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Why Purpose Pays

Andy Milligan
The Caffeine Partnership

“We’re guided by a vision to create a better everyday life for the many people. That is what steers us, motivates us—that is our role…We feel almost obliged to grow.”

IKEA Group CEO Peter Agnefjäl thus set out the interconnected relationship between purpose and profitable growth. If you have a purpose you are compelled to grow to fulfil it. In fact, showing you have an authentic and credible sense of purpose – a reason ‘why’ you exist beyond the desire to make profit – drives commercial value in an increasingly competitive world.




Purpose matters to consumers

More and more, people want to buy brands, which not only deliver them value personally but also address the wider societal challenges we all face. Michael Porter identified this development in customer motivation; it led him to establish the ‘Shared Value Initiative’. “The purpose of the corporation” he writes “must be redefined as creating shared value, not just profit per se. This will drive the next wave of innovation and productivity growth in the global economy”.

The global public relations business Edelman conducts an annual survey called the Global Trust Barometer. They look at the importance that people say they ascribe to factors such as ‘the values of an organization’. The 2015 survey found that four in five respondents wanted to see companies pursue a higher purpose, not just profit.

Google recently partnered with agencies TNS and Ogilvy to research how digital platforms and social media have changed the relationship between advertisers and consumers. They concluded that with the limitless options open to consumers they “are choosing to engage only with content that is personally relevant to them, their purpose and their passions”. They summed up their research by saying “their (the consumers) path to purchase is actually their path to purpose”.

That the search for purpose is becoming a vital factor in the consumer’s choice is shown by Havas Media’s annual survey into ‘Meaningful Brands’. Paul Frampton, the CEO introduced the 2013 report by saying “In our survey of 134,000 consumers across 23 countries we found real people crying out for brands to have a purpose, and live that purpose in what they do”. The report also found that the meaningful brands outperformed the market by 120%. So focusing on purpose makes you more profitable.


Purpose matters to employees

Employees are, similarly, looking to work for companies with whom they can share a common sense of purpose and derive dignity from their daily work not just a paycheck. Southwest Airlines, the largest low-cost carrier and the most consistently profitable airline in the world (42 years and counting!), places the recruitment of people who share its culture at the heart of its business philosophy. As Herb Kelleher, its CEO and Chairman for most of those 42 years, memorably said ‘the business of business is people’. True differentiation, he argued, could only come from culture because everything else was replicable; as he pointed out in a speech in 2008, ‘All airlines have planes’.

All the companies we feature in our book On Purpose, have followed the Southwest Airlines route to success. Be they new brands like Citizen M or Sugro, long established brands such as Lego or Ikea, or business to business brands like Liberty Global or Altro.

The business benefits of engaged employees are highlighted in a study by the Temkin Group. Looking across a number of different industries in the USA, they discovered that employees who were ‘engaged’ (people who understood and shared a sense of common purpose with the business, and felt empowered to deliver that purpose) were more productive, more loyal and delivered greater customer satisfaction, than those who were not. A staggering 99% of employees who worked for businesses that delivered excellent customer experiences, agreed they were ‘committed to helping their company succeed’. Doing the right thing for the customer is a universal motivator.


The business of business is people

Now of course, there is a danger in reporting compelling statistics such as these. As we saw with the rush to CSR some years ago, the short-sighted CEO, motivated by the potential to generate positive PR or profit will conclude ‘We need a purpose statement’ and delegate some poor minion to create one or, perhaps even worse, ask their ad agency to craft some fine words. To do so, misses the point entirely. It is about the ‘doing’ not the ‘having’. Or to put it another way: purpose only pays when you act on purpose.


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