On Purpose Read online

  How to be on purpose

  Organizations that are ‘on purpose’ do three main things:

  They Stand up for something that they believe will deliver true value or otherwise improve the lives of their customers or consumers.

  They Stand out from competitors by intentionally and consistently delivering a distinctive customer experience across all channels that is consistent with their promise.

  They Stand firm by creating the appropriate culture to ensure sustainable and authentic delivery over the long term.

  This book therefore explores and explains these three dimensions in some detail. It also explains how these businesses ‘never stand still’, responding and anticipating continuously to the changing needs of customers and society.

  How to use On Purpose

  We received many compliments about our previous books, Uncommon Practice; See, Feel, Think, Do; and Bold: How to be brave in business and win. The stories they contain and their underlying customer-centric philosophy has inspired many people. However, some readers wanted more help and tools in order to apply the thinking to their own organizations, especially long-established corporations or business-to-business organizations.

  We also learnt from our last book, Bold: How to be brave in business and win, the importance of having supplementary material to the printed book that could be accessible online – and, of course, embedded into digital versions of the book.

  We have structured this book in such a way that you first read about each of the three dimensions of being on purpose (stand up, stand out, stand firm) and the numerous examples to illustrate them. We also provide the story of a brand to illustrate each of the three main parts of the book. We offer an implementation process that distils our years of experience working with leading brands to apply this thinking and two major case studies of organizations – Liberty Global and Premier Inn – that have done so where the executives concerned tell you what they did, why they did it, how they did it and what they learned ‘warts and all’.

  Finally, at the end of the book, we provide links to a comprehensive online ‘toolkit’, which contains many of the tools we use and supports the implementation process we describe. You can, of course, skip straight to the toolkit, but that would be to miss out on some insightful case studies and, in particular, would prevent you from thinking constantly throughout the reading of this book about the most important question: ‘What purpose does my business serve?’

  We hope you enjoy the book and find it relevant and useful for your own business, whatever its type or size. If you do, then we will have achieved our purpose.

  Notes

  1 http://www.bbc.co.uk/news/business-31627068.

  2 www.sharedvalue.org.

  3 http://www.edelman.com/insights/intellectual-property/2015-edelman-trust-barometer/.

  4 Temkin Group Q4 2011 Consumer Benchmark Survey; base 2,435 employees of for-profit organizations in the United States.

  Part One

  Stand up

  Chapter One

  Purpose driven

  The wrong kind of purpose

  A few years ago, we were working for a Japanese consumer electronics company whose major competitors included Fuji. At a workshop with the leadership team we asked what their purpose was – the reply was ‘F..k Fuji’.

  Destroying or displacing your competitor is certainly one kind of purpose. Some managers can find it easier to motivate their people by making an enemy of the competition and giving people the objective to defeat them. It is a mindset that sees business as a war game and uses other military terms and strategies to achieve victory.

  Kevin O’Leary, the Canadian businessman behind Shark Tank, said, ‘Business is war. I go out there, I want to kill the competitors. I want to make their lives miserable. I want to steal their market share. I want them to fear me.’ There are numerous books on the theme of business as war, including adaptations of The Art of War by the ancient Chinese military strategist, Sun Tzu.

  This approach works when it is easy to see who the enemy is: Pepsi versus Coca-Cola in the ‘rock and roller Cola wars’; IBM versus Apple in the 1980s; Sainsbury versus Tesco, or Nike versus Reebok. But in a world where competitors are coming from anywhere, where digital has transformed the ability of brands to nimbly and quickly forge new relationships with customers, where new categories and subcategories are being created and consumers are deciding on a daily basis, it seems that what they perceive as competing alternatives – this ‘battle of the brands’ approach – is less relevant.

  Moreover, it can seem absurd. The satirist PJ O’Rourke, in a brilliant article for Forbes, mocks the inherent nonsense of comparing war with business: ‘They have as much in common as a sucking chest wound and a lunch expense account.’ He went on to write, ‘Good business produces what the best war can’t, mutual satisfaction – pleased customers, investors, employees or bosses. At the end of a war, they are in a grave. At the end of a business day, usually not.’ The machismo surrounding the ‘business as war’ analogy is also, we suspect, unappealing to at least half of the world’s population.

  Of course, the ‘military style’ objective does not need to be couched in such overtly aggressive language. Many organizations motivate their people with a target or goal that is about ‘hitting market share’, ‘reaching a profit level’, and ‘maximizing sales’. People like these targets because they are SMART (specific, measurable, actionable, realistic and time-critical).

