Modish proponents of Purpose have distilled snake oil from a worthy idea.
From its noble beginnings, Purpose has fallen. Like Corporate Social Responsibility (CSR), good intentions have not become good deeds. But, whereas CSR was misused as a way to polish up a company’s image, Purpose is bandied around as the solution to everything from lack of trust in corporations to avoiding the hard truths of business.
The idea that businesses have a wider duty than to generate returns is nothing new. Quaker founded businesses such as Cadbury and Rowntree were thinking about their workers as well as the bottom line back in the 19th century. That thinking wasn’t limited to Quakers. In India, Jamsetji Tata helped not only build India’s industrial base but its culture of corporate philanthropy too.
The current trend towards having a purpose began with brand consultants talking about companies having a noble or higher purpose. The idea being that you work on something greater than yourself and, in doing so, you create a brilliant company (e.g. we don’t make cars, we help people see the world). For those developing brands, this was a great idea. Brand development is all about what a company is and how it goes about doing what it does.
Responding at the speed of emotion
But then purpose started to trickle into the hands of marketers and PRs. Conversations went from being about having a purpose to demonstrating purpose. Latching on to the vogue-ish idea that emotion sells, purpose was used to anthropomorphise corporations. All of a sudden companies cared deeply about you, wanted to know you and wanted you to love them.
The touchy-feely stuff is great but it ignores two fundamentals of business. The first is that businesses cannot respond at the speed of emotion. It’s all well and good being loved, but when it turns out your ripping down forests or involved in sweatshops or underpaying staff, you can’t fix that problem faster than people will stop loving you. Relationships require an instant response and most businesses aren’t set up to deliver that.
Purpose before profit?
The second problem is that markets don’t buy emotion. Unilever, the standard bearer for a new way to do business, learned this lesson the hard way. When Kraft Heinz came in with an offer to buy the firm, management had to offer shareholders a lot of concessions to avoid being sold, including greater cost cutting and a sharper focus on profitability. The brutal truth is that whatever your purpose, you still need to make money.
Simon Sinek and other modish TED talkers will glibly tell you to, “start with why.” But that advice is delivered out of context. Because along with your why, are other whys. Your investors’ why might be to get a good return on their investment. Your customers’ why might be because you’re the cheapest or most efficient or coolest. You can’t run a company in a vacuum.
Google famously seeks to organise the world’s information and make it universally accessible. A noble goal. Imagine how far it would have got if it didn’t make mountains of cash by dominating digital advertising. Too many people talk about putting purpose before profits, but by weird coincidence most of the companies used as examples of purpose make a healthy profit and have been doing so for quite some time.
And there’s the rub. Corporations are like wealthy city-dwellers going to minimalist retreats, singing kumbaya and being mindful, all the while ignoring the inconvenient fact that their expensive spiritual weekend was paid for by selling things for money.
So beware the snake oil salesmen with their kumbaya capitalism. True purpose must run through every fibre of your firm. It should inform what you do and how you do it. Those decisions are made in the boardroom, not the PR department.