According to Entrepreneur.com “80% of Purpose-led brands outperform the market”
According to Deloitte Insights “Purpose-driven companies… grow three times faster on average than their competitors”
According to Forbes “Consumers are 4-6x more likely to purchase, protect and champion purpose-driven companies”
And therein may lie the problem… the cat is out of the bag. If everyone knows something that gives them an advantage, then everyone will do it (or try to) and if everyone does something, there is no longer any advantage… in a competitive, business sense. There could be a social and environmental advantage, but that’s a big ‘could’ if businesses are primarily ‘Purpose-washing’ for competitive advantage.
Some of the original purpose brands that undoubtedly inspired these figures have been snapped up by multinationals… The Body Shop by L’Oreal (now Natura), Ben & Jerry’s by Unilever, Innocent by Coca-Cola. These big guys know an opportunity when they see it.
The multinationals themselves are now ‘Purpose brands’. Unilever states “we are driven by our purpose: to make sustainable living commonplace”. Coca-Cola is “Refreshing the World and making a difference. Working together to create a shared future for our people, our communities and our planet” (despite being the world’s number 1 plastic polluter). Even L’Oreal has a stated purpose to “Create the beauty that moves the world”, pitching beauty as a force that ‘brings down barriers and communities together’ and can ‘move and shape the world, positively impacting our planet and all of its inhabitants’.
It’s easy to be cynical about multinationals pitching themselves as Pupose brands. L’Oreal’s so-called purpose is cringy enough and clearly an afterthought put on an existing business (I expect by an extremely expensive ‘Purpose agency’). However, Philip Morris has to win the cynicism prize for the purpose of “Delivering a Smoke-free future”, while most of its $28bn revenue comes from selling cigarettes like Marlboro. On one hand, it’s good they understand the problem, on the other, if they truly believed in their purpose they would stop selling cigarettes today. Yes, they would probably go bankrupt… but if the goal is a ‘smoke-free future’ then that should be a success. Shouldn’t Philip Morris’s investors be happy to lose their money, in order to kill fewer people? In a genuine purpose-led world, yes. In reality, it seems not.
My point here is not to be cynical about these brands’ purposes (although that’s a little difficult sometimes). I am more trying to point out that you can no longer claim that ‘Purpose brands outperform the market’ when all brands are purpose brands.
So what is the future of the Purpose brand?
I think that consumers will start seeing through “Purpose-washing” and look at deeds, not words. I think that people will start to gravitate to brands that have a clear purpose, that they can genuinely be held accountable towards. Take Coca-cola as an example. Imagine if instead of stating their purpose as “Refreshing the World and making a difference… blah blah blah” they said “Clean up the world’s seas and beaches, and ensure that by 20XX you will never find a Coke bottle washed up on a beach”. This is something that could make a tangible difference to people all around the world, it is something that they could be held accountable for and importantly something that they could measure – in the famous words of business guru Peter Drucker “you can’t manage what you don’t measure”. This would do far more to boost Coca-cola’s brand image than their current meaningless Purpose, but I very much doubt that they would do this because they are too scared of the risk of failing and they would rather be called out as the world’s number 1 plastic polluter than be seen to fail publicly in actually doing something about it.
That is not to say that there are not some big companies doing good things. A great example is Tesco. Instead of retrofitting some Purpose statement onto their existing way of working, they used their stated Purpose and broadened it. “Every Litte Helps” wasn’t designed to be about grander social purpose, but as you can see here they are using it as a platform for multiple initiatives from pushing plant-based eating, to helping people with disabilities, to installing soft plastic recycling points. They are doing a great job, by doing a lot of smaller things and being open about them, and there are some problems like plastic recycling that only a business the size of Tesco can have a real impact on.
Despite Tesco’s great example, most big multinationals still leave us in a Purpose-washed world, where it’s hard for small companies to compete and the big companies are the ones who really have the power to make a difference… if only they really wanted to.
So where is the opportunity for the new, smaller companies and entrepreneurs who really want to make a difference?