  But the problem at the heart of the ‘kill your competitor’ or ‘hit your objective’ ‘become number one’ types of purpose is that they are self-serving and ultimately self-limiting. What happens when you are number one? Who do you go and kill then? How inspiring is it for your minimum-wage employees to know that you are the most profitable organization in your industry? And how motivating is it to your customers to know that your purpose is to destroy your competitors – or, worse still, that your objective is to ‘sell them stuff’? Because in this day and age, when customers are peering behind the veil of secrecy that companies have maintained in the past, when the ‘truth is out there’, they will find out. In 2014, the UK retailer Sainsbury ran into a media storm when an internal campaign instructing store staff to sell an extra 50p worth of product to every customer, became public knowledge. Unfortunately, one of Sainsbury’s store staff had accidentally pinned up the poster carrying the instructions at the front of the store where consumers could see it.

  As we mentioned in our introduction, Barclays Bank is one of a number of financial service businesses undergoing transformative change around its sense of purpose. Matt Hammerstein, its head of customer experience for retail banking, explains the challenge of changing people’s motivation from a ‘business target’ to a ‘higher purpose’:

  ‘A lot of people talk about change fatigue, they complain that there’s too much change. But we cannot slow the pace of change. So, I don’t think it’s change fatigue; I think it’s “lack of purpose” fatigue. I think people are struggling to answer the question, “Why the hell am I doing this?” Let me give you an example. I was with someone who leads a very big global business here and I said, “What’s your biggest challenge?” He said, “Communications. To get the troops fired up, five years ago I used to go out and say we’re number three on the league table, we want to be number one, numbers one and two are ___, go beat the pants off them. It used to be so simple.” I said, “Well, it’s not about life being more complex or more simple; the fact was the purpose was absolutely clear. The purpose was to become number one. And you don’t know what your purpose is right now. That’s not a communication problem, that’s a fundamental challenge because you don’t know what to tell people about why they come to work and work hard. You’ve got to figure out in your own mind what the purpose is, and then the communication is pretty simple. Because once you’ve figured it out and you’re clear in your own head, people will jump
off a cliff for it, like they used to. You’ve just got to figure out what your purpose is now – and that’s hard.”’

  There is one other problem with the ‘beat your competitor’ approach to purpose: it requires little ‘insight’. There is little you need to discover or be inspired by, if all you want to do is kill the guy who is standing in your way, or find ways to extract more profit from customers.

  Of course, we strongly believe that companies must make profits. Profits are a good thing: you can invest them in improving your customer experience, in funding research and development, in paying your employees better wages, and in making returns to your investors. Businesses don’t exist unless they make money (or are heavily subsidized by someone who has lots of it). And no customer is going to thank you for delivering an experience that costs you more than they can afford to pay. They won’t be happy if you go out of business in order to give them a great service. But profits should come from providing value.

  There are organizations who put their social purpose first and foremost and money is less important. These are not-for-profit organizations. They have a very strong sense of purpose, which is altruistic. They need to ‘raise’ money rather than make it. Profits are not an outcome for them as they are for businesses. The outcome and the purpose are one and the same for many not-for-profit organizations. In fact there are some organizations whose purpose is to make themselves disappear. Oxfam wants to rid the world of poverty. If it does, it makes itself immediately redundant.

  These organizations are purpose driven but they are not businesses and we are exclusively concerned in this book with businesses. Of course, businesses can learn enormously from not-for-profit organizations about purpose and how it drives behaviour – just as not-for-profits can learn about customer experience from great businesses.

  There are three types of purpose, therefore, which we have identified: commercial purpose, which is primarily about your financial goal; brand purpose, which is about your customer ambition; and social purpose, which is about your societal vision. These three purposes have to be reconciled (Figure 1.1). Even not-for-profits have a financial goal, otherwise they lack the funds to effect any change, and commercial organizations need to concern themselves with the society within which they exist otherwise they may not be around for very long. The question is: which of these is your primary purpose?

  Figure 1.1 The three purpose drivers

  Robert Stephens is the founder of the Geek Squad. He grew a business that went from essentially one man (himself) to a phenomenon that became the number one provider of domestic computer repairs in the United States. Robert built his business with a refreshing approach that turned what most people saw as a boring but necessary activity conducted by geeks into a fun business that has 20,000 ‘special agents’ servicing customers – and millions of fans.

  He did so through insight. He saw that when someone’s PC stopped working at home that person would become emotionally distressed, bereft of the kind of IT support that he or she would get at their workplace, and often with highly emotional content on their personal computers that they risked losing. He saw there was a business opportunity in taking away the stress, making customers smile and in helping them to get the most out of their computers in a really engaging way.

  Robert is probably the leader that has been most often quoted from our previous books. He has a knack of reducing things to their fundamental truths. He explains in his uniquely entertaining and straightforwardly honest way how companies balance the three types of purpose we identify – commercial, brand and social:

  ‘I think purpose is part of a major trend, and that trend is related to global commerce. As we learn about how connected things are, whether it’s the environment or the global supply chain or the gigantic debris field of plastic in the ocean that gathers there because of the currents, we’re learning that everything has its price. Even Apple with its wonderful vision has to be vigilant on behalf of factory workers. Apple could not do what they do without lower-cost Chinese labour, and Zara and others couldn’t produce what they do.

