Expert views

Purpose. Do it right or don’t do it at all.

In a rush to achieve the famed benefits of purpose – for recruitment, customer loyalty and innovation – too many organisations still aren’t getting it right. They’re slapping a hastily-created statement on their website. They’re promoting it through big marketing campaigns. They’re not stopping to consider the impact that it should have on the way it operates as a business. And it’s not working.

Since 2015, the story has been frustratingly similar. There are a small number of global brands who have wholeheartedly embraced purpose. They’re using it to attract the best people, gain customer loyalty, generate better shareholder returns and even fight off hostile takeovers. Patagonia’s lawsuit against the US government to protect Bears Ears. Unilever’s CEO talking – again and again – about the role business can play in making the world more sustainable. RB’s 'betterbusiness' strategy with clear measurable targets. These are all examples of businesses truly living purpose.

But for every brand that truly lives purpose, there’s another that doesn’t.

Over the past few years, we’ve seen hundreds of statements that exist on a website and nowhere else. Hundreds that sit alongside purely financial KPIs. Hundreds that leaders seem to know nothing about.

For these businesses, purpose is nothing more than a shiny veneer. And that undermines the true value of purpose. It makes it nothing more than meaningless marketing jargon.

This needs to change. Purpose is the reason why people want to buy from you, work for you and do business with you. It’s not owned by the brand team, it’s lived by the whole business from the CEO down. And now is the time to start getting it right.

Matt Gibbs

Mind the gap. Purpose and your customers.

There’s been plenty of debate about purpose in the marketing and communications space over the last 18 months. Most businesses have embraced the concept and jumped at the opportunity to shout about the perceived social-worthiness of their brand.

But, following some high-profile missteps, people are starting to question the role and relevance of purpose in their customers’ worlds.

So, what should marketers be looking out for?

The empowered customer

This is the age of the customer. They have access to more information than ever before – and they’ve become more knowledgeable, connected and demanding as a result. Words like ‘transparency’, ‘sustainability’, and ‘values’ have started to appear as key decision-making criteria across multiple sectors and demographics for both business customers and consumers making major purchases.

They won’t accept a customer experience that isn’t instinctive, simple and easy. And they’re scrutinising everything you do and say. We’re operating in a low-trust environment. If you pretend to be something you’re not – you’ll quickly be found out.

The purpose gap
Some marketers have responded to this environment by championing a new purpose. And, unfortunately, many of them have become unstuck.

When we looked at this year’s FFP data it’s clear that outperforming brands have committed to having a clear purpose, putting it at the centre of their organisation and communicating it consistently. Those that scored lower had a large gap between their purpose and what they were saying to customers.

To ensure purpose has the impact you want it to, you need to ensure it’s a guiding force within your organisation and underpins your whole customer experience – including all communications.

More than a campaign

No matter what industry you’re in, you need to fight for your customers. Purpose isn’t a substitute for your marketing strategy, but it can help you grab attention.

If you have a strong purpose, you can make it an empowering element of the customer experience. You can use it to celebrate who you are and what you stand for in a way that helps you stand out and grow. But you need to make sure it’s a genuine reflection of your organisation. Because, ultimately, customers may want purpose-driven brands, but they’ll never want purpose-wash communications.

Cameron Gunn and Nicos Dermintzoglou

Purpose and people. A powerful combination.

Purpose is essential to attracting, engaging and retaining the right people. Done right, purpose gives employees a sense of shared direction, meaning and intrinsic reward. And that creates an emotional bond and engagement with their organisation and day-to-day work.

Despite the hype, it’s not just Millennials or Gen Z who care about purpose. All employees want to feel their work contributes to more than financial performance. Research tells us that most job seekers choose companies to work for based on their purpose – and 84% of employees working for organisations with a shared sense of purpose are engaged, compared with 32% of those working in organisations without one.

To make a meaningful impact, purpose should be a big part of your employee experience. Your Employer Value Proposition should link to purpose. And this promise must be made real at each point of the experience – from on-boarding to internal communications, performance conversations to leader behaviours.

In our index, companies like GSK, Pepsico and Pearson clearly show how they involve employees in purposeful activities and communicate their purpose to potential employees. Over the years we’ve seen more and more companies integrating purpose into their employee experience. But it remains an area where many organisations could work harder to stand out and attract, engage and retain the best people.

