By: Rich DePencier and Philippe Harousseau
I’m sure many of you read with intrigue recently when Yvon Chouinard, CEO of the revered outdoors company Patagonia, signaled that he was “giving away” his company – essentially, donating the value of his ownership interest to charity.
Though this is a rather extreme example of corporate philanthropy at work, the lesson regarding purpose is especially relevant in these days of corporate transparency. The digital revolution has empowered the public to look deeper than ever before at the enterprises with whom they choose to do business. No longer can a company point to its mission, vision, and values statements as sole evidence of a higher purpose.
The good news? You can still commit yourself to a “purpose-driven” business model – without giving away the farm.
Today’s stakeholder – from investors to the end consumer -- wants more than words on a website with donations. You can no longer treat purpose like a random act of marketing – it’s not a holiday event, a shared promotion, nor a one-off community workday. It must be a part of your DNA.
As many businesses find themselves wrapping up their 2023 planning cycle, they’re having to grapple with seemingly more vexing challenges -- short-term inflation concerns, hiring challenges, and the upcoming mid-term elections. So why should purpose be part of this heady conversation?
First, it’s a fact – the most enduring – and endearing - companies and brands have demonstrated purpose as a core value. Consumers are seeking to align with companies that step in and do the right thing to make our communities sustainable. Investors and stakeholders are using a new measure called ESG (short for Environmental, Social, and Governance) to gauge that this is more than lip service, but true social consciousness.
Additionally, author (and ex-Unilever CEO) Paul Polman has written a provocative book called “Net Positive: How Courageous Companies Thrive by Giving More Than They Take,” which explores the concept of “sustainable capitalism” – a concept where purpose and profits aren’t mutually exclusive. It serves as a rallying cry to fellow CEOs to include the sustainability conversation at every stage of business planning – especially in times of volatility and uncertainty.
In our view, we believe there are four core beliefs, or pillars, about purpose, that a mid-market CEO can take right now to establish a strong foundation for their company and brands:
1. Purpose must always be genuine to your brand.Do you remember why you started your company? If you’re like most entrepreneurs and founders, you likely were trying to solve a problem you felt needed a solution that was not readily available in the market. Was it to provide a better service that saved people time and money? Was it to create jobs in your local economy? A healthier food choice? A cleaner way of doing things? Without realizing it, it is almost a certainty that some sense of purpose led to the founding of your company and creation of your product and services to make life better in some way for people.
This represents a great place to (re)start the purpose conversation today. After all, aren’t we usually more credible when we are doing things we already do with excellence? When we look at successful purpose campaigns, they demonstrate that the best brands (the ones that succeed) connect purpose with product at the fundamental core.
Our advice: Go back to the founder’s roots. Interrogate your brand or business story: Why was it set up? What is it trying to do? This is where you will most easily find your authentic purpose.
2. When your business faces uncertain circumstances, that’s the time to double-down on purpose.If we are staring down the gullet of tougher economic times, most CEOs' reflex is to cut extraneous programs. But should you be using purpose as an anchor -- or ballast? Purpose can serve as a rallying cry -- uniting employees to stick with it in tough times, giving consumers more latitude to stick with you as prices increase, and reminding you of why you chose to be in this business to begin with. If you stop, you lose credibility. Purpose, if handled in this manner, can be a profit center, not an expense line-item.
Like human values shine through tough time, so will your purpose. Stick with it in good times and bad. Backtracking on purpose in difficult times will only undermine your investment in credibility and authenticity. Think of your purpose like a beacon – it guides you like a North Star during a tough time. Because purpose is proven to impact the loyalty of your consumers (in particular, Gen Z and Millennials) as well as the engagement of your employees, you should protect both as much as you can.
3. Purpose now plays a critical role in recruiting and retaining talent.Today, finding good talent is harder than ever – and surprisingly, only 19 percent of today’s job seekers are looking for more money alone. In fact, between 65 and 70 percent of job seekers cite cultural alignment as a key factor in choosing a place to work – placing even greater pressure on companies to wear their purpose, along with their hearts, on their sleeve.
Though Gen Z and Millennials have applied the most pressure in the purpose paradigm, it’s a time-honored truism that most employees can get behind: We all want to work for something that excites us, and gets us out of bed each day, right?
Purpose, too, swings both ways in the employment game – without alignment on purpose, that hard-won, newly-minted employee may grow disillusioned quickly, and vote with their feet.
This is why purpose should be central to your hiring pitch – not a line item that is discussed matter-of-factly after salary and benefits, but a through-line in your recruiting dialogue that is a central theme in promoting your company.
4. Purpose provides focus and builds brand equity – don’t let FOMO drive short term activity.Consider this scenario: A recent front-page-news societal event is causing brands all around you to make compassionate statements in a big case of FOMO (fear of missing out). You’re itching to do the same. But should you?
Again, purpose needs to be authentic so don’t try to tackle too many different “purposes” at the same time. Stick to where your purpose is – where you’re known for excellence. If you don’t have precedence, don’t “talk the walk” first and pile on. If you are purpose driven, stick to your lane.
In a review of past campaigns, we find companies that consistently demonstrate a track record in a certain area and talk with authenticity will be respected for their position, while copycat efforts will backlash.
Our advice: Never overreach and stick to where you have authenticity and credibility.
So, ask yourself this: Why not purpose? Significant research in years’ past has established a strong business case for purpose, galvanizing your two most important business actors: consumers and employees at their deepest levels.
Authors:
Rich DePencier
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