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Monday, May 20, 2024

The power of purpose

Nick Ranger analyses the single, most powerful tool available to CEOs who are determined to make a meaningful difference

In normal trading conditions there is a strong link between purpose and the success and confidence of CEOs, coupled with their ability to drive growth in their businesses.

Now, amidst the international upheaval of 2020, every CEO is dealing with pressures and challenges they could not have predicted and have never faced before.

As a result, we’re witnessing those same purposeful CEOs acting more decisively and with more authority in a time of global crisis.

Those with a genuine sense of purpose driving their business are reimagining the contribution they can make. In some cases they are thinking beyond their own business and adapting the role it can play to help people and communities through this period of crisis.

Conversely, we are also seeing radical and necessary cost cutting and job shedding as some businesses focus on profit as a means to survive. Time will tell whether these businesses retain their main focus on profit over the long term, or reconsider their role once they have re-established a normal operating pattern.

What we are witnessing is the true value of purpose being played out before our eyes, in real-time, and the emergence of a more purposeful business world.

Action in the world

Speaking at Cannes last year, Alan Jope, CEO of Unilever said “Purpose-led brand communications is not just a matter of ‘make them cry, make them buy.’ It’s about action in the world.”

But bear in mind that action in the world doesn’t have to be blatantly political – even though activist brands like Ben and Jerrys and Patagonia are often the names we most associate with purpose.

Throughout the pandemic companies like BrewDog, Trojan, and IKEA have taken action in the world, grounded in their unique purposes as organisations. By knowing who they are and what they mean and have to offer to consumers, they were able to quickly and authentically adapt to the expected global change, pivoting their products and communications to provide for new needs, promote health consciousness, and comfort their core audience.

It worked because even though these businesses aren’t necessarily synonymous with a higher ethical purpose, they are aligned around a clear sense of self externally and internally that helps them adjust in real time to the unprecedented challenges of the world around them. This strategic approach to purpose from the inside out, more than attaching to any specific cause, is how I’d encourage CEOs to approach their business’s purpose.

The purpose spectrum

Purpose isn’t just about having a foundation in place in case of unprecedented international emergency. It’s about the long-game, whatever comes our way.

In those businesses where purpose is used effectively to enact action in the world, it can play a number of different roles across an organisation: creating value, attracting the right talent, and driving growth. Leaders can use purpose to change the mindset of their board and shareholders, shifting the agenda to a sustainable one for their businesses, and emerging successfully through the other side of existential risk and change.

But purpose is not a binary “have one” or “don’t have one” situation – in fact, every business has one. But a majority of businesses don’t use purpose to its full effect, because they don’t see it for what it really is: a resource, not a proclamation. Purpose, rather than an end goal, is a constant work in progress. Purpose is a spectrum, and every business falls somewhere along it.

In the current market, we’re seeing many businesses fall into the category of profit drivers. At this end of the spectrum, a business is focussed on profit maximization and satisfying shareholders’ interests. Its sole reason to exist is making money.

While there’s no right or wrong, particularly when survival is on the line, profit drivers will not be those best equipped for longer-term success.

The problem is that a solely profit-driven approach creates a trap for businesses, in which the purpose is determined exclusively by external factors, and the control the organization has over how they react to change and progress becomes overly limited by the bottom line. Profit-driven companies rarely produce lasting leader brands – their limited purpose can’t help them when it comes to other essential issues, like talent retention or long-term value.

Ideally, we want to see more businesses at the other end – as purpose champions, viewing purpose as a multidisciplinary framework for the business. Their purpose is the central organizing idea that drives everything they do to create value – from profits to campaigns to personnel, social and environmental impact, and beyond.

True purpose champions deploy purpose as a guide for all decision making across every area of the business. Purpose acts as the benchmark by which strategic decisions are made.

The purposeful path

CEOs that place purpose at the heart of how they lead really do make a difference to their business’s long-term performance.

Every CEO knows that long-term thinking drives success. Every CEO wants to raise their head from the day-to-day and take the longer view. But most are hemmed in by quarterly returns, crisis management, the short-term view of those around them—particularly shareholders.

But there are a few – bolder – CEOs who are taking a different path. Using purpose as their main tool to help them navigate the unpredictable world we find ourselves in, so that they don’t lose sight of the long term.

Using purpose to create value. Using purpose to attract the right talent, to drive growth. Using purpose to change the mindset of their board and shareholders, shifting the agenda to a sustainable one for their businesses. Using purpose to emerge successfully through the other side of existential risk and change.

For the few CEOs who have truly adopted purpose so far, it’s proving to be their most powerful tool in helping to make a meaningful difference and navigate their way through difficult times.

It makes them bolder, which makes them more likely to lead and drive performance. In the short term, through a crisis – and in the long term, too.

Nick RANGER Managing Partner, Brandpie. Has amassed 25 years’ experience in Europe, the US, Japan and Middle East. He partners with chief executives and the C-suite to create, reinvigorate and equip their brands for transformation and commercial advantage.

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