The behaviour and sometimes outright demands of investors, consumers and employees are returning brand purpose back to the core of the business strategy. The colouring-in department is finally getting its day in the sun, thanks to a decade of digital led customer empowerment.
Often described as the “why” for business, brand purpose articulates a company’s reason for being, and the social good that it seeks to deliver.
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As Victoria Whitaker, partner in risk advisory at Deloitte notes, the significance of purpose in business is not new, in fact it was outlined by economist Adam Smith when the Corporations Act was first developed.
“[Smith] said, the purpose of the corporation is to provide societal good — to provide benefit, more benefit to society than what it takes,” says Whitaker.
Somewhere along the way, that message was lost.
The fact that it went missing is coincidental to the huge accumulation of wealth that was hoarded by companies, senior executives and shareholders as they hoovered up the lion's share of productivity gains was not lost on contemporary, socially conscious consumers.
“The purpose of a company is not to deliver a profit to a shareholder. That is not the problem that it solves. You’ve got to ask what problem do you solve? … the by-product of that is that you deliver a profit to the shareholder,” says Whitaker.
While the theory of purposeful business may have been articulated in the 1700s, in practice, consumers are only now putting their money where their mouth is.
According to Cheryl Hayman, non-executive director at Shriro, “Customers and consumers are voting with their feet and their wallet. And they're advocating for and against companies based on what those companies stand for, and how they behave. So you're being judged much more directly these days by those things.”
Brand purpose not only affects where consumers and investors are choosing to put their money, but influences employee decision making, as younger people who are entering the workforce choosing to work for companies based on their values.
In a market like Australia, which is suffering from some acute skill shortages, the impact is magnified.
John Lydon, former senior partner at McKinsey and Company recently spoke at the Governance Institute of Australia’s 2021 National Conference and highlights the growing support from Millennials and Gen Z for purpose-led business.
He said, “86 per cent of under 30s will choose a company to work for based on its stance, position and impact on social issues. So you want to get employees in the future? You better care about that.”
According to Kate Phillips, VP global marketing at Criteria Corp, brand purpose is particularly relevant for businesses with intangible products, such as those in the B2B space, that need to clearly articulate to the market the problem that they are solving, and the solution they are offering.
“Brand purpose is an incredibly important concept to really articulate what the company stands for, and the value that it brings to each of its stakeholder groups. And that might be external customers, it might be investors, it might be existing employees, it might be future talent, you're looking to attract to business as well. So brand purpose to me has a really critical function in the organisational ecosystem,” says Phillips.
This purpose must then be reflected through all interactions and touchpoints in the business, she says.
“Whether that's your marketing messages, whether that's your customer journeys, whether that's people's experience with your product or service, right down to their experience as an employee each day in your organisation.”
Josh Grace, former CMO of Samsung Australia breaks down the three aspects of building a brand; meaning, difference and salience. While salience simply describes an awareness of the brand in the market, the other two aspects relate to the brand purpose resonating with customers.
“For people to really want to buy your product, it really needs to mean something to them, and also reflect their own beliefs and attitudes. And what we're seeing in particular in today's climate, and I use the word climate specifically, is people getting really worried about some big global issues, things like the environment,” says Grace.
“And so we're looking to our organisations, not just to our governments, to take the lead on how the businesses can actually address these issues. And that's why you're seeing a lot of the purpose of organisations now starting to really orient towards making sure they're doing the right thing. Because they know that customers are starting to select businesses and brands and products based on how visibly they are making the right decisions.”
In 2019, the Business Roundtable in the US representing the country's – and some of the world’s largest companies – finally buried its long-held defended view that shareholders’ interests are uniquely paramount.
At the time, Roundtable head and chairman, and CEO of JPMorgan Chase & Co. Jamie Dimon said, "Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernised principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans.”
While often businesses already have a clearly articulated “why”, Sarah Downie, CEO of the Shared Value Project says it’s the “how” that can cause challenges.
The concept of shared value was developed in Harvard Business School by Michael Porter and Mark Kramer, which Downie says, is about redefining the role of business in society. It is the framework for businesses through which businesses can execute their purpose.
“Shared value asks organisations to think about what is the societal issues that intersect with their business, and then it asked them to think about their assets and their IP and their resources. And it also asks them to think about where the business opportunities might lie. And the intersection of those three things is where we create shared value,” says Downie.
“We're seeing organisations make commitments around a why or a purpose, but often translating that into their behaviours, their actual initiatives, is the bit that is sometimes a bit of a stumbling block for organisations. So we use a strategy like shared value to do exactly that.”
Downie highlights life and health insurer AIA as an example of a business that has deployed the shared value framework through its Vitality program.
The company’s purpose is articulated as helping its customers to “live healthier, longer and better lives.” The vitality program allows customers to engage in physical and mental health related activities including gym incentives and health screening reminders.
“By helping their customers be healthy, they actually help their business in lower claims,” says Downie.
Not only does the Shared Value Project framework support the business’ purpose, but it has a direct positive impact on business performance.
Credit: The mini-documentary was produced by Josh Lundberg, Matthew Ryan and Tejas Bhat.