Successful businesses have a higher purpose, one that stretches and guides them through changing times; one that aligns and galvinises their culture, and keeps them striving for better.
Economist Milton Friedman famously said that “the social responsibility of business is to increase its profits”. Of course, value creation is an excellent measure of business effectiveness, although the moment of truth comes in how that value is shared between stakeholders. Does it all line the pockets of shareholders, or is it more evenly distributed between everyone inside and out, both financially and in terms of future investments?
Most entrepreneurs have a bigger ambition than their exit strategy, and most business leaders are driven by more than money, of which they are already well compensated. Yet too many organisations, particularly large corporations seem happy to pursue the commodity of money. Legally executives are employed to create the best long-term return for their shareholders, and this can be an incredibly useful metric to guide decisions and measure performance. But it misses “the why”. The why this organisation is likely to create a better return than another, and the why people as employees and customers will care.
Indeed the new forces in business – from Generation Y to Eastern cultures – tend to have a different view. Rising stars of Asia, like India’s Tata for example, have a different outlook on success. Two thirds of the equity of the company, that makes everything from steel to Range Rovers, is held by philanthropic trusts that are set up to support education, healthcare and performing arts. Tata also provides social welfare support to communities local to its operations.
Similarly, the “millennial” mind-set of young people across the world, is much more about improving society, making life better, caring and sharing more. Innocent drinks, for example, still give 10% of all profits to charities, even though their principle shareholder is now Coca Cola. It is part of the psyche that creates the distinctive brand and internal culture, which is why even Wall Street-minded owners are supportive. But purpose goes beyond philanthropy. Purpose is about why you come to work each do, why people engage with your brand emotionally, and why you have a more enduring impact, despite the rollercoaster of economic performance.
A higher purpose is a “north star” to navigate complex and ever-changing markets, like early sailors used to stay on course as they crossed the vast oceans. It is a really big idea, around which the business can align all it does over time, to focus strategy, inspire creativity and measure success. It defines the role of business in society, why it exists, its added value, how it contributes to a better world, and makes life better.
Business can be full of words - missions and visions, slogans and taglines, values and goals. A higher purpose sits above these. A vision describes how we see the future world, a mission defines what we want to achieve in it. Values are the distinctive cultural attributes, and goals are strategic objectives. Slogans and taglines are creative ways to capture all of this, usually in a way that expresses the benefit to people.
Proctor & Gamble says that its purpose “unifies us in a common cause and growth strategy of improving more consumers’ lives in small but meaningful ways each day” whilst also recognising how it inspires employees to look beyond a machine that makes money. The P&G purpose is to “provide branded products and services of superior quality and value that improve the lives of the world’s consumers, now and for generations to come”. It also says consumers will reward them with sales, from which comes profits and value creation, which enables everyone inside and outside the business to prosper.
John Mackey, founder of Whole Foods Markets, believes that business should be based on a purpose deeper than making money. “Our motto Whole Foods, Whole People, Whole Planet emphasizes that our brand reaches beyond food retailing. In fact, our deepest purpose as an organization is helping support the health, well-being, and healing of both people - customers, team members, business partners, and the planet.”
Here are some examples of companies with a “higher purpose”, and how articulate what more they seek to do for people, their role in society, how they make life better:
- Coca-Cola: “To refresh the world. To inspire moments of optimism and happiness. To create value and make a difference."
- Nike: “To bring inspiration and innovation to every athlete* in the world (*If you have a body, you are an athlete).”
- Starbucks: "To inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time."
- Swarovski: “We add sparkle to people's everyday lives."
- Walmart: “If we work together, we’ll lower the cost of living for everyone, we’ll give the world an opportunity to see what it’s like to save and have a better life.”
Other purpose statements, whilst still directional, are less inspiring because they are more functional, about the business and what it seeks to become:
- Amazon: “To be earth's most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.”
- Audi: “We delight customers worldwide” through four actions "We define innovation. We create experiences. We live responsibility. We shape Audi"
- Bare Escentuals: "To be a force of beauty … the belief that products can actually be good, makeup can be fun, business can be personal and companies can behave more like communities."
- Dunkin’ Donuts: "Make and serve the freshest, most delicious coffee and donuts quickly and courteously in modern, well-merchandised stores.”
- Tiffany & Co: "To be the world’s most respected and successful designer, manufacturer and retailer of the finest jewellery … committed to obtaining precious metals and gemstones, and crafting our jewellery in ways that are socially and environmentally responsible."
The best purpose statements are simple and uplifting. They have an intent “to be” and “do more” rather than asserting their achievement. They are about people, and making their lives better, which is more engaging and memorable, and also creates space to shine and grow.
This article is an extract from “Gamechangers: Creating Innovative Strategies for Business and Brands” by Peter Fisk.