers and the financial crisis in general are evidence that maximising profit above all else leads to short term thinking that can be detrimental to broader society on a grand scaleSo we’re seeing a groundswell in thinking that highlights that business does not exist separate to society, but is a citizen of it which makes the issues of society fundamental to the business of business
- So what we’re seeing now is more of a stakeholder-centric view being adopted by business.Our highly progressive King Code of Governance forces South African business to be more responsibleBut there’s a swing in consumer psyche that now expects business to do more than comply, and to actually CAREJoey Reiman, an ardent speaker on the topic of purpose points out that large multinationals account for 40% of world trade, and together have annual sales that are greater than the gross national products of a 1/3 of the world’s countries Because of this business has incredible power. Business as a whole is the single largest community in the world – and a community with cloutAnd because of that there is the opportunity, and responsibility even, for business to make more of a difference to the world’s problems
- Contrary to our parents times when you would get a job and stay with the company for 40yrs, and be grateful for the work – employees are a different kettle of fish these daysWe’re less committed – much less committed if we look at the survey done by career portal Careerbuilder.com76% would leave – In a world of global competition, having this many workers disengaged and simply pushing paper across desks is simply not optimal
- In fact employee engagement is critical in order for people to be more productive, to care about the outcome, and to care about the company itself.And for that they need something to believe in. We are meaning seeking creature by natureA recent McKinsey report has shown that the most important aspect of engagement at work is for employees to feel that they are contributing to something meaningful – that what they spend their time and energy on matters.Meaning matters to today’s employees – and that’s especially the case with graduates and young professionals, who are less and less motivated by financial package and benefits.
- And so the collision of all these aspects of the world gets us to the point where purpose is less fluffy and warm and fuzzy, but is absolutely relevantIt allows business to reframe the value that it delivers to its customers and society at largeIt inspires customers to connect at a deeper level in a meaning-starved marketplaceAnd it motivates employees to be committed and care about the organisation, by giving them something to believe in and work towards
- Your purpose is your WHYIt answers the question of why the world is better of with your organisation in itIt goes beyond talking about profit, or the functional needs that your products and services addressAnd frames the value you add in the change that your company hopes to make to its customers, your industry, your community, or the world at large.
- It’s the …. (all of the above)Hopefully at this point I’ve managed to convince you that purpose is relevantBut these are really big, deep, introspective questionsAnd I’m sure we’ve all come in today with some preconceived ideas of what purpose is Hopefully we’re able to ground it all with some real examples and facts.I’m going to start with a story….
- In the 1940s, Japan was in ashes. World War II had done enormous physical damage, and to the psyche of Japanese people. Legend has it Sony co-founder Akio Morita met with some of his advisors in a burnt out department store just after WW2He was presented with the plans for a fledgling Sony that would make the company the #1 technology company in Japan.But Morita saw the purpose of the company as bigger than this. Within the context of his country’s economy in tatters, and the spirit and pride of his people broken, he reframed the company’s purpose to this:To make Japan the #1 technology country in the world.In this context of a broken country, one man had a dream to make Japan the number one technology country in the world.
- And on this dream …to build not a company, but to regain Japan’s place on the global stage…Sony was born.
- Morita himself was a visionary leader and a man fuelled by purpose. And it can be argued by the critics in the room that the time was right for a ‘worthy’ purpose such as this to lead to ahead of the curve financial gain.But is the idea of purpose applicable to everyone?Lets address some of the preconceived ideas about it..
- When many people hear the word purpose, they place it in the realm of the ‘do-gooders’ …
- Because of the relationship between business an society changing, purpose is evolving outside of communication and marketing alone, and is becoming a viable way for many of the world’s largest organisations – for profit organisations –to talk about how they do business.
- If we look at how marketing thinking has evolved to reflect thisProduct centric – functionally fulfilling a need
- Customer centric Embedding the value by thinking broader than the functional need being fulfilled, to how that fits into peoples people’s lifestyles.
- People centricWhat broader societal requirement can I address with the need I am already fulfilling?
- Same core idea, but the value delivery extends beyond the productHas forced brands to think about how they define their relationships with key audiences and how to engage with those they impact
- People think purpose needs to be ‘worthy’ Curing AIDS, saving the dolphins, preserving the rainforestsFollowed by ‘That’s not what we do here’While these are very noble and important, we’re the first to acknowledge that its not for everyone…
- After all, we’re not all in the business of sewing arms back onto babiesThe ‘world changing’ purpose might not be right for youAnd actually purpose can exist on many levels, depending on whats right for the context you operate in, and whats right for your business..The point is, while it doesn’t have to be world changing, purpose can be relevant to any business, in any industry.
