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On Purpose Page 5
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Being purpose-led is vital for businesses who want to succeed, who want to win and retain customers and talent, and who want to progress with a ‘licence to operate’ by all stakeholders in society. And to be truly purpose-led, you need to have insight into the world they live in, and will live in, and what needs and wants they have and will have. And that insight can often come from being aware of yourself and the things that are affecting your own life.
One example of a brand that was conceived around a purpose and that has been led that way ever since is giffgaff, a subsidiary of O2 but about as different as you can get from most telecom brands and, indeed, the parent company.
– a purpose-driven company
Tim Sefton, director of strategy and new business development at O2
I was appointed to the UK Board of O2 with a remit to champion the strategy that had driven our growth in previous years – to be customer-led. The nuance was that by this time the UK market had reached maturity and total revenues were declining year on year. This meant that there was a clear need to create new revenue streams away from the core business.
We spent a fair amount of time analysing alternative strategies because we knew how many other corporates had tried and failed to create new business from within. We also learned from our previous experiences as a business and from others about what it takes to give new businesses a chance to succeed within a corporate environment.
One key insight that emerged was that it was essential to give them an arm’s-length relationship with the core business so they could be incubated and nurtured. Another was that if you decide to go down the path of creating new revenue streams, you have to commit resource to making it happen.
With the UK board fully aligned behind the strategy I built a new business development team, drawing talented people together from across functions – strategy, marketing, commercial finance, IT, HR – with a remit to create a pipeline of new business opportunities and to win board approval for financing them.
One member of this team was Gav Thompson who had the role of Head of Brand Strategy – his brief from me was simple… to apply the types of thinking that had created great brands in the past and come up with one amazing idea that would get funded and had the potential to ‘move the needle’ every year…
Gav Thompson
My real insight came because I was going through a midlife crisis.
I had just started riding a motorcycle and didn’t know anything about how to fix the bike or tweak it. So at night I’d go onto web forums asking questions about how to change the suspension settings. I would get really good quality answers from strangers around the globe, for free, in minutes – in fact, better quality answers than I was getting from the BMW dealer.
And I thought, ‘Well, this is amazing. There’s so much goodwill around the internet and people sitting in their bedrooms willing to share it. Why don’t we capture the knowledge of a bunch of people who, without trying to disparage them, are probably geeks who knew about phones and technology and how, for example, to get your photos from an iPhone onto an Android or to get your music from an Apple laptop to a PC? Why don’t we harness that knowledge and goodwill and launch a business that would share that knowledge and empower those people? In doing so, we could actually create a brand that was more appealing to this segment of people who were a bit underwhelmed by O2 and all big telcos.
And so, whilst daydreaming about motorbikes during a Web 2.0 conference in San Francisco in 2008, giffgaff was born – a brand where marketing and customer service is provided by the customers. Customers are more engaged because they are helping you run it, it’s cheaper to run and you are hitting the segment that normally wouldn’t have been that interested in O2.
Stand up – purpose driven
giffgaff, which is an ancient Scottish word meaning a mutual gift, was built around a one-word essence, ‘mutuality’. That word popped into my head when I first came up with the idea. I wrote it down as an original scribble in my notebook and to this day that simple essence of mutuality has informed everything the business has done and how the business should behave, through to pretty much every decision the business now makes.
The idea was in the back of my mind, when I was working for O2, having worked for 18 months as head of brand strategy. O2 was undoubtedly the best telco in our market, but there were a bunch of people who, because they were digital natives, probably thought that O2 and all the other big telcos were just a bit too corporate, a bit too glossy, a bit too complicated. They just wanted a good quality, cheaper telco that they could engage with online on their terms. They wanted more of an equitable relationship, not the kind of classic big brand telling you what to do. ‘You’ve got to come to our shop and you’ve got to buy this phone’; so, a far more open, transparent relationship.
Our manifesto, which is on the website to this day, says we’re about mutuality. We have a charter of eight points: it starts with mutuality; second, it’s got to be a great deal; third, members need to be involved in running the company; fourth, the business wants to do stuff for the collective good of the community; fifth, it’s got to be simple and less complicated than most telcos; sixth, it’s got to be an online only business – no shops and no sales people; seventh, it’s got to be independent from the parent business; and eighth, we’ve got to do our bit for the environment.
Image 1.2 giffgaff’s purpose – mutuality
When you have that kind of manifesto from day one, you can’t just change it further down the line. And when your purpose is mutuality then you always have to think about what’s best for the community, because the customers are the community, and the community is your business.
This means that when giffgaff’s managing director Mike Fairman and the management team needed to put up our prices, because the cost of running the network had increased, that decision was put to the members to debate, to discuss and, ultimately, to take a vote on it. It was debated for a couple of weeks on the members’ forum. Then, through the members, we got to a series of choices and then put it to a vote with the caveat that the guys running the business would get the casting vote. But it’s never been the case that we’ve had to go against the will of the members.
At the end of the debating process, the goodwill of the community was higher than before. So the prices went up and everyone was happy as a result, which was a bizarre state of affairs.
