“How to Connect Profit and Purpose”
By Mark Bonchek and Cara France
It takes time for a big idea to make its way into business practice. Six years ago, Harvard’s Michael Porter and FSG’s Mark Kramer made the bold statement that shared value — the idea that the purpose of a company is to achieve both shareholder profit and social purpose — would “reinvent capitalism.” They encouraged companies to go beyond CSR (corporate social responsibility) and integrate social impact into companies’ competitive strategy. And in 2011, Nathaniel Foote and Russ Eisenstat proposed a “better way to manage in the 21st century.” They found “higher-ambition” leaders achieved superior performance by doing well and doing good.
For the last six years, we have worked with a group of top marketing executives and business leaders in Silicon Valley and the Bay Area from companies large and small. Each year we assess the issues that are most top-of-mind. From digital platforms to customer experience to crisis management, these priorities have been a bellwether for what would soon dominate boardroom discussions and headline business publications.
This year the issue of profit and purpose came to the fore, echoing the earlier manifestos. To understand the connections and applications, we interviewed over 20 CMOs and CEOs, finding a remarkably similar pattern across a highly diverse set of companies.
We found widespread agreement that having great products and services and being a “good corporate citizen” are table stakes in a world of empowered citizens and consumers. Melissa Waters, CMO of Lyft, says “Any customer these days is asking for transparency on what a company stands for and why they operate. But you can’t exist just to make the world a better place.”
Purpose today goes well beyond corporate social responsibility. According to Alicia Tillman, CMO of SAP, “Purpose can’t be viewed as a department or initiative. It must be woven into a company’s operational fabric. Purpose is a lodestar guiding and inspiring everyone to create economic and societal value together.” In a sense, purpose is following the path that digital has taken in the enterprise.
Purpose is not just philanthropy; it is a source of competitive advantage. Porter and Kramer emphasized the external market opportunity of creating social impact. One of the key findings of our conversations was how purpose created advantage internally by aligning and energizing the organization.
Antonio Lucio, CMO of HP finds that purpose streamlines decision-making. “The amount of time management teams are spending reacting to dramatic changes in the world is unprecedented. Purpose becomes the compass against which you’re making decisions.” Eric Reynolds, CMO of Clorox, also sees purpose enhancing planning as a construct for decision-making. “We talk purpose at the highest level strategy meetings. It affects hiring practices, suppliers you work with, how you reward product development, and of course, marketing.”
Purpose also attracts, empowers and inspires employees. Mike Marcellin, CMO of Juniper, says “Purpose has an impact on the kind of people we’ve been able to attract. People are looking for a worthy purpose or vision they can believe in. The more inspired your employees are, the better the work they are going to do.”
Sephora has identified its purpose as “inspiring fearlessness” which is much bigger than makeup and beauty. Sephora’s Head of Marketing Deborah Yeh has been “blown away with how profound it was to get at a deeper meaning with employees. Every day they choose to put on their uniform and spend time in our stores because they believe their work is meaningful. They will leap over mountains for each other, our brand and our client.”
In our conversations, we were struck by how systematically companies were approaching purpose, from how they initially define their purpose, to how they embedded into the fabric of the business, to how they sustain engagement with purpose over time. Their experience provides a roadmap for others looking to fuse profit and purpose.
To start, it’s helpful to look backwards in order to move forward. The origin of your company is often a starting point to finding the company’s DNA — the “why” that gets people up in the morning and the common thread connecting the past, present and future. Vineet Mehra, CMO of Ancestry, says, “A great purpose is grounded in something universally true that is authentically delivered by your brand and product.”
Amir Rubin, CEO of One Medical, describes how the company has embedded its purpose into every aspect of the company through people and performance management. “We start with purpose, to transform healthcare, then we map that purpose to goals and metrics. We look at the entire customer journey and how to deliver the best patient experience anywhere even down to how we greet people. If we do these sub-components, we will transform healthcare.”
A challenge is how to sustain purpose after the initial honeymoon is over. Over its 60 years as a business, Visa has maintained a strong connection to founder Dee Hock’s vision, organized around a shared purpose and strong principles. Lynne Biggar attributes this longevity to, “staying true to a vision that is truly authentic to our business. We strive to be the best way to pay and be paid, for everyone, everywhere – and this guides everything we do. It is a powerful statement that defines our aspiration and purpose.”
By contrast, in the 1990s, HP drifted away from their DNA and lost the “HP Way” that inspired so much of Silicon Valley. In the last few years, HP has re-established its purpose, starting with a commitment by the CEO and senior management to be a purpose-led brand. The vision “to create technology that makes life better for everyone everywhere” and a mission to “engineer experiences that amaze” has become a filter against which everything is measured and a catalyst to shift both culture and business process.
As it grows, Square is trying to stay true to its purpose by focusing on the entire employee lifecycle. Beyond its business model as a payments technology company, the company’s purpose is economic empowerment by helping entrepreneurs to start, run, and grow a business. Starting with the employee interview process, Square tests whether candidates are effective advocates and feel a personal connection to the mission. In the on-boarding process, they set up their own business using Square to develop empathy and understanding. For ongoing alignment, the company holds all-hands meetings every other week where any of the 2,300 employees can question or challenge management on decisions that don’t align with the company purpose.
Many of the executives warned that the journey to purpose is not a tactic or campaign. Customers will see right through a “feel good” communications about the wonderful things the company is doing. If the company has been more focused on profit than purpose in the past, you have to be ready for some degree of skepticism and find ways to engage the skeptics in the process.
Levi’s CMO, Jennifer Sey, talked about not choosing easy over right. “Whether it was integrating our factories before being legally required to do so or being the first Fortune 500 company to offer same sex partner benefits in 1992 when it was not a popular thing to do, we try to do the right thing that’s aligned with our purpose of profits through principles.”
Metrics can help ensure you maintain transparency, accountability and focus. Clif Bar operates in service of five aspirations – sustaining their business, brands, people, communities, and planet. Each one has a defined vision with metrics and measurements that keep the company on track.
The fusion of profit and purpose is a journey more than a destination. If you are at the beginning of that journey, start by having conversations with your stakeholders about how you can connect the two more closely. Get outside the “boardroom bubble” and talk to frontline employees, customers, and partners. If you have a strong sense of purpose, see where you can embed it more deeply into how you make everyday decisions. Also see how you can begin to measure your progress towards fulfilling that purpose. Finally, if you are farther along the journey, see how you can help others be more purposeful to unleash a multiplier effect across every part of your company.