In recent months, there has been an undisputed rise in discussions around corporate purpose. Many organisations are discussing how to be better workplaces, serve their customers more effectively and are carefully examining what they stand for. But there does seem to be a divide between companies that treat this exercise as a re-hashing of the old ‘vision and mission’ straplines and those who are treating it as an opportunity to seriously reconsider what they stand for.
What is Purpose?
There’s a lot of ambiguity around the topic of purpose. Many firms treat their sustainability initiatives as statements of organisational purpose, which can lead to a very narrow focus. However, some have taken the bold step in defining a purpose that resonates through not just marketing and the C-suite, but through every part of their operations.
I struggled to find many landmark reports on the subject but EY’s Beacon Institute released a report in September 2019, defining purpose as “an aspirational reason for being which inspires and provides a call to action for an organization and its partners and stakeholders and provides benefit to local and global society.”
The first two sections, in italics and bold, are not too different from a standard company mission, but it’s the last part, in underline, that sets it apart. It’s the intention to make organisations not only offer valuable products and services, but also to serve society in some way. In the words of the Harvard Business Review, to “connect with the heart as well as the head” or Bizfluent, “how you will improve the lives of those you serve”.
Now, we’ve had a number of discussions about whether the benefits do need to be both local and global, because the latter is a big ask! However, there are a number of bigger questions in my view, including how purpose can be balanced with profit, and who should be accountable for company purpose.
Can Purpose be Profitable?
According to Gallup, when companies get their purpose right, it can make a difference. When a company’s purpose – and the corresponding behaviour – line up, customers will give the brand 47% ‘share of wallet’ (i.e. their spending on that category) than a non-aligned brand, which only receives 23% of ‘walletshare’. Gallup also cites a few good examples of purpose statements, including this one from Southwest Airlines in the US: “To connect people to what's important in their lives through friendly, reliable, and low-cost air travel” – and this has clear implications for the entire brand experience.
Similarly, looking at EY’s research, 42% of ‘purpose laggards’ report flat or declining revenue compared to only 15% of purpose 'prioritisers', so the report seems to imply that revenue growth is somehow linked to corporate purpose. I’m extremely hesitant of correlating purpose and performance because I suspect that it’s linked to a third variable. I don’t have any data to back this up, but it’s entirely possible that organisations that have the time and resources to develop their purpose are likely to be larger, leaner and potentially more successful firms.
Furthermore, there’s the problem of definition. Some might argue that SW Airlines’ purpose statement doesn’t provide benefit to global and local society, only global and local travellers – after all, according to Wikipedia, the aviation industry is responsible for 3.5% of all climate change. That said, this reminds me of an episode of the philosophical Netflix comedy The Good Place, where one character works out that most humans are being sent to hell because of ‘unintended consequences’. For example, the apple that we buy in the supermarket on the first day of turning vegan was shipped on a plane, adding to global warming. Its plastic packaging is thrown away and later chokes a dolphin, etc.
It’s important to remember, though, that most initiatives need to start small, then grow. Even Google was a small organisation at one stage, so any change can begin to have a bigger impact further on down the line, and we can begin to tackle those ‘unintended consequences’.
Accountability and Cost
One of the other key challenges with building company purpose is accountability. The natural main stakeholder for company purpose is the CEO. In a traditional, non-purpose-driven organisation, shareholders shout at you if you don’t achieve goals – but who shouts at you if you don’t have a purpose? Potentially no-one.
But there is a longer-term cost to a lack of purpose, or a purpose statement that is poorly executed. Employees will leave. They’ll be less motivated. You’ll lose the halo effect of a good reputation. And when ‘reputational value’ makes up 41% of the value of the FTSE 100, that’s not something to be sniffed at – in fact, it’s just under a trillion pounds.
Furthermore, there’s the absolute cost. That if we don't want dissatisfied customers – or, considering purpose from a sustainable standpoint – a greater number of hot, wet summers, droughts or to run out of resources, we're going to have to find this balance a lot, lot more in our lives. But this can be hard.
Time to Get Creative
A contact of mine, a careers coach, used to tell her ‘coachees’ that it was daft to tell people that they could do anything. You can’t, she’d say, become an astronaut. It’s really hard, your country might not even have a space programme, and you might wear glasses (or something).
I’ve got to say I disagree. If you really want to be an astronaut and wear glasses, then start your own spaceship company, or join the Virgin Galactic programme. Admitting defeat is creativity failure. Sometimes creative suggestions might seem crazy, but then it’s important to remember that sometimes crazy can work. For example, no-one thought NASA’s idea of lowering the Curiosity Rover down to Mars using a ‘sky crane’ (essentially a UFO with a winch) would work, but after testing, it became the only viable option – and performed perfectly.
Of course, sometimes the biggest barrier to developing corporate purpose isn’t creativity, it’s the potential for reducing revenue. In the short term, this may well be true, but a good purpose also has the long-term potential to transform a company, motivating employees and maintaining relevance. It’s like any kind of transformation – if companies are smart enough to take their eyes off quarterly targets for a moment, look at the bigger picture and cut the staff some slack, it gives them space to manoeuvre.
Furthermore, in an age when simply running a profitable business is growing ever-harder, finding a purpose may seem like a tough thing to do. But in the absolute long term, it’s the right thing to do if organisations are to retain customers better, create a robust reputation and help to sustain the planet. So perhaps the right question isn’t ‘can profit and purpose co-exist’ but ‘why aren’t they co-existing right now?’