With mutuality comes a notion of a sort of socialism and total transparency, which, when you’re in a very competitive business like mobile telephony, creates a dilemma. You can’t just put all your information up for anyone to read because it means that our competitors will either try to copy us or mirror us or steal our customers. So, although mutuality comes with this notion of socialism and openness and transparency, that’s not at the expense of doing what’s right by all stakeholders in the business.
A sense of purpose allows you to make some tough decisions as long as you can join up the dots.
If we put prices up, or, choose not to stock handsets, the logic flows back to the purpose. It’s like having a kind of conscience operating all the time. If any member of the management team were to be stopped by a member in the street, or if we had to explain a decision on the forum, how do we make the link between mutuality and what we’ve chosen to do?
Here’s a great example; giffgaff is one of the few networks still to have unlimited data usage but it was getting to the point where a certain number of members were using so much data that the rest of the members were getting reduced service. So Mike and the management team had a debate with the members about members who were taking the piss, by using so much data. The debate was: ‘Shall we let them carry on doing this or shall we restrict them or shall we kick them out?’ The view from the people was to kick them out because their selfish behaviour was getting in the way of what was good for the membership.
Sure, sometimes we make mistakes, but ou
r clarity of purpose allows us to take tough decisions and recover from those mistakes relatively easily. As long as giffgaff remains about ‘mutuality’, I can’t see it going too far off course.
Note
1 http://blogs.wsj.com/moneybeat/2015/02/23/apple-is-now-more-than-double-the-size-of-exxon-and-everyone-else/.
Chapter Two
Purposeful leadership
‘There’s always a little element of bravery when you start a new project. It’s a bit like jumping in the deep end in a way. You don’t know exactly where you’ll come out so you need to stay true to your core purpose – it becomes the compass that guides you.’
SONU SHIVDASANI, FOUNDER, SIX SENSES
It takes conviction
Purposeful leadership takes courage and conviction. It has two main responsibilities. The first is that leaders must be clear and committed advocates of the purpose in their public and private words and deeds. The second is that they must take decisions for the business that are in line with the purpose. The second is probably harder than the first for many executives who, however committed personally to a sense of higher purpose, are under pressure to show results in the short term, either to shareholders or to the city. But it is business-critical for leaders because purpose drives company profits.
Leaders who display a profound commitment to purpose do not have to be as charismatic or as high-profile as Richard Branson or Steve Jobs, or as controversial as Robert Stephens (Geek Squad) and John Legere (T-Mobile) – we shall hear more about them later. In this book, for example, we have included examples and case studies of companies who are not well known other than to the customers they serve. But their businesses are purposeful and the leaders are enthusiastic and committed to their purpose, whether their business is connecting people, laying floors or running a hotel. They all ‘declare a future that others commit to’ but only because they commit to it too. It therefore follows that the most important quality that any leader must have above all else is authenticity – a genuine belief in the purpose to which they are asking others to commit.
Daniel Pink in his book Drive (2009), which looks at motivation within organizations, argues that wages are not the main motivator for most – if not all – people. ‘ The best use of money as a motivator is to pay people enough to take the issue of money off the table,’ he argues. ‘Pay people enough so that they’re not thinking about money and they’re thinking about the work.’
He goes further and gives a clear warning to leaders who focus on the short term and on that other ‘p’ word:
‘When the profit motive gets unmoored from the purpose motive, bad things happen.’
For example, one of the big news stories of 2012 was Hurricane Sandy. This ‘storm of the century’ caused 85 deaths and left 8 million people on the eastern seaboard of the United States without power for several days.
It was interesting to see how brands responded to this event. Some, such as the fashion retailers American Apparel, Gap and Urban Outfitters, saw this as a sales opportunity and quickly launched a campaign. American Apparel targeted customers in the nine stricken states who were ‘bored’ at home and invited them to visit American Apparel, offering a 20 per cent discount, saying ‘In case you’re bored during the storm, 20 per cent off for the next 36 hours’. Not unsurprisingly, consumers reacted with anger at this commercialization of what was a terrible event for many people, and Twitter and other social media channels were buzzing with outraged customers voicing their opinions about the apparent lack of sensitivity.
However, some other organizations chose to respond differently. For example, two of the P&G brands, Duracell and Tide, found ways to help consumers in their hours of need and, in so doing, created goodwill for the brand.
P&G’s purpose is ‘to touch and improve more consumers’ lives with more P&G brands and products every day’. Here’s how they brought this to life during the crisis. Duracell sent mobile charging stations to Lower Manhattan so that people could charge their mobile phones and connect with loved ones. Tide loaded a truck with 32 washer/dryers and sent it out on the streets so that people could wash their clothes. A cynic might argue, however, that this was just another form of marketing. That might be true in terms of the long-term effect but the fact is that the first response of these brands was to ask what they could do to help, rather than what they could do to sell. They behaved in a way that was motivated by purpose rather than profit.
