Stop the rhetoric-reality gap: How to make purpose actionable

A new purpose culture is arising

Less than a decade ago, executives rarely spoke of “purpose,” and when they did, it was typically focused on maximising shareholder value. "We are the first generation of leaders that can't say we didn't know - we are also the last generation that is able to make a change." - Douglas Lamont, CEO of Innocent Drinks. To take up on that quote, a definition of purpose is hard to make, as its meaning varies from individual to individual. However, as Simon Sinek said in his famous TED talk, “it all starts with the Why”. Why are we doing what we are doing, what is our highest aspiration and what is our reason for being? A purpose-driven approach can be used to build companies, lead movements and inspire people. The strength and passion you bring to the table, no matter where you’re seated. But in order for purpose to truly matter, it must transcend beyond marketing and sales.

Purpose actually pays off and does not equal Degrowth

Often executives are afraid of sustainable change, as they fear a revenue collapse or customer loss, since they cannot continue to buy cheap and unethical resources and instead need to invest in people and communities. But doing good actually means doing well. Purpose companies are blooming and about to change the world.

An often quoted study by Harvard Business Review found that 52% of purpose-lead companies experienced over 10% growth, compared with 42% of non-purpose-driven companies. Those companies further benefited from greater global expansion, more product launches and success in major transformation efforts. According to HBR and EY, today 90% of executives further recognise the importance of having an aspirational reason for being, which inspires and provides a call to action for an organisation and a benefit to society.

So companies perform better if they have a clear sense of purpose. They have more engaged employees, more loyal customers and thus drive revenue growth, almost as a side effect. In detail, purpose gives transparency on the corporate strategy, it also empowers people to drive innovation and provides openness for partnerships with different stakeholders, even with competitors to find new business models. In times of crisis, a strong core drives resilience and strengthens the agility to adapt, for example due to disrupting forces like digitisation. It further overcomes the trust-deficit of customers, drives equality and sustainability. But above all it motivates, as purpose taps into our basic human need to be part of something bigger than ourselves and to have meaning in what we do.

The rhetoric-reality gap still remains

Many brands are still struggling to make their purpose real - often they don’t even understand how it differs from a mission (what), a vision (where) or values (how). According to BoF, there is a significant rhetoric gap between authentic sustainability measures and what brands are preaching. Looking internally, a recent McKinsey survey has shown that 82% of employees affirmed the importance of purpose, but only 42% reported that their company’s stated purpose had much effect. Contributing to society and creating meaningful work are the top two priorities of employees, but just the focus of 21% and 11% of purpose statements, respectively. So how to get started?

First, you need to understand where you currently are, which also means getting out of your comfort zone and recognising your vulnerabilities. If you are a small brand, the identification of your purpose comes much more naturally. Basically, it's the reason why you wake up every morning. For larger corporations, the transformation is a difficult task and needs the power of persuasion. Secondly, you need to decide what kind of purpose you are defining: According to HBR purpose is used in three senses: competence (“the function that our product serves”); culture (“the intent with which we run our business”); and cause (“the social good to which we aspire”). All three types can create a meaningful Why.

The purpose statement has been defined perfectly by some brands, but also abused in many cases. However, some brands have made it to an iconic status: For example Tesla wants to “accelerate the world's transition to sustainable energy”, while Stella McCartney is “committed to always being responsible, honest and accountable today, with a positive impact on people, the planet and all its creatures so that we can protect it for tomorrow”. Or how Libresse puts it by “breaking taboos that hold women back” and Nike, known for its political activism, just wants to “bring innovation and inspiration to every athlete in the world (if you have a body, you are an athlete)”. Brunello Cucinelli has further created a foundation in support of his purpose and young social brand Bethany Williams lives up to her core with the launch of every new collection.

Listen inside your brand

Where is your brand coming from? What are your roots? What is your passion? Define your top capability, which contributes to the greater good. Developing this succinct statement can be an emotional process. Having set your purpose, anchoring it in your business culture and strategy is crucial. This means you need to start thinking about finding the most authentic way to involve all your stakeholders. And this is where success depends on: Speak facts and feelings to inspire and make people believe. Now you can start communicating in three directions: 1. Inside your brand to get alignment with your employees, 2. to all the stakeholders along the value chain and 3. externally to your customers, to make them be part of the movement. To round that up, it’s helpful to develop a purpose-to-impact plan with credible, measurable and reportable actions. In a continuous improvement process, being honest is an imperative.

In summary, purpose is forcing brands to rethink their value and how it's created. Long-term thinking is critical in a world of comprehensive growth – therefore becoming a better corporate citizen is the best way in responding to our fast-moving and volatile world.

This is the first of a series of features contributed by Haus von Eden with the overarching goal to spread deep knowledge on key sustainability topics. The sustainability transition is highly complex and often driven by generalists lacking practical know-how and courage. So in the next few months, under the title "Haus von Eden Sustainability Series", NJAL will be sharing a series of insightful and diverse features focused on tackling sustainability challenges with novel ideas and best practice solutions.