People buy from people. In this choice-filled, transparent world, consumers engage by recommendation and relevance. You can advertise until you’re blue in the face, but if you’re not part of your customers’ lifestyle and culture, why would they want to spend time with you?
In the past, society was more forgiving of transgressions. You might say we suffered from cultural amnesia. We could "forget" unsavory aspects of figures, personalities, leaders, and even companies whose work we respect and admire. People still overlook Winston Churchill’s racist remarks and Charles Dickens’s philandering. Our cultural landscape is littered with figures that would disappoint us if we scrutinized them too closely. Yet they have enriched our lives in so many ways that we have become adept at separating the content (the book, the painting, the policy) from the individual. We can approve of the former without liking the latter.
In the case of companies, we tended to do the same. We were on the same page after all: They maximized profits while we maxed out our credit cards. Amnesia was comfortable. The age of transparency changed this. The tensions became uncomfortable. We developed memories like elephants rather than goldfish. We remembered the sweatshops, the guzzling of coal, and the greediness of bonuses. We remembered the excess and the hypocrisy, especially when it came at a cost to the people. And today, when hitting Facebook’s "like" button adds a brand to our own timeline and our own sense of purpose, we think carefully about what we are aligning ourselves with and why.
Some companies have tried to solve this awkward mess with a superficial Corporate Social Responsibility (CSR) initiative, or rather strategic "offsetting"—a lukewarm bath of reactive, ad hoc corporate policies designed to neutralize or bury embarrassing aspects of a business. Banks stayed greedy but continued to pour money into the arts. Forests were planted and homeless shelters received handouts. Hence, the consciences of corporations—and let’s admit it, consumers, too—were eased.
But CSR is not a proven substitute for passion. The 2001 Harvard Study by Mohr, Webb, and Harris showed that although CSR activities inspire a much more positive image of a company, it is far from certain that customers will change their purchase behavior as a result. As modern discerning customers, we need more. What we want from companies, just as from our public heroes, is consistency and honesty driven by a clear and transparent sense of purpose. A purpose that we can align ourselves with. A purpose that moves us forward.
Wait a minute! Societal purpose? Bringing meaning to people’s lives? Isn’t that what NGOs, charities, and governments are for? Why does social purpose matter to business?
And there’s the rub. The belief that having a "purpose" means "being social" relegates it to supplementing welfare or offsetting bad deeds with good. This denies it the bigger—and far better—role of playing an active part in the lives and passions of customers.
Companies and organizations that put purpose at the heart of what they do unleash a renewed passion in their customers and employees. They’ve taken the power of their brand and fine-tuned it as a force for good. And in doing so, they have made themselves incredibly and indelibly relevant to their customers.
And that’s good for business. Social impact is fast becoming a widespread, rigorous business metric. More and more businesses are choosing to explicitly link their economic decisions to the value created through environmental, social, labor, and governance efforts. The UN Global Compact already has 8,700 corporate members across 140 countries.
The most effective are those whose openly stated purpose links clearly to progress in the communities in which they operate:
— Unilever, for example, delivers to the bottom of the "economic pyramid" with affordable, micro versions of essential products in developing countries.
— IBM reinvented itself around a renewed purpose of creating a "Smarter Planet," an impressive example of a company finding a renewed purpose for its organization and reconfiguring its business to fit.
— GSK is building a health care infrastructure for its products in areas where the health distribution system is lacking. It gets its own medicines to people in need, and in the process builds systems that local governments are unable to provide.
— Nike Foundation seeks to expand the opportunities available to girls and young women around the world, with a passion for fairness that is shared by its current and future customers.
— Google’s mission to "Organize the world’s information and make it accessible and useful" is a defining principle for everything it does, informing users where to look for new value from its core advertising revenue streams.
These companies are experimenting with new business models built around a strategic purpose and in a way that is inextricably linked with their corporate strategy.
High-growth companies see ways they can create win-win economic value for the company and the society they have elected to participate in. They’ve learned the lesson that business can create value that is directly connected to the interests of society and shareholders. It is no longer passive and reactive "accountability" but an active, gritty, genuinely held passion for change that is ripe for creativity and collaboration.
Grameen Bank built its purpose around finding ways to get business funding to individuals in poor communities. it makes small loans to Bangladeshi women and has become a pioneer in the world of microfinance. Its beneficiaries are rural and from low-income groups who are unable to provide collateral.
The bank reduces non-repayment risks by loaning to the whole village, where peer pressure ensures that the village works as a community to pay the loan back, and therefore improves its credit rating for better terms in the future.
BE MORE LIKE GRAMEEN
Reverse engineer frugal solutions from areas of unfulfilled need.
Responding to intense and growing pressure in the 1990s, Nike recast its purpose towards using the power of its brand as a tool for social and environmental innovation. It now has a range of initiatives, including greenxchange, a marketplace where patents and intellectual property are shared in the pursuit of social innovation.
Nike’s other initiatives include: opening company data; making products available via the n7 fund at reduced prices to native and aboriginal sports programs; encouraging adolescent girls to become agents for change in their own communities, with the Nike Foundation providing micro loans to start their own businesses.
BE MORE LIKE NIKE
Build a purpose around the current social needs of your future.
Zipcar’s purpose is all about sharing underused utility (in this case, the car) to address the mobility needs of the modern urban resident in an environmentally accountable way. It took on the challenges of overpopulated roads and the high cost of car ownership by creating a car-sharing scheme that shifts customers away from ownership.
The service allows urbanites with occasional or irregular transport needs to access a car for a specific period of time. On average, Zipcar members drive 71% less after joining, cutting Co2 emissions by 24,000 tonnes every year.
BE MORE LIKE ZIPCAR
Look for positive purpose in areas where people are pulling away from existing traditions.
This story is part of Wolff Olins’s Game Changers report. Read the rest here.