Companies need to understand the growing importance of social responsibility to their customers.
6 min read
Opinions expressed by Entrepreneur contributors are their own.
Any company, from a startup to a conglomerate, that wants to connect with its customer base may want to rethink its reason for being. Truth is, we’re watching companies like never before. While American politics and talk shows split everything into left and right extremes, the majority of us live in the middle. That has left a plethora of interests to serve. Less plastic in the oceans, reasonable gun control, inclusion and acceptance, free speech — who doesn’t want some of that? Not surprisingly, seven in 10 consumers today believe a CEO or company’s actions can make a significant difference in social or political issues, according to a 2019 Gartner study.
But here’s the twist: Purpose is no longer just about a better world. It’s become good data and dollars, too. At the recent Sustainable Brands conference in Detroit, ImpactROI, a consultancy tracking purpose brands’ business impacts, reported findings that anyone with a P&L responsibility should be clamoring to learn more about.
Through analysis and in interviews with CEOs, ImpactROI discovered that when done well, purpose-centric companies see a 6 percent increase in share price; 20 percent increase in sales; 13 percent increase in productivity; 50 percent decrease in employee turnover; and a sweet pop in “market reputation.” Projecting a company’s passion and point of view beyond a socially-responsible supply chain, and making it profitable, is arguably capitalism at its best.
Still, little has been said about the internal company landscape around purpose. Being a true activist company requires a lot more than barbed copywriting and a famous face. The corporate profiles emerging today of brands slinging purpose are starting to take shape. Some of it’s downright inspiring. Some of it no so much.
Related: 5 Ways Entrepreneurs Can Combine Profit and Purpose
The OGs
Walk into any pitch or marketing meeting about purpose, and these are the gold standard logos: Patagonia, Toms, Whole Foods Markets, Kenneth Cole, etc. Down to their DNA (often the DNA of their founders), these are brands born and operated on some kind of authentic calling. The $200 billion natural food and products industry is actually built on this very idea. Even tech startups like Lyft quietly do awesome things (food deserts and voting), and companies like Nike have smartly nudged powerfully deft positionings to something well beyond product benefits (free speech). What buckets these companies as OGs of purpose is a deep commitment to recognizing that what they say and do matters. The other critical ingredient: The company leadership doesn’t care if you don’t agree. They know their tribe, often lead it, speak to their cultural concerns and get rewarded for it. So tip of the hat, OGs. We’re watching and learning.
The “Social-Purpose Immigrant”
There has been no more important article written about the eco-system of purpose companies than “Competing on Social Purpose” by Omar Rodríguez Vilá and Sundar Bharadwaj in the Harvard Business Review. They coined the term “social purpose immigrant.” These are mostly big companies whose leaders made the call, mashed up marketing and responsibility and are steering monster legacy brands and budgets into purpose. Levi’s (gun control), Unilever’s Dove (real beauty), Beam Suntory’s Cruzan Rum (rebuilding hurricane-ravaged St. Croix); the c-suite knows purpose done well is not only right but poised for profitability. They know their work will nudge culture, even be studied (success and failures). They know courage will inspire employees, suppliers and colleagues alike. They are in the midst of tearing down powerful, old-school corporate walls and fears, and let’s all hope they win.
The Adolescent
Teenage years can be tough. Mood swings. Insecurities. Mixed messages. And all of it wrapped around a world with seemingly too many rules. Yet there’s that insatiable thirst for inspiration. In the world of purpose brands, there are the Adolescents. Big or small, the company culture remains enthusiastic for a purpose, but something (often someone) gets in the way. The result: watered-down platforms; triggered cultural landmines (e.g. Kendall Jenner and Pepsi); or regressing to a “purpose” that aims to fix the very social problem the company is causing (after all, a beer company championing “Don’t Drink and Drive” is not exactly reaching for a higher calling). These Adolescent brands might admirable and even responsible, but are ultimately destined to become white noise.
The Divided House
These are the saddest of companies dabbling in purpose. As a family in conflict, the tensions within these halls (often big, legacy brands) are as physical as much as emotional. Corporate social responsibly and marketing are located on opposite ends of the building, led by leaders with different agendas, directives, lexicon and LinkedIn trajectories. Employees are often split along older versus younger generational lines. No one — be it the c-suite, marketing or CSR leadership — is truly convinced purpose can be a real business KPI. If any of this sounds familiar, and your company is not actively tearing down internal divisions, a purpose agenda will fail, and may even become dangerous.
Related: When Should Entrepreneurs Pursue a Social Good?
The Green Washer
These missions remain real, gross and not hard to spot. Here’s how they work: A so-called “purpose project” is handed to a mid-level director, stuck with a shallow brief and a pimple of a budget. The product chain may be celebrated, but on a closer look, it’s really not pretty (as one CSR exec from a big brand once told me, “Some things don’t get talked about.”) The culture is often toxic. The leadership is focused on quarterlies, and at best, doing good means wrapping around a big-name charity and hoping it bought a halo effect. For me, the clarity and confidence of turning away this business always feels pretty damn good.
So there you go. A snapshot of companies that get purpose culture and strategy right. Or not. Either way, 10 years from now, purpose will likely be a discipline, embedded in a company’s master brand, maybe led by the Chief Purpose Officer, just like digital, experiential and design before it. After all, when I sat at a J. Walter Thompson media desk for my first job in 1991, “social” was simply inconceivable. Now, with purpose brands making real money and growing fast, and employees feeling pretty good about their jobs, someone will write about these early days and pioneers. So pick a side. History’s being made.
