The power of purpose is undermined if your purpose is crap

03 May 2018

Business purpose

In all the chatter about the value of purpose-led business, one rather important element is ignored or swept under the table. Simply put: For purpose to be powerful, you need a powerful purpose. If your purpose has been mangled by a committee until it resembles a limp lettuce, you won’t get the benefits.

And yet nobody is talking about what makes a good purpose, and being more critical of some of the ones out there.

Recently, Radley Yeldar launched their ‘Fit for Purpose Index 2018’. It’s a useful exercise that looks at companies and evaluates whether they live their purpose, rating them against five criteria: purpose & story, how they communicate, how they perform, how they behave, and connectivity.

We all love a ranking table, so it’s a powerful tool that helps to put attention onto the value of purpose if it is actually integrated into how the company does business. And, on that level, it’s a great initiative and Radley Yeldar deserves all due credit for doing it.

The top ten, since you asked, are: Unilever, Lloyds Banking Group, Royal Philips, GSK, Nestlé, Johnson & Johnson, RB, Novo Nordisk, Pearson and Danone.

A genuinely purpose-led business will make day-to-day decisions differently as a result of its purpose.

However, reviewing the purpose statements of a lot of the companies included, it seems to me that many miss the mark, and because all such indices have to rely on a methodology to score companies, they can often produce counter-intuitive or downright incorrect results if something falls outside of the scope of the methodology that is actually important.

In this case, a lot of the leading purpose-led companies are getting higher marks than they should because their purposes are crap.

Recognising that ‘the word of Mallen’ isn’t sufficient justification for such a claim, let’s talk about a few factors that make a purpose less effective.

  1. The purpose defaults to the purpose of the whole sector, not the company.
  2. The purpose promises generally good stuff, sufficiently non-specific that it can be used to post-rationalise any choices so long as they are not specifically evil
  3. Purposes that are good, but don’t describe accurately what the company actually does.
  4. Purposes that are marketing slogans, not statements of purpose.
  5. Purposes apparently designed by committee that feel the need to name-check causes or constituencies until they become long, rambling and feeble.
  6. Purposes that are self-referential, in terms of the company’s position in the marketplace

Let’s look at these in turn, but before we do so let me make one thing clear: some of the companies whose purpose statements I critique below are good companies, solving all sorts of problems and doing great things to move us towards a more sustainable and better world. However, they may not be getting the benefit of a powerful purpose to help them to do so. The criticisms are of the value of the purpose statements, not more generally of the good will or business practices of the companies. OK - with that firmly logged, let’s go.

1. The purpose defaults to the purpose of the whole sector, not the company.

GSK’s purpose is perfectly admirable in theory. “To help people do more, feel better, live longer”. Certainly, if you produce life-saving medicines, then it’s a statement that is true. The point is, it’s true of any company that produces such medicines. There is nothing different here at all. What is GSK’s approach and distinctive contribution?

If I look at Novo Nordisk’s statement, which for years was “to defeat diabetes” and which has evolved recently to “driving change to defeat diabetes and other serious chronic conditions”, it is way more specific. It is aiming at an outcome - to defeat a specific condition. It is a much more meaningful purpose, not least because it will become obvious when it has been fulfilled.

Ironically, it’s not as though GSK couldn’t have a powerful purpose of its own based on how it operates - or at least how it operated during Andrew Witty’s tenure. At that point the company was taking a number of measures in relation to making medicines available in less affluent countries. These were being scrutinised by investors because it wasn’t the standard pharma model. And Witty’s defence was that you could make a profit with lower margins but higher volumes and in so doing spread the benefits to a much larger percentage of the world population. Now that is the stuff of real purpose. But it was controversial, and so here we are with GSK left with a ‘we do good stuff’ sort of purpose that makes no decisions of substance at all.

I have been a huge fan of GSK in recent years, but I would not put them in a purpose top ten at the moment.

2. The purpose promises generally good stuff, sufficiently non-specific that it can be used to post-rationalise any choices so long as they are not specifically evil

Lloyds Banking Group makes number 2 on the list. So it’s one of the purpose leaders, according to this index. Its purpose is: “To help Britain prosper”. Any company that sells products that are basically ok could say something similar. It is, I suppose, one step ahead of the norm for the banking sector. Banks tend to default to some variation of ‘helping our clients prosper’. Arguably, it is a tricky sector to come up with something distinctive. In the mainstream, Barclays (near to the bottom of this top 100 list) arguably comes closest in its purpose to: “Help people achieve their ambitions - in the right way”. It is the only banking purpose that makes any kind of nod to the brush we’ve had with worldwide financial collapse based on unsustainable practices. The overwhelming bulk of banking purpose statements could easily be used to justify exactly the same behaviours that caused all the problems. Arguably, that’s simply not good enough.

