In August 2020, Debra Sobel, Verity London Co-Founder spoke at the Imperial College Business School MBA Capstone event about the importance of Leading with Purpose.
This year marks the 50th anniversary of economist Milton Friedman’s (in)famous declaration that “the social responsibility of business is to increase its profits.”
It’s a very far cry from where we are now – the corona virus pandemic, the economic shutdown, massive social justice protests and climate change – and increasing calls and expectations from public and employees for businesses to take responsibility for societal issues – and have a purpose beyond profit – and a movement to reimagine capitalism.
The power of having a purpose in today’s world
As Deloitte stats states that, Purposeful businesses grow 3 times faster than their competitors and are more likely to perform better, with purposeful businesses outperforming the stock market by 133%. The 25 top brands in Havas Media’s Meaningful Brand Index deliver an annual share return of nearly 124%.
In comparison, businesses lacking purpose (that is to say brands or companies without a visionary purpose which acts as a North Star for commercial strategy and wider behaviours) are reportedly costing the British economy up to £130bn a year of lost value generation.
2016 research by the Big Innovation Centre taskforce of businesses, investors and business schools claims that lack of purpose is a key reason for the decline in major companies. A Purpose provides a businesses’ North Star. Sitting at the core of your business. Guiding commercial strategy and behaviours.
But you need to get it right
Any business can issue a statement but if core business practices are not beneficial for society Purpose is not going to do much good. “Even a tobacco company could make a statement about police brutality and give charitable donations,” Professor Alex Edmans, of the London Business School said recently.
No purpose washing: We’ve all witnessed major brands fail in this way. Pepsi’s 2017 “Live for Now” campaign featuring Kendall Jenner as a model-turned-protestor who joined the Black Lives Matter movement (in the end, handing a police officer a Pepsi as a de-escalation tactic) drew massive backlash, as would-be consumers accused the brand of capitalizing on the pain of #BLM for profits, among other things. Pepsi pulled the ad immediately, but in August 2020 an image of an actual protestor in the current riots went viral. He was attempting to hand a police officer a Pepsi. People don’t forget.
The importance of Leadership
Covid-19 has presented CEOs with a mandate to rethink, refine and reinvent their business models, with purposeful changes being high on the agenda. (PwC’s CEO Panel Survey 2020 – UK findings).
It starts with leaders questioning their values and how you show why you matter to people beyond product and services … and looking beyond short-term profits towards prioritising long term resilience and seeking to innovate and integrate purposeful considerations across strategy development, operational execution and stakeholder engagement.
Great examples of purposeful leaders are: Paul Polman, former Unilever CEO, Microsoft’s Chief Environment Officer Lucas Joppe, Mastercard Vice Chair Ann Cairns, and Pepsico Latin America CEO Paula Santilli.
Harvard Business School research reveals that successful purposeful businesses take an approach we call hybrid organizing, which involves four levers:
1. Setting and monitoring social goals alongside financial ones
2. Structuring the organization to support both socially and financially oriented activities
3. Hiring and socializing employees to embrace both
4. Practicing dual-minded leadership
Practicing Dual-Minded Leadership
Leaders must manage the tensions that inevitably crop up on the path to achieving dual goals. These tensions often involve competition for resources and divergent views about how to reach those goals. Leaders must affirm, embody, and protect both the financial and the social side and address tensions proactively.
A note of warning: Alex Edmans, author of “Grow the Pie: How Great Companies Deliver Both Purpose and Profit,” says business leaders should remain focused on their core values and competencies. “Purpose is as much about knowing what not to do as what to do,” he said. “Companies have limited time and resources and there are trade-offs. A discerning leader understands these trade-offs and recognizes she can’t do everything. Instead, she puts her energies into where she can make the most difference.”
Align your messaging (“brand say”) with your company’s actions (“brand do”)
We’re big believers in the difference between “brand say” and “brand do,” terms coined in 2016 by Steve Miles and widely used within Unilever and its agencies. Brand say involves communicating to consumers about the social purpose; brand do is about translating this purpose into actually addressing social problems. Put simply, you need to walk the talk and take action.
Key take outs
Purpose:
· Has to be aligned and integrated with core business
· Needs to be authentic
· Need brand do as well as brand say (phrases used widely across Unilever)
· Has to build purpose brand advocates / encourage stakeholder inclusion
· Has to grow long term activation / become the fabric of an organisation
· Has to be driven from the top