- If we consider a Maslowian hierarchy of needs as a framework for how we can frame the value we deliverYou see that you can choose to deliver value through excellence in the products or services that you offer – though this is still quite business centricYou start becoming more purposeful when your value proposition is focused on more higher level customer needs; in the Maslow hierarchy, this addresses needs for belonging, connectedness, pride and self-esteemAnd we can talk about higher purpose, when we’re fulfilling more society-centric needs, a need to ‘do all that you can/reach full potential’ – help transcend societal problems, or build society
- Claiming a purpose is one thing, but delivering on it is something quite differentIts our view that being able to deliver the different levels of purpose has implications for your operating model, the culture and ethos of your company.(talk through model)Your company has to be FIT for the purpose you claim ,which is why real consideration should be given to the purpose you choose….
- Starbucks went from a small, Seattle based business, to a global company with a store on every street corner.But with the growth came confusion around what the brand actually stood for; was it fast service, was it that you could find one in every neighbourhood, was it the coffee experienceIn 2007, reflecting that the historic strengths of the organisation lay in its sense of community, and human connection, the purpose was solidified as ………Which talks to the Maslowian need for belonging and connectedness
- Those with purpose expressions at the very top of the pyramid are typically those who are comfortable that a purposeful, society impacting intent above all else will generate a profitable return. Purpose is built into the DNA of the company.A group that sits very comfortably in this space is range of social entrepreneurs – those for whom a business was started to alleviate a social ill. These are NOT non-profits – their intention is to make money, but they don’t do so at the expense of their purposeful intent e.g. DaloAnd to show that its not just small business, and it is possible to grow and have a higher purpose – Jamii Bora bank – started by a community of street families to find a solution to their financial problems, …. Now one of Kenya’s fastest growing banks, with aspirations of being a pan-African micro-financier.
- Example of how purpose can be a game changer, deposition the competition and produce meteoric growth Apple has gone from not featuring in the top 100 US companies by market capitalisation a decade ago, to topping the list today. All built around a purpose of empowering creative exploration and self expression – a commitment to making innovative, beautiful robust prodcuts that delighted customersShareholders have never been their focus, but their shareholders have not suffered.
- But the point is not about Apple, its about how purpose drives growth, and nothing proves growth like a graph.Stengle 50: The companies that organise themselves around improving people’s lives outperform the market by a massive margin of almost 400%
- Back in 1999, Johnnie Walker was on red alert. In the preceding three years, volume sales had fallen by 14 per cent, while market share was also in steady decline.
- Examples of how ‘progress’ and ‘keep walking’ resonates…After the 2005 assassination of their Prime Minister Rafic Hariri, the people of Lebanon took to the streets. To proclaim their resolve to the world, they carried homemade banners emblazoned with the words "Keep walking" and carrying a local pun on the name Red Label.At a March 2008 party conference in Greece, George Papandreou, the opposition leader, proclaimed to party members "We need to continue our pursuit until we achieve our goal", then exhorted, in English: "Keep walking."Over the course of the campaign, "Keep walking" executions have elicited remarkable reactions. It's not uncommon in creative development research for young men to hold profound conversations about what it means to be a man. We even found instances of people in Brazil tattooing the Striding Man on their bodies."We have to take advantage of everything we have, to enjoy everything and to give our maximum so we have no regrets when we die. We have to think we are on this earth to do something; (Keep walking) motivates me to be a better human being," a focus group member in creative development research in Venezuela in 2006 said.
- The campaign adopted by 120 countries that has seen Johnnie Walker’s value and volume sales rise up 48% and 94% respectively as the whisky market has declined to 8%. 8 years after the launch of “Keep Walking”, the campaign has helped deliver over $2.2 billion in retail sales.
- Having a purpose does more than connect with customers. It helps motivate employees. Employees who feel they are part of an organisation that matters are happier employees – and more productive employees.
- When your purpose is clear, it frees you to direct your attention away from the outmoded practices of competition and to innovate more purposefully…
- Evidence of shift in world psyche that welcomes a more socially conscious and responsible business world.
