Giles Lury urges companies to repurpose their purpose
In the ‘good old days’ before Covid-19, brands were under pressure to shift their focus away from just delivering stakeholder returns. We were living in a world of growing activism: from #MeToo to Extinction Rebellion, from les gilets jaunes to Greta Thunberg. But in the wake of the corona crisis, brands may need to think again about the role of purpose.
In recent years, survey after survey showed an increase in the number of consumers who said they intended to buy things based on the purpose, values and ethics of brands: as many as 87%, according to one study by Cone in the US. While the numbers were based on claimed intent and thus undoubtedly overstated the reality, the direction was clear. Purpose was starting to replace vision or mission.
Our 2019 analysis of the 100 most valuable brands found that 14 now had a purpose. That compared to 60 with a vision or mission (of which 36 had a vision and 48 a mission – some had both, or even all three). A tail of 33 had none, or at least chose not to publish them. These purposes were, unsurprisingly, often linked to doing ‘good’. As Jim Stengel, one of the most famous cheerleaders for purpose, said in his book Grow, a purpose is “a business’s essential reason for being, the higher-order benefit it brings to the world”.
Indeed, many brands – both big and small – have responded to Covid-19 by doing good. Some, like LVMH, Zara, Mercedes and Dyson, pivoted their production capabilities to help make sanitizers, personal protective equipment and ventilators. Many made charity donations, while others provided services, free or at significant discounts, for essential workers. Some did all three.
But brands can’t keep doing this. It will lead to problems and ultimately their demise. In turn, this would mean more unemployment, more demands on government and less wealth creation; not what countries with weakened economies and ballooning national debts need. In the post-Covid economy, the idea of profit needs to be rehabilitated. We need to recall the role of brands as value creators. Of course, profits which simply line the pockets of the already-very-rich are not what society needs: they are sure to face renewed scrutiny. But profits which go back into providing employment are a double good: reducing government spending on social security and providing people with money to spend in the economy. Plus, profits, or at least the tax paid on them, will help repay national debts and help stock markets recover, allowing pension funds to rebuild.
So, brands should not be shy of focusing on profit. They should work to deliver a true triple win – something that is good for the business, good for the customer and society, and good for the environment. In so doing, we may need to repurpose purpose, broadening our understanding and its application, making it less altruistic.
Robert Noel, when chief executive of real estate firm Landsec, used to talk about being a “sustainable brand”, which for him meant committing both to better environmental practices and supporting local communities. However, he was clear that it also meant the business had to make money – profits – because only then would it survive and be able to fulfill these commitments.
Brands looking to define their purpose should consider a holistic approach based on three Cs: being Customer-focused, socially and environmentally Conscientious, and – yes – Commercial.