WHY PURPOSE IS THE KEY TO GROWTH
This article first appeared in Director on 19 July 2015.
Michael Hayman and Nick Giles explain how companies must adopt a campaigning sense of purpose and forge a bond of trust with customers, or risk falling behind in an era of scrutiny and rapid change.
Cast your mind back 10 years and the business landscape was a dramatically different place, one where AOL, Oracle and Nokia were king. And it’s been a decade of change.
Where Blockbuster once controlled approximately a quarter of the $16bn (£10bn) home video rental market, now it’s upstart online competitor Netflix that viewers turn to, having effectively put out of business a brand that once looked too big to fail.
Today’s business market has the capacity to chew up and spit out even those companies whose market position seems unassailable. Indeed, half of the Fortune 500 companies on the list in 2000 have since fallen off due to bankruptcies, acquisitions and mergers.
The lesson? Incumbents are always vulnerable; we live in a world where change is the only constant; and damage is the punishment for standing still.
Moreover, in a world where scrutiny on business is fiercer than ever before, and where public trust has yet to recover from the hangover of the 2008 economic crash, it is no longer good enough to fall back on being seen to do well.
The 2015 Havas Meaningful Brands survey found consumers are overwhelmingly ambivalent towards the vast majority of today’s businesses; they wouldn’t care if 74 per cent of the world’s brands disappeared tomorrow.
So no wonder that one study estimated that 80 per cent of the value of S&P 500 companies in 2010 was made up of intangible assets: intellectual property, identity, reputation and brand. This is an era where the ability to explain your proposition is paramount, your narrative matters and the best story wins.
If the environment for business has changed, the traits of successful companies have had to evolve in turn. The world is moving at a faster pace than ever before, where consumers are information-rich but time-poor, and where today’s success story can be trashed in seconds by the rapid rise of social media.
Today’s businesses must show a willingness to do good in order to win support. A recent study by Deloitte found that 92 per cent of the millennial generation believes pursuing profit alone is no longer enough – and this same group will represent some 75 per cent of the global workforce by 2025.
We’ve spent the last year speaking to some of the world’s most exciting business leaders, from Ella’s Kitchen CEO Paul Lindley to Whole Foods Market co-founder John Mackey and Airbnb’s Joe Gebbia. Our aim was to distil how these businesses harnessed purpose to become world-beaters.
Through these conversations, we discovered that articulating a sense of purpose inspires belief – with customers, employees and shareholders alike.
By forging a bond of trust with the consumer and marketplace, companies transcend the cynicism so many have towards brand messages and advertising.
Of course, purpose in business is no novelty. Longstanding companies from ethical grocer Whole Foods Market to clothing brand Patagonia demonstrate the same keen awareness about the need to make the world around them a better place.
Take Airbnb, which believes it inspires a sense of belonging as it changes the way people travel and experience the world, or Twitter, transforming how people share and access information.
What’s clear is that the products of the world’s most successful young brands aren’t only commercially smart; they’re born from founders with a deep and driving sense of purpose to change and improve people’s lives. Today’s best businesses are run by campaigners.
There’s no doubt that those who fail to follow the new rules of business will fall, while those who respond with what Dr Martin Luther King described as the “fierce urgency of now” will steal a march on competitors. The purpose-driven culture is about fierce activity, urgently undertaken with the keenest sense of its impact on the present.
At the heart of this activity is communication, of being able to articulate and convince customers, stakeholders and employees alike that yours is a company worth investing in.
Business can learn a great deal from politics in this regard. In today’s ultra-competitive marketplace, where companies must battle for attention before they can start to contest sales, it is a powerful option to approach your business like an election candidate.
Just as politicians have historically been society’s campaigners, now entrepreneurs and business leaders have learnt to shape a message that connects and persuades, an affirmative narrative that outlines the possibility of a better world.
The challenge to business today is not so different to that faced by faith systems down the centuries – principally in how to enlist and maintain followers; securing more converts than you lose.
That creates a powerful context for campaigners, who put the needs, desires and aspirations of their customers at the heart of their business philosophy, to prosper. They set out to build companies that are, at least in part, designed to support embattled or ignored consumers. To create a new arena of trust for people who have stopped believing.
Michael Hayman and Nick Giles will be sharing their thoughts on business growth at the Institute of Directors, 116 Pall Mall on 21 July. To book tickets, visit iod.com/dgevents. Their new book, MISSION: How the Best in Business Break Through is also out now. For more information, please visit mission.business.