By Guy Corbet, Fourteen Forty
The researchers at professional services firm EY reveal four fifths (82%) of us believe a brand’s values must include a clear purpose. This purpose is critical in deciding whether or not we will buy from them.
The difficulty with this conclusion, and many like it, is that what people mean by purpose can be misunderstood, and such analysis can be overly simplistic and too easily miss a point.
Which means that purpose can too often be misunderstood, misappropriated, or have unexpected and unpleasant consequences.
1. Unexpected consequences: “purpose washing”
One difficulty is that there does not appear to be a clear consensus on what “purpose” really means.
Is it around good governance and being a good corporate citizenship, for instance, as “Blueprint for Better Business” have cogently outlined in their excellent guidance, “How can investors identify purpose-led companies?”?
Or is it, as legitimately, around campaigning for a better world, perhaps by, supporting United Nation’s sustainable development goals?
Or is “social purpose” something done by social enterprises? According to Social Enterprise UK these firms make profits like normal businesses, “but it’s what they do with their profits that sets them apart – reinvesting or donating them to create positive social change”.
Or is a mix of two, or more, or something else?
This lack of clarity makes it risky to ask for purpose to be part of a company’s offer. It can lead to unexpected consequences or, at worst, it is to ask to be misled.
How a business behaves will always say more about a brand than what it says itself. Words can be too cheap, and “purpose washing” is a real risk.
Whether deliberately or not, it can be too easy for brands to make bold statements about their intentions, and then behave differently (not necessarily deliberately). That’s why critics sometimes dismiss “purpose” as nothing more than thinly veiled public relations or marketing ploys.
State Street’s stunning “Fearless Girl” campaign won acclaim wherever it was to be had. Its purpose was clear.
It was a bold (and fearless) challenge to face down many traditional prejudices on Wall Street and beyond. The fall from grace may have been as dramatic when the bank had to pay out £5m in fines for its own discriminatory practices.
In other words, once businesses believe that they must show “purpose” it can be all too easy to say the right things, without doing them. To become inauthentic.
2. Over simplifying
Such research also over simplifies because what people say to market researchers, and what they do in real life are often very different.
The same research from EY also reported that three quarters of UK consumers said they would boycott a brand they don’t trust.
Customers often have short memories. A Kantar study of the horsemeat scandal showed that people saying they would boycott the effected brands in fact quickly forgave them and carried on buying.
What they said they would do did not match what they did.
3. Missing the point
Insisting that “purpose” is at the heart of the business also misses a point because it very often conflates the need for a robust business plan with the need for a robust marketing plan. They are often different things.
Management guru Peter Drucker said, in 1954, that “there is only one valid definition of a business purpose: to create a customer.” To be able to create customers, businesses must first deliver what their customers want. They must identify and meet a demand. This is the core business planning.
How they get people to take up that demand is marketing.
In doing that, in creating customers, even without a noble “purpose”, businesses also create jobs, directly and indirectly. They support a supply chain.
All this generates the taxes to pay for the public services, health and education that are the foundation of our society. They create the environment in which we can all push for positive social change.
If not a purpose, what is that?
4. Purpose can be misunderstood
Many argue that successful businesses need a noble purpose that is bigger than themselves and goes beyond providing goods or services. This may be true, but it is not necessarily needed to justify why they exist in the first place.
The business world is full of powerful stories about brands which are built on such purpose. Unilever is a frequent example. It does great things which enviably differentiate it from others in its own category and across industries. It is inspirational.
Geoff McDonald, former VP of HR at Unilever, explains (37 minutes in): “The reason Unilever has gone down this whole route was to improve its performance. It was performing so badly back in 2009. The vultures were going to take it on. They were going to split it up.
“The only way to improve the performance of that organisation was to give people a sense of pride and ambition, and that’s what purpose did. It is about enlightened self-interest. It is about ensuring that organisation survives, and to do good at the same time.”
In other words, Unilever did not adopt a purpose to legitimise its existence, it became purpose driven to save it. It created a purpose as the vehicle to build its brand internally and to sell its products, which is marketing. Unilever’s salvation became doing well by doing good.
Which in no way at all undermines or undervalues the huge amount of good that it does. Quite the opposite. It simply puts it in context.
For other businesses to be as noble there is also nothing that says they should have to display such noble social purpose. It might not be right for their brand or customers. They should choose to do what is right for them.
Purpose-driven marketing has its place
This is not to say that purpose-driven businesses are not sincere.
But we should recognise that having a purpose has a purpose of its own. Profit, and there is nothing wrong with that. Enlightened self-interest is the corner stone of the free market.
A noble purpose can be a compelling marketing tool. For some businesses it is the part of their marketing that separates them from the competition.
It is what those in the EY survey recognised as a reason to buy. For many businesses, building their brand around their purpose is exactly the right thing to do.
But there are other ways of building brands and encouraging people to buy from businesses. They should be authentic, and not be confused with the business plan.
Sincere purpose-driven businesses, even using their purpose as a marketing narrative, are a subset of all good businesses. It is not the other way around.
More than 60 years later, it is hard to fault Drucker’s definition of purpose. Creating customers creates jobs, and that creates economic growth, and that improves prosperity for all.
Is the pursuit of profit not a sufficiently noble purpose all on its own?