If the mainstream is lacking in inspiration, how about the ethical outliers? Have they at least got something distinctive, even if it wouldn't suit the mainstream players? Not the Co-operative Bank, which blandly promises “We pioneer banking that makes a positive difference to the lives of our customers and communities.” Triodos does better, with its promise to: “make money work for positive social, environmental and cultural change”.

3. Purposes that are good, but don’t describe accurately what the company actually does.

Google has a great purpose. “Organise the world’s information and make it universally accessible and useful.” It used to describe exactly what it did back in the days when its creative energy went into becoming the primary catalogue of information on the internet. It would be hard to say that Google’s business model is based on that in the modern age, where it has become so many different things but where the primary engine of growth has been in advertising. Back in 2014, the CEO acknowledged it was time for a mission update, and that this was “being worked on”. Four years later, we’re still waiting. In the mean time, the company scores well for its purpose according to Radley Yeldar, which calls it “clear and easy for anyone to understand”. Well, yes. But it just no longer describes the company’s purpose. If it’s so clear, we should immediately spot that, shouldn’t we?

4. Purposes that are marketing slogans, not statements of purpose.

It’s tricky, don’t get me wrong. Powerful purposes are short and succinct, and getting short statements of purpose - it’s genuinely difficult. But all too often, the attempt ends up reducing something down to what becomes merely a slogan rather than a purpose. How can you tell the difference?

Purposes that fall into this trap include National Grid: “To bring energy to life”, Tesco “Serving Britain’s shoppers a little better every day”, and even social responsibility champion M&S: “Making every moment special”.

A genuinely purpose-led business will make day-to-day decisions differently as a result of its purpose. You would be scratching your head to see the obvious choices that arise from the above purposes, other than ‘do a good job and don’t suck’. Which is important, for sure, but hardly a defining purpose.

5. Purposes apparently designed by committee that feel the need to name-check causes or constituencies until they become long, rambling and feeble.

Not everybody even makes the attempt to get a short statement. It’s the most natural thing in the world. I’ve seen it in action more times than I can recount. Something starts of powerful and simple, but then someone has a particular bug-bear, so that has to be referenced. And if that’s referenced, then there’s this other constituency that will be outraged if it’s not also in there. Before you know it, you’ve got some bland rambling nonsense that serves its actual purpose - not offending anyone.

There aren’t many of these that make it onto Radley Yeldar’s list - but one of those, perhaps surprisingly, is McDonald’s: “Our purpose goes beyond what we sell. We’re using our reach to be a positive force. For our customers. Our people. Our communities. Our world.” Radly Yeldar calls this purpose “inspiring and exciting for all audiences”. Maybe, if we’re setting the bar exceptionally low. But what kind of a purpose simply dismisses the company’s commercial activity and talks about the incidental benefits that come from “its reach”? Doesn’t the company embody any part of its purpose in its products? Are we sure we’re talking about purpose here?

6. Purposes that are self-referential, in terms of the company’s position in the marketplace

Your purpose is about the difference you’re going to make to the world. I don’t care that you aspire to be number one in your marketplace. I suppose it’s not the end of the world if you feel the need to tag on the aspiration to being financially successful to something that does have meaning, but at best you’re making your statement less powerful and confused.

Examples of this include: PepsiCo: “To deliver top-tier financial performance over the long term by integrating sustainability into our business, leaving a positive imprint on society and the environment.” It sounds good with its name-checking of sustainability and society, but what business are they in? How would you know it from this statement? That’s because it’s self-referential - it’s about how they will conduct business, not what their business is going to achieve in the world. In short, it’s not a purpose statement.

Also Westpac: “To be one of the world’s great service companies, helping our customers, communities and people to prosper and grow”. Helping your customers do good non-specific things is a weak purpose, not made stronger by tacking on your ambition to be “ a great company”. You become great as a consequence of the difference you make. Let others worry about that, focus on the task at hand.

Having focused on problematic purpose statements, it is only fair to highlight some of the ones that I think are clear winners. Radley Yeldar’s top spot is handed to Unilever, and in this case I concur. Its purpose: “To make sustainable living commonplace” is simple but substantial, and you can see the focus on that purpose in many of the things the company does.

Other purposes that stand out as powerful:

  • Tesla (not on this list at all) “To bring forward the age of renewable energy”.
  • Novo Nordisk (as noted above): “To drive change to defeat diabetes and other serious chronic conditions”.
  • Philip Morris International (yes, really): “Designing a smoke-free future”.

What do you think? Are all purposes created equal, and it all comes down to execution? Or can purpose only really make a difference to how a business performs if it’s well-considered and will actually drive decisions, sometimes in the face of the status quo for the company’s industry?