Why being a purpose-led company is great for business
Chrissy Blackburn, managing partner of brand consultancy West Eighty Second, on why being a purpose-led company is good for business.
Ever since Simon Sinek’s TED Talk, “How great leaders inspire action”, which seeded the mantra “people don’t buy what you do they buy why you do it”, many companies have spent hundreds of thousands to become a “purpose led organisation”.
At these prices, one would expect the return-on-investment to speak for itself, says Chrissy Blackburn, managing partner of brand consultancy West Eighty Second.
“So, why are CEOs still waiting to see ‘the transformation’ in staff engagement and Net Promoter Scores the brand consultants promised?” she asks. “Is ‘purpose’ simply the new black for the modern company or is it ‘the Golden Circle’ that Sinek so eloquently described?”
Blackburn points to research done by Jim Stengel, the former global marketing director of P&G, to prove that an inspiring purpose works. After collecting 10 years of data involving 50,000 brands, he concluded that businesses centered on improving people’s lives have a growth rate triple that of competitors, outperform the market on margin, dominate their category and maximise profit in the long-term.
“Jim’s research shows how the world’s 50 best businesses including Red Bull, Samsung, Discovery Communications, Visa, Zappos, and Innocent, have a cause and effect relationship between financial performance and their ability to connect with fundamental human emotions, hopes, values and greater purposes,” she says. “Over the 2000s an investment in ‘The Stengel 50’ would have been 400 per cent more profitable than an investment in the S&P 500.”
Closer to home, Radek Sali, CEO of Swisse, spoke about the power of purpose at the 2015 World Business Forum in Sydney. He attributed much of the company’s meteoric growth from $13m to $400m to the company’s purpose “to make people healthier and happier” and its core values to engage the organisation behind a common cause and provide motivation, direction and meaning for staff.
Keeping your employees happy and engaged
Employees doing meaningful work beyond making money for shareholders are happier employees and happier employees translate into happier customers. “Your customers will never be happier than your employees”, according to US management expert legend Tom Peters, who recommends this as a good tattoo for all business leaders.
But purpose isn’t just about making it more fun for employees to come to work, adds Blackburn. “More fun translates into more motivated employees who consistently deliver a better experience for customers, which translates into companies being able to substantiate premium prices and maintain a loyal customer base. This ultimately translates into greater shareholder returns.”
The idea of being a purpose-led organisation is great for business. So why aren’t businesses seeing the kind of results promised? Because many companies only do half the job. They don’t walk the talk to make it true, and employees aren’t sure what they need to do every day to make the company’s purpose a reality.
Chrissy Blackburn’s tips for making your company’s purpose a reality.
1. Start at the top
There’s no point in the marketing team creating a purpose if the CEO doesn’t see the need for one. Unless the project has the total commitment of the CEO, it will never gain traction beyond the marketing department and the company won’t become one that’s purpose-led. There must be a passion for the purpose at the top.
2. Inside out
Your advertising agency or your brand consultant can’t create a purpose for you. For no matter how good it is, if the people responsible for delivering it didn’t play an active role in creating it, they will never truly own it. Agencies and consultants certainly have the skills to help you discover your purpose but it must be a collaborative process that is built from within and involves the CEO and the leadership team.
3. You don’t have to save the world
Steve Jobs wanted to “make a contribution to the world by making tools for the mind that advance humankind”.But not every company wants to put a dent in the universe. You don’t have to save the world, but you do have to express a desire to make things better for people in a clear and inspiring way. The purpose isn’t about you; it’s about what you want to make possible for people.
4. What do you want employees to do?
There’s no point having a purpose if it’s just going to live on the website or in the induction handbook. Employees need to know what they need to do to deliver on the purpose in their day jobs and need to be reminded often. Values drive behaviours and should be actioned to create the behaviours and standards expected of employees. Employees need to be trained, measured and rewarded for behaviours that exemplify the values and deliver on purpose.
5. Your purpose isn’t your next ad campaign
Make a film to engage employees but don’t put it on air. Your purpose is for use internally only, and consumers will most likely fail to see the relevance of your purpose to them. Customers will experience your purpose through the products and services that you provide because of it. Done well, having a purpose can be an incredibly powerful tool. Those who have worked in companies that live their purpose will have felt the earth move. But if you’re not committed to going the whole way, you won’t feel a thing.
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