As we emerge from the aftermath of Covid-19, we have a golden opportunity to reboot capitalism, and purpose is the most effective source code to start with to reset how business can be a force for good.
This means prioritising listening, learning, compassion and involvement as our new pillars for innovation and growth. Companies must adopt a mindset of giving more than taking, choosing the future over the present, and public good over self-preservation.
We have spoken to and worked with some of the best and most passionate leaders at iconic companies like Microsoft, Adidas, Lego and Patagonia, and here are the nine principles we believe are essential to creating a truly purpose-driven organisation whatever their size.
1. Purpose needs to start inside out
Before a company starts preaching to the outside world about how it should behave, it must first get its house in order. It needs to take care of its employees and to ensure that it has gender balance, both in pay equity and in leadership positions. It needs not just diversity but inclusion—the ability to empower people of all backgrounds to lead and have their voices heard.
A caveat—it is important to realise that every company makes mistakes; the important thing is to be transparent about those mistakes and use them as opportunities to do better.
2. Purpose is about picking your sword and shields
As the ex-vice president of sustainable business at Unilever, Sara Vaughan (pictured right) cites a phrase often quoted inside the company: “Brands must choose their swords and shields.” Swords are a brand’s crusade, the causes they want to lead and march forward with. Shields are the values, actions, and truths that can help protect the brand’s reputation, even in the face of criticism.
Brands should connect their sword with their core business. For example, Adidas makes products for athletes, so their belief that sport has the power to change lives is a natural fit.
3. Purpose must be profitable to be scalable
In the long term, purpose must drive profitability. This is business, not philanthropy, and society has a vested interest in helping businesses that are good for the world to do well. The more money a company can make from doing good, the more the good can scale: Adidas generates $2 billion from selling sneakers and apparel made out of waste ocean plastic, harnessing the engine of capitalism to solve one of the most pernicious problems in our seas. The United Nations estimates that in reaching all of their Sustainable Development Goals, we will create a staggering $12 trillion in unlocked value.
4. Purpose is about putting your money where your mission is
However, sometimes companies need to risk short-term profits to maintain a long-term commitment to their beliefs. As advertising legend Bill Bernbach put it: “A principle isn’t a principle until it costs you money.”
Nike sparked controversy when it supported Colin Kaepernick in his protests against police brutality, a move that now looks prescient given the worldwide outrage after George Floyd—and which also led it to a record quarter of sales. They proved the maxim from Nike founder Phil Knight (pictured above): “It doesn’t matter how many people hate your brand as long as enough people love it.”
Delta Air Lines cut ties with the National Rifle Association, leading to a potential loss of $40 million in tax subsidies from the Georgia State Legislature, with their chief executive Ed Bastian saying: “Our values are not for sale.”
These actions win them true respect from their stakeholders as a test of their integrity, generating brand loyalty and advocacy that is invaluable in this day and age.
5. Purpose doesn’t have to be political
Some brands have such a broad and diverse customer set that choosing unifying causes is most prudent. There are plenty of areas with broad-based support, such as feeding the hungry, improving schools and creating more job opportunities.
It’s also important to understand that purpose is relative. Oreo’s choice in merely acknowledging someone’s right to choose their gender pronoun on a pack can be read as hostile to some people’s values. Today, some backlash is inevitable and should be planned for. The important thing is not to be paralysed by indecision.
6. Purpose should be an open source pursuit
As the adage goes, sharing is caring. Purpose-driven companies will give away their intellectual property if they believe it can help improve the world. Tesla, co-founded and led by Elon Musk (pictured right), gave away patents for lithium ion battery technology to jump-start the electric car market. Volvo gave away decades of data on how car crashes affect the female body to improve all manufacturers’ safety. Companies must collaborate on every level with others in their category (yes, even the competition) to create new models in service of our shared goal of creating a better world.
7. Purpose is about being the helper, not the hero
One of the biggest mistakes companies make is in casting themselves as the saviour, riding in to solve the world’s problems. When badly executed (see the Pepsi Kendall Jenner ad about Black Lives Matter as exhibit A), it can cause massive damage to your company reputation.
Center your approach on people, not your brand: consumers are craving the opportunity to bring meaning to their lives. Give customers and partners a way to get involved with your purpose by creating platforms for participation that range from lightweight (simply purchasing the product) to more actively engaged.
8. Purpose must measure what you treasure
As the field of purpose grows, so too does the need to quantify and measure its effectiveness—the so-called return on purpose.
Part of the challenge of building a purpose-led organisation is that it requires a multidimensional, customised model to measure the impacts across so many silos. These include the financial impacts, the brand credibility, the “employee brand” (the ability to attract and retain the best talent), the corporate citizenship reputation, and ultimately the value of the social and environmental impact that is being generated.
9. Purpose is a journey, not a destination
Just as a company will never stop innovating, so too every company can always find more ways to do good in the world.
A clear purpose allows a company, whatever their size, to stay true to its North Star and keep moving forward, even as expectations and context change. Patagonia has made great strides in its materials and supply chain but still uses plastic, a problem it is grappling with solving.
The world’s biggest problems weren’t created overnight—and they won’t be solved overnight either. Purpose-driven companies have the ability to evolve their thinking and contributions to keep pace with the changing world.