The purpose revolution is as powerful as the digital revolution
This blog looks at why a business can’t just paint a new purpose over what it’s currently doing. And why, it has to take people – employees and customers – with it.
The UK has a particularly extreme form of capitalism says Prof Colin Mayer, author of a report of capitalism for the British Academy. It is something that has been echoed by people like Larry Fink, CEO of Blackrock investments. Put simply, business as it was understood, is unsustainable. This is why so many businesses are rushing to purpose proof themselves.
As The Team’s Financial Director James Dix puts it, “Shareholder value through growth and profit alone has to change. The influence of companies and business has to become positive beyond just delivering for shareholders and pension funds. Profits are hugely important, but business must also strive to benefit the environment, communities and other long-term sustainable goals. I agree with what the report says, but can companies, business, shareholders and pension funds adopt a wider range of stakeholders and take responsibility for success factors beyond the P&L and Balance Sheet? That’s the big question.”.
This begs the question, what is the purpose of profit? Surely profit should be used to profitably solve the problems of the planet – as Prof Mayer’s report says.
Key to any analysis is the ever-expanding chasm between those who produce and those who own the instruments of production. That has to change. Shareholders have to become true business owners again.
If this all sounds a bit Marxist, then it is. It is Yanis Varoufakis analysis of how we should and could have foreseen the problems that we have created for ourselves today. And so, how does a business marry a Marxist viewpoint with a refreshed capitalist future? This is where purpose, if it is to survive its current honeymoon, must play its part.
But a business can’t just paint a new purpose over what it’s doing. It has to take people – employees and customers – with it.
In my view, you just can’t retro fit purpose. Purpose is something that has to be believed and led from the top of the organisation and throughout, and its leaders are essential to its success. It’s leaders who decide where money gets spent and what gets done, and ultimately, it’s leaders who decide on the actions of their brand. Ultimately, a brand’s purpose is measured by its actions. So, unless you have leaders who truly believe in purpose, it’s a fudge.
In my view, you just can’t retro fit purpose. Purpose is something that has to be believed and led from the top of the organisation and throughout, and its leaders are essential to its success
That is not to say that purpose can’t emerge within existing structures, but leopards do not change their spots and change takes time. Beware of companies that suddenly announce their new purpose with a bang! There usually has to have been some journey of change before any organisation is ready to unveil its new shape and form. Which is why, unless brands are seriously making changes to the way they: recruit; reward; innovate; research and develop; price; develop relationships with NGOs and with communities; bring employees onto boards; reinvest profits – unless they are doing all this now, they are behind the curve and not ready to start marketing purpose.
Unsurprisingly, it’s the organisations that have been through near death experiences that are more likely to take purpose seriously. They will have seen the impact of their actions up close and personal. That type of experience changes minds. It also changes ways of working, which is why they probably have better infrastructure to back up any purpose claims.
True purpose gets lived in every action, every process, every policy and the ways in which a business wants to engage with society and governments on the issues that matter. Brands like Unilever can now talk about sustainability because they have been working hard at that by changing their products and changing how they work with communities around the world. They have invested the time and resources. Brands that suddenly announce their new purpose had better have spent a lot of time getting that right behind the scenes before going public with any marketing campaign.
Getting employees onside
To get employees on side, an organisation needs to explain why purpose is important; why purpose is important to both the organisation and its customers and what is going to change and when. Let’s be clear, not every employee will buy into purpose. We have spent the last 100 years telling people that businesses are served by focusing on shareholders, not by focusing on purpose.
Employees will want to know why their purpose is good for customers, for consumers and for society. They will want to know it makes commercial sense as they still want to work in a business that makes money.
Employees will want to know why their purpose is good for customers, for consumers and for society. They will want to know it makes commercial sense as they still want to work in a business that makes money. Using a frame of reference like the UN Sustainability Goals is useful as it ties everything back to a bigger picture, but never forget the smaller picture – while employees are more interested in working for companies that do good, they also want to work for companies that are successful.
Purpose starts on the inside. Get your leaders, your employees, your shareholders on board first. Go to customers and consumers and listen to what they think about your purpose. Listen hard. Make changes on the inside. Then, and only then, trumpet your purpose. And even then, use a humble trumpet.