- The context of many countries today isn’t all that different to the context in which Sony was founded. Emerging markets have numerous societal ills that they struggle with, and their citizens and consumers have much broader needs than those in developed economies…
- Why are we lagging on the purpose front? It’s more important to our customers than to those in developed economiesPurpose is not just a ‘rich world’ phenomenon. Research has shown that customers in emerging markets are especially receptive to brands who make an impact on social issues – because they are much more attuned to the social issues that affect them.
- Powerful purpose is based on the key insights about your category, social context, product or customerBe clear about who you are choosing to impact, and the need you are ideally placed to addressAsk yourself : ^Higher order needs, hopes and aspirations of my customers and employeesWhat communities do we impact?What societal issues negatively impact my business?
- From the battle of the moleculesTo stimulating children to develop and grow (playing outside and getting dirty builds social skill, curiosity and confidence)Consumer insight that people want their children to be well balanced, outgoing and proactive so that they can go out into the world and be successful
- Purpose shouldn’t be about a transient or fleeting issue
- A long term journey that your business will be taking to embed the purpose internally, and make an impact externally
- Actual impact that you intend to make
- Important – requires you to be honest about your intentions as an organisation as well as your ability to deliver on those intentions. Being clear about the type of impact you want to make also helps when it comes down to activating your purpose:How much are you prepared to spendWho will you align with How will you measure and track your progress
- Spar has a decentralised model, where independently run and operated stores get involved in the issues relevant to their community. Tying it up with the core offering of Spar, community involvement often involves feeding schemes
- There is no point trying to make up a purpose that sounds good. Even Enron listed lovely values on their website. Your purpose needs to be authentic, real and genuinely true of your organisation in order to make a real difference. Being purposeful needs to be part of who you are as an organisation, which requires a deep reflection of where your business is best placed to make a difference, and the strategic choice of aligning your organisation in order to actually do so.
- For exampleLiberty Though a South African giant now, Liberty was started by Donald Gordon based on the noble notion that ‘everyone has the right to retire with dignity’ and Liberty was born with the intention of providing guidance to people to allow them to make the right choices that got them to a secure retirement… a strong foundation that has been used as guide for Liberty as it expanded its portfolio of services.WalmartAnother example of how as the organisation grew, it took revisiting the original intention of founder Sam Walton (to help people provide better lives for their families) to inspire employees and customers alike.
- Looking back into the history of your organisation is useful, as often there is something inspiring there that needs to be dusted off and made relevant
- Rob McDonald, ex CEO of P&G believed in choosing the ‘harder right instead of the easier wrong’ – he was passionate about the P&G’s purpose to touch and improve lives, and believed the business was in a privileged position to make a real impact in the world. Purpose needs strong leadership. Without leaders living and loving the purpose, organisational ideals will become just another internal campaign. Lead from the front and employees will feel like they are part of a movement that is really doing something meaningful. Inspire your people
- Hire the right people for your business. Challenge recruitment practices to prioritise value-fit. Listen to your people: include and involve them(pic: Google employees in Dublin)
- Define the metrics that are right for youMeasure real impact &Measure customer & employee perceptionMeasure individuals, departments and the company against these goalsPublish and compare, publicly Woolworths publicly shares their milestones and progress on their good business journey.They track and measure everything, from how many plastic bags are sold in store to where their ingredients are sourced Be proud of your achievementsProve that you are doing what you say – get third party endorsements and validationsKeep customers updated on progress
- Partners can be an important strategic tool to extend your impact beyond what you’re able to do alonePartners bring expertise, creativity, resources or reach that you may not possess and through them you impact can be greatly multipliedPampers is about caring for the happy, healthy development of babies. This resonates deeply with mothers on an individual level, but Pampers has extended their reach for global impact by partnering with the highly credible and trusted UNICEF1 pack = 1 vaccine raises funds for tetanus vaccines >>> has raised funds for 300million vaccines in 32 countries – and is making the eradication of neonatal tetanus a real possibility. Campaign has delivered year-on-year growth for Pampers, even in their toughest markets.
- Name of the game in mkting today, and particularly where purpose is concerned today is engagement, not advertisingEngagement mechanisms such as digital media, feedback systems, experiences and crowdsourcing projects are incredibly important, as it engages customers outside of the purchase process, and enables them to package the value you offer beyond the product you sell.Talk to people, listen, incorporate their feedbackInclude customers in doing good – let them participate.Let the actions speak for themselves, but tell the back story