As we cited in the Introduction, the annual Edelman study on trust has found that consumers are increasingly inclined to favour those brands that have a social conscience and are prepared to give something back to the world: 66 per cent will recommend or buy from a brand that supports good causes. However, the study also found that customers were more influenced by how these brands behave in their everyday business operations rather than the extent to which they might donate to good causes. So, being purposeful is much more about the choices and decisions that you make as a company than having a CSR policy.
It is more about behaving in a purposeful way than ‘doing good’
Consumers will also ‘vote with their feet’ when a brand that they admire in every other respect is found to be doing the wrong thing for society. A perfect example of this is the 25 per cent boost in sales for Costa Coffee that parent Whitbread announced in 2013 as a result of consumers boycotting Starbucks after it was revealed that the brand had paid just £8.6 million in UK corporate tax for its 750 stores since 1998.
Mitch Markson, chief creative officer of Edelman, said this in their report:
‘Purpose is now the “fifth P” of marketing. It is a vital addition to the age-old marketing mix of product, price, place and promotion.’
Many would argue that purpose is the sixth ‘P’ of the mix because ‘people’ are the fifth ‘P’, but this does not negate his conclusion. Those brands that are transforming their markets through the customer experience share a common approach to business; they have a purpose beyond merely making profit – and their leaders are making decisions based on fulfilling that purpose.
Sometimes, leaders force themselves to ‘go back to’ a sense of purpose. When organizations grow, particularly at a fast rate, that growth can come without intentionally focusing on purpose. While that is good in the short term, it poses a dilemma in the long term and sets up a potential crisis of identity for the brand. The result of this can be for a company to effectively create a generic market that lots of competitors come into, ‘stealing’ their clothes, aping their proposition and eventually undermining their growth. It is therefore vital to a branded business to stay true to its purpose as it grows so that it remains differentiated in the eyes of consumers from the competition it creates.
The Nando’s fast food chain, which specializes in Mozambique-style chicken, is an example. In 1987, Robbie Brozin and Fernando Duarte borrowed money from friends and family to buy a cafe called Chickenland, which sold Mozambique-inspired cooking in Johannesburg, South Africa. They renamed it Nando’s (after co-founder Duarte’s first name), and began to grow a global brand. They now have more than 1,000 outlets in 23 countries as diverse as Namibia and Bangladesh, and their famous Peri-Peri sauce can be found all over the world. In 2010, they were identified as one of the 30 hottest marketing brands by the magazine Advertising Age. Their culture has always been brand and people focused, with a spice to it that reflects the vibrancy and piquancy of its signature Peri-Peri chicken dish. This includes a list of ‘Ten Don’t F… Withs’ that is core to the running of the global franchise and it includes the logo!
Nando’s is famous for its product. But its founders are very conscious of its purpose and, as the brand has grown, they became concerned that a sense of purpose was being overlooked. Brozin told the marketing magazine The Drum that ‘as the brand took off, South Africa became irrelevant in the Nando’s world’, which he described as ‘the saddest thing that we could do’. Brozin continued, ‘For
me every brand needs a soul and [although] our brand heritage is in Mozambique the first restaurant was in South Africa and from here it went global. It’s actually very easy to lose your heritage as the business gets bigger and you can lose a sense of purpose. For me, any business needs a strong sense of purpose, and it would be so sad if we had a business that was successful but never had a purpose, and that purpose is really the soul of Africa to a certain extent.’
In 2015, Nando’s undertook major new investments in its store experience as part of its next stage of growth and has decided to go back to its roots and celebrate South African design. It launched a ‘Heartfelt Celebration of South African Design’ project at the core of its refurbishment. This produced a collection of items such as chairs and tables made by 12 South African designers showcased in its stores globally. It has also launched the ‘Hot New Designer’ competition in South Africa. Any designer, amateur or professional under the age of 35, competes to develop a pendant light to be displayed in its restaurants globally.
The investment in these activities, and their introduction as part of enhancing the customer experience, will reinforce for both employees and customers the distinctive promise of the Nando’s brand and communicate a sense of its higher purpose to bring South African culture to the world.
Stay true to your purpose as you grow
Purposeful leaders are constantly obsessing about this subject. They recognize the dilemma that happens as you grow quickly, in that growth can be so fast that it can obscure your purpose. Soon you become just another one of the ‘big guys who run the market’ rather than the cool guys challenging it. It’s a dilemma that Innocent foods faced when they were acquired by the Coca-Cola Corporation (CCC). How could this cool, quirky little brand whose purpose was to put ‘the best food and drink into the most people and places’ survive when it was gobbled up by the sugar-loaded, carbonated soft-drink global behemoth? Some people predicted that having sold its soul it would lose its appeal to consumers. Richard Reed, one of the co-founders of Innocent, saw it differently. He argued that the decision to sell to Coca-Cola was exactly in line with the brand’s purpose. What was the best way for Innocent to fulfil its purpose? Was it from a small factory in west London, where it was headquartered? Or through one of the world’s largest food and beverage distribution systems, which is what CCC offers? The answer is clear when you look at it that way.