On Purpose Read online

  Many companies have followed the Southwest Airlines route to success. Umpqua Bank and First Direct deliberately hired people who had no previous banking experience so that they would only focus on what customers wanted, not what banks could do. Zappos, the online retailer snapped up by Amazon for $1 billion in 2009, offers newly recruited employees $4,000 to leave after one week of training. Why? Because they only want the people who really want to stay.

  The business benefits of engaged employees were highlighted in a study by the Temkin Group in 2011. Looking across a number of different industries in the United States, 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.4 A staggering 99 per cent of employees who worked for businesses that the Temkin study had identified as delivering excellent customer experiences agreed that they were ‘committed to helping their company succeed’. Whereas, of the employees who worked for companies that delivered poor customer experiences, only 17 per cent agreed with the statement. Doing the right thing for the customer is a universal motivator.

  Why purpose became important

  What has caused the importance of purpose to rise among so many people in so many countries?

  The evidence is that there are three reasons:

  A shift in consumer values caused by both generational change and especially by the financial crisis of 2008.

  The rise of new technologies that empower people.

  The shift in the value base of many developed economies.

  1 A shift in values

  It seems that as baby boomers have been succeeded by generation Xers, who in turn have been succeeded by generations Y, Z and millennials, attitudes to and expectations from life have been changing. This is true about why people buy what they buy. The baby boomers have now entered their 60s and even generation X have begun to turn 50. These were people who were brought up with some deeply held beliefs about empowerment, about freedom and about ‘living life to the full’. They have little desire to retire gracefully, thus earning themselves the ‘Ageing Ravers’ tag – and they have money to spend. They are at once interested in enjoying themselves and doing what is right for their succeeding generations. Consumption for them is less about ‘having’ and more about ‘doing’ and doing good while they do it. Extreme examples of this are entrepreneurs such as Bill and Melinda Gates and Sir Richard Branson. It is not exclusive to baby boomers, of course. According to Forbes magazine, Warren Buffet’s entire holding in Berkshire Hathaway, some $58 billion, will be donated to charity before or upon his death.

  There have always been philanthropists but why is it that baby boomers and generation X seem to be applying this on a commercial scale? For the answer we need to go all the way back to 1943. It was then that Abraham Maslow published his groundbreaking paper ‘A theory of human motivation’. In it Maslow described his ‘hierarchy of needs’, which has become one of the most widely known psychology models in business. He suggested that our ultimate motivation is ‘self-actualization’, which means, essentially, achieving one’s full potential. What is much less well known is that shortly before his death he wrote an unpublished paper called ‘Critique of self-actualization theory’ in which he challenged his own model and proposed another dimension as being the pinnacle of human motivation. He called it ‘self-transcendence’ and concluded the self only finds its actualization in giving itself to some higher goal outside itself, in altruism and spirituality. It seems that the increasing wealth of the older generations is allowing them to turn their attention from ‘me’ to ‘we’.

  So there seems to be a psychological need for purpose, but the shift towards values is probably also a product of our times. The global financial crisis (GFC) of 2007–08 has, of course, accelerated some of our underlying beliefs: that you ‘can’t trust the man’, that life is too short, that we owe a responsibility to those who come after us. Certainly, the breakdown in trust in institutions – financial, political and religious – seems to have been fuelled by the collapse in confidence that the GFC fostered if not created.

  The GFC has also focused people on ‘meaningful’ or true value. People expect their hard-earned euro, pound or dollar to give them much more. And the ‘reassuringly expensive’ pitch of many brands convinces fewer people. Primark, the European retail phenomenon, is a great example of the shift in value perception. Instead of regarding cheap clothes as unfashionable, millions of consumers recognize that Primark offers good quality, fast fashion that costs little and can be easily given away. Teenagers can enjoy a form of retail therapy for a few pounds – it is no longer the preserve of the well-to-do.

  The savvy consumer that has been created by this combination of changing generation and financial environment is at once keen to get good value and to espouse good values. Primark has, for example, worked hard to reassure its customers that the inexpensive prices of its clothes are not the direct result of the exploitation of low-cost labour.

  The importance to customers of putting ‘purpose’ before profit can be seen in the success of organizations such as Fairtrade and the World Wildlife Fund (WWF). Major branded-good companies have realized that it is a commercial advantage to them to source from fair trade-approved suppliers and so carry the fair trade logo on their products. This includes multinational powerhouses such as Nestlé, whose Nescafé coffee brand has been so dominant in Europe for so long that you would think it had little need of external endorsement from a not-for-profit brand. But consumers are putting their money into those brands that they perceive as doing ‘the right thing’. And Nestlé, like any good brand should, is responding to its customers. In 2012, there were €4.8 billion of fair trade-endorsed products sold in Europe.

