Luminous recently facilitated a workshop at the International Integrated Reporting Council’s (IIRC) global conference on the role of purpose and how purpose-led communications can be used to drive authentic stakeholder engagement.
We wanted to help delegates think more clearly about a fundamental shift that needs to occur in many businesses, and may be relevant to their own: moving purpose from being a marketing exercise to being the start of a business transformation journey; from being just a high-level statement to being an effective programme delivered through actions and behaviours; and from being a wrapper for existing initiatives to being an integrated driver for innovation, progress and participation.
The last couple of years mark a curious time for purpose. Within the corporate space, we have seen asset owners such as Larry Fink of BlackRock speak forcefully about the power of purpose in supporting value creation. In his 2019 letter to CEOs, Fink noted, “Purpose is not the sole pursuit of profits but the animating force for achieving them.” And he went on to say, “Purpose is not a mere tagline or marketing campaign; it is a company’s fundamental reason for being – what it does every day to create value for its stakeholders.”
Fink’s view is supported by compelling research evidence from organisations such as EY that details the business case for purpose. Over 80% of CEOs believe that a strong sense of purpose drives customer loyalty, enhances an organisation’s ability to transform itself and drives employee satisfaction.
However, at the same time, we have seen a rise in ‘purpose washing’ and the negative effect that that can have on the intangible value of a brand or business.
Take, for example, Pepsi’s infamous 2017 ad campaign featuring Kendall Jenner. The ad was roundly criticised for its portrayal of contemporary protests, particularly in the light of some real-life events which were obviously not resolved by a reality TV character handing out drinks. In a statement, the company said: "Pepsi was trying to project a global message of unity, peace and understanding. We missed the mark, and we apologise. We did not intend to make light of any serious issue”.
According to YouGov, the Jenner ad brought Pepsi’s purchase consideration score with millennials down from 27% to 24% for the next three months or so.
Pepsi does have a strong purpose, rooted in sustainability goals and targets. However, delivering global peace is not within the gift of the soft drinks business, and so the ad simply felt like an ill-conceived exercise in style over substance.
During our workshop, we presented Pepsi alongside brands we felt had got purpose right, such as Unilever, whose purpose ‘To make sustainable living commonplace’ is delivered through the company’s sustainable living plan.
We split the workshop into groups and set each the task of examining a purpose statement, looking at whether it went far enough, what else might be expected from that particular brand/company, whether the language worked and what the statement needed more, or less, of. We went on to look at the value created for stakeholders and what the pitfalls might be when communicating purpose to consumers.
In general, it was thought that many of the purpose statements studied did not go far enough and that it was difficult to understand the value the purpose created. There was also a consensus that some of the purpose statements were generic and could be applied to any business. However, it’s important to remember that purpose is not a statement of ‘what a business does’ but ‘why it does it'.
One of the workshopped purposes which did get the thumbs up was Lloyds Banking Group's ‘Helping Britain Prosper’. The purpose, launched in 2014, was intended to address some of the social, economic and environmental challenges that the UK faces. It is managed through the banking group's Helping Britain Prosper plan and revised annually. The Plan takes the business beyond business as usual and focuses on the areas in which Lloyd’s can make the biggest difference.
The Luminous view
Getting purpose right matters – think of it as your business’s north star. At Luminous, we work with businesses large and small to define their purpose so that it supports brand values, is aligned to strategy and the business model and makes sustainability commitments that are relevant to stakeholders.
We see purpose as an essential part of the role business plays in developing sustainable value and a sustainable world. So, if you would like help unearthing your purpose, please contact Stephen.email@example.com.