Purpose-led growth: Marketing catchphrase or the foundation of organisational success?
Last month, I was on the panel of a debate hosted by City law firm Taylor Vinters as part of their thought leadership programme the Zebra Project – one of the most visible examples of how the firm is evolving to become a purpose-led business. The question for debate was whether purpose-led growth is (just) a marketing catchphrase, or the foundation for organisational success?
And it’s a brilliant question because (corporate) purpose touches on the most critical issues in the world right now – gender equality, AI, the changing world of work, the aging population, global health, and investment for economic growth. This may be why the event was so over-subscribed. Here are my take-aways from the session…
Some people do associate purpose with marketing – or even communications – but it’s so much more than this. Being clear about what you stand for, why you exist, and what your role is in the world can inspire powerful marketing – see purpose poster-kids like Nike or Patagonia – but it’s not the same thing.
Many people conflate ‘purpose’ with CSR, sustainability, corporate philanthropy or altruism. This is wrong. Purpose is why you exist.
Profit as purpose is not sustainable. VW’s original purpose was to enhance people’s lives through great engineering that offered everyone an accessible, high-quality car. In 2007 they decided on a new goal – to become the world’s biggest car maker by 2018. Which they achieved – three years early. But at a cost…
But neither is purpose without profit. Take the insurance sector, where consumer trust ratings are typically low, where behavioural economists conclude that insurers and consumers are incentivized to cheat and where price comparison websites have conditioned consumers to value a cuddly toy, or a cheap meal more than a policy that meets their needs…The biggest insurance brands in the UK – Aviva and Direct Line – have weathered the storm by defining their purpose and staying true to it, rebuilding trust and delivering profitable growth.
Purpose isn’t a radical idea, or even new. Unilever is often held up as a great example of a modern, purpose-led business. But this has always been a purpose-led business. In the days of William Hesketh Lever – and before we had to invent a special word for it – many companies were purpose-led, defined by their founders’ beliefs in creating a better world – whilst also pursuing commercial success and profit.
Becoming purpose-led usually requires change, and change isn’t easy; behavioural science tells us that people associate change with loss, and that humans are conditioned to minimise loss more than optimise gains. So there’s a significant barrier to overcome. The answer lies in understanding the habits that are part of life inside the organisation and establishing new rewards and routines to create new habits. There are a range of proven techniques to achieve this, from occupational psychology to storytelling and modeling behaviours in leadership.
The final talking point of the day was the potential for risk in becoming purpose-led – does defining and embedding purpose in an organisation create a problem for you when something goes wrong? In my belief, the opposite is true.
Unlike the old adage that nothing kills a bad product faster than good advertising, defining your purpose, embedding it throughout your organisation. going public with it, staying true to it and being genuinely purpose-led makes a company stronger when bad things happen.
It makes decision-making easier and clearer. It enables a quick and credible response, and it makes it easier for stakeholders inside and outside the organization to forgive and forget.
Kevin Sutherland, Strategy Director, Skating Panda