  So the search for a higher purpose is becoming a vital factor in the consumer’s choice of products and it is becoming of vital commercial importance for brands themselves. This is clearly 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.’ Their 2013 report also found that the meaningful brands outperformed the market by 120 per cent and this increased significantly in their 2015 study, so focusing on purpose makes you more profitable (see Figure 0.1).

  Figure 0.1 Havas Meaningful Brands Index 2013

  There is a danger, of course, in reporting compelling statistics such as these. As we saw with the rush to corporate social responsibility (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’.

  2 The rise of new technologies and breakdown of barriers

  Digital is undeniably transforming every aspect of our lives. Our ability to render almost everything into a code, which can then be translated into anything from movies to messages, from 3D printing to mobile money, has simplified, speeded up and more often than not improved our experience. We shop online, pay our bills online, and even undertake mass political protest online. If we have a digital device connected to the internet, we have access to a world of information. And, as always, with information comes knowledge and with knowledge comes power. So pervasive and relentless is this process that experts now refer to the ‘internet of things’, a world where all devices – from a fridge to a phone – are connected and can communicate intelligently with each other. Soon your fridge will identify that it doesn’t have enough milk and will automatically order extra pints from your online supermarket, which will deliver it either to your ho
use or to a location of your convenience somewhere on your journey home from work.

  We can find out how to write business plans, how to rent our spare rooms, how to raise money through crowdfunded investment, how to fix a computer, cook a meal for a multitude, even buy weapons, all by accessing applications on the internet. There is a thriving digital currency independent of the currencies controlled by the central banks of countries and economic unions. Bitcoin is just one of these currencies and it is fuelling the growth of entirely new businesses. Around $250 million was estimated to be in bitcoin businesses during 2014, an increase of 150 per cent on 2013.

  All of the above is making it easier for everyone to start businesses that disrupt the normal way of doing things – businesses that are nimble, agile, highly responsive to customer needs and, most importantly, launched with an avowed purpose of making a difference rather than simply making a buck.

  Accompanying the Digital Revolution has been a rapid deregulation, which has made it easier for companies to cross borders, enter new markets and reduce costs dramatically. Let’s take two examples: Airbnb and Uber. Both of these brands are disrupting their respective sectors (guest accommodation and vehicle hire) by helping to redefine and reshape expectations. Airbnb allows anyone (as long as they pass some essential security checks) to rent out any part or whole of their house to anyone else at rates far more appealing than many hotels or traditional guesthouses. It can only do this because of the ubiquity of digital technology, our increasing comfort with online payment systems and a regulatory environment that is less stringent about what you can or cannot do with the subletting of your home. Uber is the same. It relies on our familiarity with and the ubiquity of hand-held digital devices, fast connectivity and a regulatory environment that allows them to trade as vehicles for hire, not taxis. Of course, disruption of this kind is often met with resistance from traditional channels, as Uber found in France.

  Other sectors are constantly subject to regulatory change aimed at bringing in greater competition, greater customer or consumer choice, greater efficiency and effectiveness, including health care, education and finance. This is creating a fertile environment for extreme competitiveness. The power of technology and the breakdown of traditional forms of business are allowing business to operate in unprecedented ways. However, power – without the moderating hand of purpose – can be a dangerous force. Google’s purpose is to ‘organize the world’s information and make it universally accessible and useful’ but perhaps, recognizing the danger inherent in the sheer sweep of their purpose, their mantra is ‘Don’t be evil’. Even so, Google has come in for its fair share of criticism over the years.

  Interestingly, 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’.

  3 A shift in the source of value

  The source of value for business and for an economy has always come from access to or control of a key resource that people need or want. For centuries, that was land and natural resources, then it became access to financial and human capital required for the development of the manufacturing base of the industrial age. Somewhere in the 20th century we entered the ‘Information Age’, where access to data became a key source of advantage as services and communications began to dominate developed economies.