  ‘The consumer could ignore that before, and may not have even been aware but, because of global communications, once you see the relationship you can’t unsee it. Companies can ignore it if they want but at some point I believe that lack of authentic purpose will be a tax not just on your growth and revenues, but on your talent acquisition.

  ‘So as long as an organization is honest with itself, it can have a totally capitalist world view. How does this apply to business? We have to support the AIDS crisis, we have to help starving children in Africa, because they are our future customers; we must save them so they can buy from us one day. I take care of my employees and I provide them with benefits because I don’t want them worrying about s..t like that – so they can be super-productive. With this super-cynical but super-honest world view, you can be a capitalist pig, you can love Wall Street and Gordon Gekko, but you can still take care of the environment for capitalist reasons – as long as you’re doing the right thing.

  ‘You know, personally, I’m not really interested in the environment; I don’t really think the world can be saved and, politically, I don’t believe in climate change. So purpose doesn’t have to be altruistic in my view. It doesn’t have to be all about hugging trees. And that’s where you can be authentic. You can be authentically “greedy”, because, if I’m truly a true greedy person, I would not steal from somebody because at some point it will come back to hurt me. It ruins the virtuous cycle. Businesses need to behave ethically because in the long run, if they don’t it short-changes them anyway. So this is a more refreshing, more honest way that people can think about this notion of purpose.’

  The right kind of purpose

  So what is the right kind of purpose for businesses? It is one that is primarily customer driven. The social purpose is attendant on it because customers live in society, and financial goals are consequent to it because if you delight customers you should make money. That might sound cynical to some but, as Robert Stephens says: ‘A cynic is just a romantic with higher standards.’

  Because businesses’ primary purpose must be customer driven, it is vital that they gain insight into what customers need or want, now or in the future. Barclays Bank’s purpose is ‘Helping people achieve their ambition – in the right way’. Matt Hammerstein explains the insight that led Barclays to that purpose:

  ‘The financial crisis and the subsequent recession revealed there were organizations that had figured out how to make money and that was their principal purpose. That was not unique to banking. It was the 1980s spirit of shareholder returns: the only thing that you needed to do as a company was to make sure that you were producing good shareholder returns. That became problematic because an attitude developed that “anything goes”; as long as it contributes to a shareholder return then we can justify it.

  ‘We have to reconnect the question “What are we in business for?” with a higher order of magnitude than just to make money. As a bank, we are at the heart of what our customers need in order for them to be as successful as they want to be. And ultimately the things that they are trying to do are about being good citizens, contributing to their own and society’s wealth and happiness. So it becomes fundamentally incumbent on us, if we aspire to try and serve those needs, to be clear about what our social purpose is. There are lots of stakeholders who affect our licence to operate, specifically regulators and legislators. If they don’t understand that what we are doing for our customers also benefits them as custodians of society, they can take that licence away.’

  So the best businesses will have a purpose that is driven by insight, first and foremost, into its customers’ needs but also considers the demands of the society in which they will operate. And there is increasing evidence that customers will reward businesses that do this.

  Since 2010 Havas Media Group have invested in a regular study into people’
s attitudes to brands – called ‘Meaningful Brands’. Essentially, this looks at how relevant to people any brand is – not merely in delivering a specific functional or aspirational image benefit, but within the context of what they are concerned about in their world as well as their values or beliefs about what is important. Essentially, how does that brand help them to improve their quality of life and wellbeing? The 2015 analysis covered 34 countries, involving 300,000 consumers, revealing that the majority of people could not care whether 74 per cent of brands they bought existed or not. However, it also found that the brands that people found most ‘meaningful’ to them – and there were not many – were regarded as essential to their lives. Moreover, those brands were also the ones that were growing or performing strongly in terms of traditional business measures, outperforming the others by 133 per cent stock market value. Analysis of the survey also revealed that a brand’s ‘Share of Wallet’ – a metric used to measure the percentage spent with a brand versus the total annual expenditure within its category – is on average 46 per cent higher for meaningful brands and can be up to as much as seven times larger.

  Furthermore, the performance of marketing key performance indicators (KPIs) set by top meaningful brands can grow at twice the rate of those set by lower-scoring meaningful brands. For example, for every 10 per cent increase in meaningfulness, a brand can increase its purchase and repurchase intent by 6 per cent and price premiums by 10.4 per cent. The results have led Havas to conclude that brands that contribute significantly to our quality of life are rewarded with stronger business results – they earn a ‘return on meaning’: ie business benefits gained by a brand when it is seen to improve our wellbeing.