It’s getting hard to avoid the ‘P’ word these days. CEOs say they’ve got it, millennials say they want it, managers try to work out what it means for them, and celebrities try to avoid looking like Kendall Jenner. Thousands of articles, conferences and away days are being devoted to Purpose and the questions it raises: what is our purpose? Do we need a purpose? Is purpose compatible with profit? Will people believe us, or accuse us of ‘purpose-wash’? And in all this talk we risk over-complicating what should be a very simple question: why does this business exist?
The hard bit of course is answering that question in a way that works for all stakeholders – investors and employees, customers and society (including government, regulators, opinion formers and media). If they all buy into your purpose, then you’ve got a successful, sustainable business on your hands, one that delivers returns to investors, earns the motivation of employees, wins over customers, and gets a licence to operate from society. Ignoring any one of these groups – including the social context in which the business operates – can render any purpose meaningless. Another way to look at it is to ask, what would they really miss if we no longer existed? If investors would simply move their money elsewhere, employees find new jobs without a backward glance, customers switch brands, and society be no worse off – then you’ve not got a purpose in any meaningful sense of the word.
One way businesses are addressing the question of purpose is by exploring how they can tackle society’s challenges. At a global level, multinational businesses contributed – alongside governments and NGOs – to the setting of the Sustainable Development Goals (SDGs) by the UN in 2015 and countless corporations are now mapping their own performance against the social and environmental targets in the 17 goals. Meeting a relevant need in society creates more markets (demand for products and services that weren’t there before); more motivation from staff in the form of attraction, retention and discretionary effort; and more effective marketing in an age where people share social stories.
At a personal level, our company, MullenLowe salt, became a B (benefit) Corporation in 2015 when the mark was introduced to the UK– an accreditation for companies that are managed in a way that balances shareholders’ financial interests and the benefits it brings to people, the environment and broader society. We saw certification as a way of demonstrating our commitment to making a positive impact. But we also did it because we want to be a better, more profitable business. Companies with a clear purpose and a clear understanding of the social context in which they operate ARE better businesses.
Being a B-Corp makes us a better employer – our impact criteria in the assessment point us towards how we can better develop and train our staff as well as give them more of a stake in running the business, which helps us attract, motivate and retain our talent. It helps us do better work for our customers and attract more customers in the first place. At the other end of the scale Danone, the French-based multinational, recently announced that its US subsidiary, DanoneWave, a business with more than $6 billion in sales and 6,000 employees, has become a benefit corporation. Its articles of association talk to bringing health through food to as many people as possible, promoting sustainable growth and minimising its impacts on the environment. But they also call out how DanoneWave’s status as a public benefit corporation is key to accelerating the company’ growth strategy. Rose Marcario, the CEO of Patagonia, which was established as the first benefit corporation in California in 2012, will sit on DanoneWave’s advisory committee and said, “profits can and will still be made, perhaps at greater levels than ever before, as in Patagonia’s case.”
Over 2,000 companies in more than 50 countries are now B Corporations, and many more are considering it. Do it. Do it because you believe in your business having a purpose. But also do it because you believe in being profitable and wanting to make your business better. Profit and purpose not only can go hand in hand, they SHOULD go hand in hand. Where MullenLowe salt can make a positive impact is different to where Danone can make one, and each company has to identify the right purpose for them. What is it they can do to contribute to society that people would miss if they were no longer there? What can they do that is authentic to their business, relevant to their stakeholders and drives profitable growth? We work with many different businesses and brands to help them find and articulate their purpose. Each is different, but what is common is the impact having an authentic purpose has on productivity, sales, marketing and licence to operate – and therefore on returns. Unilever’s recent announcement – that its 18 ‘sustainable living’ brands, which all have a clear purpose relating to a social or environmental concern, delivered 60% of the company’s growth in 2016 and are growing over 50% faster than the rest of the business – being a case in point. And the recent Advisory Panel on Mission-Led Business reported to the UK Government that, “We have found evidence that businesses that embrace social priorities perform better, reflect people’s ideals and ambitions and so are primed for success.”
In researching my book, Business on a Mission: How to Build a Sustainable Brand, I was fortunate to talk to business and NGO leaders who have led the way in bringing purpose to business. The models that we have developed from these point to common themes: that businesses become stronger when they understand and respond to their social context; that the transparency of social media and the digital age are forcing businesses towards authentic purpose over purpose-wash; and that profit through purpose will fast become the norm.
If you are interested in becoming a B Corporation, take the simple online assessment here.