  Now a new shift in value is occurring. In 1999, Joseph Pine and James Gilmore wrote the book The Experience Economy, predicting that consumers would increasingly demand and pay premiums for an ‘experience’ beyond the mere consumption of any branded product or service. Starbucks coffee houses were the most conspicuous example of this. People visited them as much to ‘hang out’ or catch up on some work as to drink coffee. Howard Schultz, its CEO, described Starbucks as ‘the third place’ between home and work where because of its ambience, and the time you could linger, people would pay up to $4 for a coffee.

  This desire for an experience beyond the product or service has grown. It requires the mingling or merging together of marketing, operations and human resources because, for the consumer or the customer, the people, the messaging and the product or service provision become integral parts of a bigger whole and, in some cases, indistinguishable from each other. People who buy Innocent drinks rather than other smoothies are buying its quirky sense of fun as much as the healthy product.

  Above all, the experience economy requires constant innovation or invention as a key source of value. Customers want predictability of outcome but they don’t want sameness of experience. They want to know they will get something of value that is consistent with their perceptions of the brand but which is updated, upgraded or has the capacity to surprise them in a relevant way. In order to invent and innovate regularly and relevantly, companies need to achieve unprecedented levels of intimacy with their customers. They need as much as possible real-time information about what their customers like or don’t like, what they want or desire. This goes far beyond gathering the opinions of customers in a way that is remote from the experience, such as through focus groups or gathering their reactions through high street or online surveys. It means being in a continual conversation with customers, who will give you as much information as they want in the expectation that you will use it to improve their experience. In fact, it goes beyond a conversation into the co-creation of the experience itself.

  In an effort to refresh constantly the relationship with customers, companies are investing in experiences that are ‘immersive’, by which we mean that customers or consumers are actively engaged in or participants in them. This is a trend best exemplified in the entertainment business. Punchdrunk, for example, an innovative theatre company, puts on shows in unusual, ‘non-theatrical’ venues and then involves the audience in the performance in unique ways where the audience ‘controls’ the experience. Its award-wining production of Sleep no More, a version of Macbeth, at the time of writing has run in New York for more than three years. It takes place in 100 rooms over six floors of an old warehouse building and each member of the audience can walk through the warehouse and the story at his or her own pace, choosing which part of the story they want to follow.

  This personalization, co-creation and ‘participation’ in the experience is increasingly what other commercial sectors are aspiring to. It might be as simple as having your favourite picture on your bank credit card or your name on a Coca-Cola can, or more useful such as Amazon’s profiling, or more immersive such as Google Cultural Institute or Burberry’s Bespoke tab on its website.

  For this to work, the participation has to be relevant to the brand and its consumer, of course, and it also has to be relevant to its purpose. Just because organizations can, doesn’t mean that they should. Technology allows us to engage with customers whenever we choose, but the question is ‘Should we – does it add value for the consumer?’ You only need to think of the irritating customer relationship management (CRM)-driven cold calls that interrupt our Saturday evenings, or the spam that clogs up our e-mail on a daily basis. We often joke in speeches that CRM, rather than standing for ‘customer relationship management’, actually stands for ‘constantly receiving mailshots’ from the customer perspective. The filter of an effective purpose places a check on how, and when, we engage with customers over these channels to ensure that we are doing so in a way that creates value for the consumer and the business. O2, the telecom operator and one of the most successful purpose-driven brands, has a proposition called ‘Priority Moments’ where it texts customers with invitations to concerts at the O2 Arena or sporting events. Its purpose is ‘Helping our customers connect to the people and things that matter to them’ and th
is provides the lens through which the brand makes those decisions about what to communicate to whom.

  Since Shaun and Joe Wheeler wrote their book Managing the Customer Experience in 2002, customer experience has gone mainstream, but it has been made hugely more important and complex by the addition of the ‘omni-channel’ approach. Omni-channel includes not only traditional media channels but also every touchpoint through which the customer experiences the brand. The product, the packaging, the place in which it is sold and the people who represent or sell the brand across every channel – including physical, social and digital – have to deliver a consistent experience of the brand. They are all ‘channels’ for establishing a conversation with the customer and creating a perception of the brand. If any of them operates in a way that is inconsistent or at odds with the sense of purpose of the brand, it will dilute or, at worst, destroy value for the business.

  We said that our title On Purpose has a double meaning – the notion of purpose beyond profit and also the sense of being intentional about delivering the customer experience. This becomes all the more important when delivering an experience across multiple channels because the variables increase exponentially and therefore the opportunity for inconsistency is massive. All the more reason, then, to take a joined-up approach. As Ronan Dunne, CEO of Telefonica UK, the owner of O2, says, ‘it only works when it all works’.