What does ‘purpose’ really mean in the business context? How can companies go about identifying what their broader social or environmental values are, ensuring these are authentic and actionable?
Purpose is becoming so widely used and misused as a word that it’s in danger of losing all meaning. But a clear purpose is useful, in fact vital, for any organisation, to help people at all levels make better decisions. If you know what the purpose is, then it’s easier to see how your role fits within the business, how you’re contributing to a bigger goal, and what you need to do to help and to get on. What’s changed is that social and environmental issues – like diversity and climate change – are no longer externalities that can be ignored by business. Customers, employees, governments, investors, activists are all forcing businesses to address them. So a business has to find its purpose now not just by asking why it exists, but why it exists and what the world would really miss if it no longer did. Business on a Mission looks at businesses and individuals who have successfully answered this question and how any organisation can identify the most relevant and material issues for them (by looking at their products and services; their supply chains; their talent base; their marketplace; their industry sector etc.) and then build plans to address these in what they do and what they say.
Why is it in their commercial interests for businesses to put a social purpose at their heart?
We have identified four main commercial drivers for putting a social purpose at the heart of the business, which differ in priority from organisation to organisation. The first is Sales, and how a social purpose can strengthen relationships with customers either in retail (through prominence in-store and online) or in business-to-business tenders and pitches. The second is Marketing, and how a social purpose can be the foundation for more engaging, shareable, effective communications. The third is Talent, where a social purpose drives employee engagement and productivity. And the fourth is Licence to Operate, where it supports the social licence to operate. Investors are increasingly aware of these benefits – and the risks of not managing environmental and social issues – and are assessing companies based on their Environmental, Social and Governance (ESG) performance.
How can purpose and profit be compatible?
Purpose has to be about focusing a business on its core objectives and why it exists in the first place, understanding the social and environmental context in which it operates, and managing both. By helping an organisation strengthen its relationship with society and manage its environmental impact, the right purpose can drive sales, improve marketing, engage talent, and strengthen licence to operate.
Which companies would you recommend as doing this well?
Nike exists ‘to bring inspiration and innovation to every athlete in the world’, where an athlete is anyone with a body. This very clear purpose guides their strategic choices, product and market development, marketing and endorsements programmes. But it has also driven them to address social issues, including all forms of discrimination. When Nike ran a 2018 campaign featuring NFL star Colin Kaepernick, who had been shunned by teams after he had refused to take the knee during the playing of the national anthem – ‘Believe in something. Even if it means sacrificing everything.’ – they generated a huge amount of awareness, with media and public violently for and against it . The campaign resulted in consumer boycotts by people on one side of the issue, and a rush to buy Kaepernick shirts by people who supported his stance. The business result was one-sided though, with Nike’s value reported as having increased by $6 billion in the months following the campaign . It’s difficult to assign that growth just to an ad campaign, but the campaign clearly had a lasting effect. It worked because it was entirely in tune with Nike’s core purpose, inspiring every athlete in the world. As far back as the 1970s Nike understood the social element of its purpose and promoted its business by addressing relevant social issues. The company championed gender equality legislation in the early 1970s, helping increase female participation in high-school sports by 940% since 1972, while Nike’s women’s range now accounts for approximately 25% of its business. At the same time, they have understood that negative issues (around unsustainable manufacturing, for example, or sweat shop labour) were incompatible with that purpose and presented a threat to the business, and so addressed them. The then Nike CEO, Mark Parker, said in 2010, “It took us a while, but we finally figured out that we could apply our core competencies – design and innovation – to bring about environmental, labor and social change.”
What is greenwashing, and how can companies avoid this?
Greenwashing was first used in 1986 to describe the signs in hotel rooms asking guests to reuse towels to ‘save the planet’, without mentioning the costs this saves for the hotel. Perhaps the darkest shade of greenwashing came in 1990 with DuPont’s corporate ad of seals clapping, whales jumping, and flamingos flying to the soundtrack of Beethoven’s ‘Ode to Joy’ to project the company’s new-found green image, shortly before the company was named by the Environmental Protection Agency as the largest emitter of toxic waste in the USA. The term now has been extended to Purposewash, to describe companies saying one thing – ‘we believe in fairness’ – and doing another – promoting unfairness in their supply chains, for example. But in an age where companies can be called out and cancelled so easily through social media platforms, it’s becoming increasingly risky for companies to talk the talk without walking the walk. The solution? Don’t say more than you do.
The rest of this interview will be published at a later date.