Purpose is one of the most common misinterpreted and misused business buzzwords today. For a long time, there was a belief that the main purpose of companies was to make money for their shareholders.
Nobel economist Milton Friedman proposed this in a New York Times article back in the 70s -arguably, the most provocative statement of the past half-century on the role of business in society-, declaring that “businesses’ sole purpose is to generate profit for shareholders”.
Christian Kinnear, Managing Director of EMEA at HubSpot explains that the concept of purpose has been at the forefront of corporate business for decades, but it seems to have gained ground and evolved in recent times (for the sake of all of us). Today’s companies recognize that they must live and breathe through their core brand values not only to survive but also to thrive. Purpose is king, and there’s no way back. With our planet facing more challenges than ever before –the reality of global warming, the disparity of wealth widening globally and, most recently, the devastating impact of the COVID-19 (the list goes on)–, companies will increasingly be viewed as either part of the solution or the problem.
Purpose goes beyond profit
Business Roundtable, America’s most influential group of leaders, published a statement at the end of 2019 signed by 181 CEOs of some of the largest corporations in the U.S., including the likes of Amazon, Apple or IBM. Essentially, this statement defied Friedman’s theory and instead of fulfilling only the interests of shareholders, the group asserted that companies must invest in their employees, protect the environment, and deal ethically with their suppliers.
As the executive managing director of EMEA at HubSpot, my responsibility is to drive growth and help millions of organizations grow better across the region. I regularly meet with customers and prospects from all industries and company sizes, from startups to growing enterprises, and I realize that Business Roundtable’s statement is nothing less than a mere translation of what many businesses have acknowledged and acted upon for many years. Companies have recognized that the way they convey their purpose will ultimately determine success and that it is paramount to have a purpose that goes beyond financial results.
According to global research from Edelman, 87% of consumers around the world believe that companies should place equal weight on business and pressing social issues. Another study from Edelman reveals that nearly two-thirds of consumers will buy or boycott a brand solely because of its position on a social or political issue. By the same token, Kantar’s Purpose 2020 study showed brands considered by consumers to have a positive impact grow at two times the rate of other brands.
So more action and less speechifying!
Too much chatter around purpose makes it become just another corporate buzzword. While it is growing as a requirement for competitiveness, that doesn’t imply that businesses should weigh it merely for PR purposes to spread the message that they are “purpose-driven.” There are rising expectations of all companies to do right by society and solve problems. Words are cheap and actions are priceless. Consumers are savvy and can quickly recognize these marketing “tricks,” which are destined to backfire. Instead, companies must turn their social impact chat into action.
The most recent example is right in front of us. As devastating and heartbreaking a crisis like the spread of COVID-19 is, the reality is that it is prompting brands to show the real power of purpose. However, no company should ever profit from an unnerving crisis in an opportunistic manner so it is normal that in the face of adversity, some of them choose to sit it out — it’s largely uncharted territory.
But the ones that live up to their inner purpose are stepping up to genuinely and transparently respond to the situation, leaving an indelible mark. Zoom is giving schools video conferencing tools for free, Comcast is removing WiFi limits for low-income families and Coursera is offering free online courses to universities until August. At HubSpot, we are adding free tools and removing limits for small businesses so that they can stay connected to their communities.
The question is: where is the brand’s legitimate and authentic room to act? -both for the short term survival of the company and the long term goodwill of the brand-. Stating why your company exists is a good first step, but many are struggling with the challenging and expansive work of living up to it. Given these major shifts in the consumer mindset and the difficult times all companies are going through, how can today’s purpose-driven brands bring their core values to life? Here is my view:
- Stay true to your “why”: Every company is created with a core purpose, but many face difficulties to unfold it, while others overlook or neglect their origins as a result of putting all focus into revenue growth. Purpose isn’t profitable when it is not very trustworthy. Authenticity and transparency must guide all efforts. Purpose has to be real and embedded in all your endeavors if you don’t want your customers to redirect their spending elsewhere.
- Lead by example: Consumers are expecting brands to take meaningful steps that create tangible results. To deliver this, ensure that the purpose of your brand touches all components of your organization. Starting with the CEO and executives, the company’s leadership team must be aligned on the company’s statement of purpose and the causes it champions. Once the C-suite has a clear North Star, managers and team leaders are responsible for turning this mission into action for their teams and maintaining this sense of purpose over the long run.
- Listen before you speak: Putting your customer first and at the core of your business is a must in today’s competitive landscape to provide a positive experience and build long-term relationships. The more empathy you show, the more you recognize what a customer wants and desires, what hurdles they’re aiming to overcome and what opportunities are ahead of them. The more you listen, the more chances you will have to take that on board to shape a strategy, products and services. Consumers are calling for a change, and I believe that the brands which really focus on listening, reacting and responding will conquer today’s demanding customers.
- Tell your story and make it impactful: Your marketing and communication efforts should not be allowed on to the playing field until the purpose of your company has been established as your organization’s North Star. Otherwise, you run the risk of being seen as fake and opportunistic. Your purpose-driven campaign should address the issues consumers care about. Consumers demand brands to meet them where they are instead of the other way around. Just like purpose is the king, so is content. Your content should be inclusive, insightful, enlightening and reward those who engage. In an age of brand ambassadors fueling your message, the goal is to align your purpose to the world in a way that you make it easy for others to tell your brand story.
The brands that get it right and make purpose their North Star can achieve continued loyalty, consistency, and relevance in the minds of people. Those that neglect to identify and articulate their purpose may stick around in the short term, but over time, consumers will likely demand more. Lead with purpose—authentically—, give more than you take and, as a result, you will gain a trusted status that will help you grow better.