Michael Dunmore and Liam Farnworth

Think purpose is just shareholder value? Think again.

In 2017, the UK’s Financial Reporting Council proposed draft amendments to its Guidance on the Strategic Report. They put purpose at the centre of transparent reporting.

According to The Corporate Reporting Council, communicating purpose helps shareholders understand how a business creates value for them, benefits other stakeholders and contributes to long-term success.

That’s why the FRC’s initiative is so important. Just talking about financial return isn’t enough now. Proving long-term viability and value creation is becoming more and more important to investors. Recent governance failures like Carillion have shown that short-term financial gains can no longer drive investment decisions. For an investor, understanding why a business exists – and how external factors shape that existence – is critical.

The FRC says: “An entity’s purpose is why it exists. The entity’s strategy describes the intended means of fulfilling its purpose. Together they provide an overview of why and how the entity aims to generate and preserve value.”

Why a business exists is a big question. But no business has ever been formed without a purpose. GSK was founded to help people do more, feel better and live longer. And 30 years ago Carl Radley, our founding partner, saw an opportunity to help businesses communicate better through reporting. We’re still striving to achieve that purpose every day.

Purpose is not, and shouldn’t be, complicated. In fact, it’s a very simple way for a brand to promote why they exist. It goes wrong when grandiose claims mean strategic performance can never be truly measured. But it’s great to see UK legislative guidance setters pushing for clarity and encouraging companies to link performance to their purpose.

Brett Simnett

Purpose makes sustainability competitive. Sustainability makes purpose productive.

Purpose is pointless if it’s not productive. Sustainability is just an exercise in keeping stakeholders happy if it’s not core to the organisation. And, unfortunately, these are the realities for far too many businesses.

Purpose makes sustainability competitive

You see it everywhere in sustainability. Take a sector, get their sustainability strategies together, strip the brand names out and you’ll struggle to match the strategy back to the brand. Differentiation’s a rarity – only 34% of brands in this year’s index gained high scores for connecting their sustainability strategy to their purpose.

Maybe differentiation doesn’t matter. After all, there are great business gains to be had from sustainability. Improving efficiencies saves resources and costs. Innovation opportunities come from new ways to meet sustainability challenges. And some issues can only be tackled through pre-competitive action.

But consider how Danone’s focus on health has helped them reshape the business. Look at the ever-increasing growth of Unilever’s purpose-led brands. Benefits like these only come from having a differentiated approach to sustainability. Use purpose to give sustainability focus and, like 34% of the brands we looked at, you can reap these rewards.

Sustainability makes purpose productive

At the moment, purpose is largely about communications – with 65% of our index getting high scores on communicating it consistently across their channels. In three years of our Fit For Purpose Index, we’ve yet to see a significant shift in performance – only 26% score highly for having KPIs connected to their purpose.

Without real evidence to back up lofty statements, purpose is destined to be a mechanic for making speeches. If it can’t be measured, managed and made real, it can’t realistically go anywhere else.

All the promise of purpose comes from putting it to work, proving your actions are having an impact, and making it part of your KPIs to drive action. That’s when businesses start to realise the benefits of purpose. But translating these lofty, non-financial statements into language and metrics the business can use to make decisions isn’t easy.

But is this actually something the sustainability community cracked a long time ago? Any good sustainability person can tell you why purpose matters to the core business and, with a bit of work, show you how to measure and use it in a way that makes sense. Years ago, PUMA created an environmental P&L, shadow carbon pricing has been used to make decisions in business for decades, and more advanced brands are exploring how to quantify action on equality for their business.

It’s time to take action

We live in challenging times. Trump, #MeToo, disgraceful gender pay gaps, shock collapses of behemoths like Carillion, ocean plastics entering the food chain, rising rates of child poverty, obesity and anti-globalisation sentiment in the West, and more.

Against this dark backdrop, business leaders have a choice. To put real power behind their statements of purpose and reap the rewards. Or to continue to mean well, but fail to do what business does best – measure, manage and make it happen.

This is a big, symbolic choice. The leaders that choose to make it happen will be showing us they are of the realities of today, they’re using evidence-based decision making and they’re committed to serving their organisation’s long-term interests. The leaders that don’t will be showing the opposite.

David Willans and Bhaarat Verma