I believe that all companies are going to start acting better to a degree, which is a good thing. What this means is that generally being good for the environment, or a good global citizen is not enough to set smaller companies apart. That should be a given for any small company starting up, not only is it the right thing to do, it’s also increasingly important for recruitment (as people want to work for companies doing the right thing) and investment (with the rise of funds mandated to invest in companies with green credentials). However, new companies do need to stand out, to get the growth rates that Forbes and Deloitte promised and purpose is a way to do it. As I see it there are 3 routes that smaller companies should be looking at:
1) Find a very specific cause that few people know about and highlight it
This is the Tony’s Chocolonely approach. Very few people knew about slavery in the chocolate industry, and even the companies who were shouting about their ethical sourcing were not focusing on the slavery aspect. Tony’s whole Pupose is around slavery. It comes through in all their communication, their packagingand even the shape of the blocks on the product itself tell the story. There is no doubt in a customer’s mind about this and if you you want to make the ethical choice in chocolate you know to buy Tony’s. Other chocolate brands, like Divine are saying similar things, but they are not living it in the same way as Tony’s. Brands like Tribe, have done amazing work against modern slavery and raised over £1m, but they aren’t as focussed as Tony’s… they also have a ‘join the plant revolution’, which although a good thing is confusing as a brand, and their vision of “a world free from slavery”, although obviously extremely admirable, does not feel like something that a start-up food company can actually achieve. Compared to Tony’s whose success and clear message put so much pressure on the rest of the industry it feels like they can make a real difference. Tony’s messaging has real ‘cut through’ and is a story so simple that customers can easily share it with their friends, which fuels their growth.
2) Build the whole product as an example of a solution to a problem
My absolute favorite example of this is Waterhaul, who make glasses and other products from discarded fishing nets that they actually go to the beach and collect themselves. What differentiates this from a brand like Tony’s is that they are not trying solve all of the problem of polluted oceans, or even discarded fishing nets. They are showing an example of what can be done if people want to do it and they are getting on and doing it. Whilst there are other brands making glasses from recycled plastic or even ocean plastic, I don’t think any are doing it as authentically as Waterhaul. Their instagram feed is filled with them going to the beach, diving in caves and pulling out the nets. They aren’t a well-known brand yet, but I think that they are a great model for the future. Some other examples of this in the FMCG sector are brands like Rubies in the Rubble (condiments made from food waste) and Toast Ale (brewing beer from surplus bread)… but I think everyone has a lot to learn from Waterhaul.
3) Do one thing really, really, really well
It might be a surprise to a lot of people in the start-up community, and even to people who have managed to get this far in this article, but not all Purposes have to be about saving the world. Some Purpose brands might not even realise that they are Purpose brands. Take Babyzen, who makes the Yoyo stroller as an example. They have a very clear purpose, in my opinion, to make it easier for parents to travel with their children. They don’t say this anywhere on their site and I don’t know if they have ever formalised it in this way (no expensive ‘pupose agency’!). It’s clear from the product that they make; a stroller that can go in the overhead locker of a plane, that can easily go in any car (no matter how much other stuff you have) and that you can carry on your shoulder…. Even with a baby in the other arm. Doing one thing really well makes you famous for that thing, and if there is a big enough market for that thing, you can’t help but have a great business.
Similarly, Micro Scooters make really really good scooters. That is the core of what they do. They do say that scooters are an environmentally friendly and healthy way to travel, which they are. They also make a scooter from ocean plastic (which I bought for my daughter), they give money to 1% for the planet and are carbon neutral. They are undoubtedly ‘doing the right thing’ for the planet and doing tangible things that make a real difference, but they’re not shouting at everyone that they are great because of this, it comes across more that they are doing it because they think that’s how businesses should operate. The striking thing here is that Micro Scooters is a small business, not really shouting about doing their bit for the planet, but actually doing something. Whereas Coca-cola seems to be shouting about doing their bit for the planet, but actually being the world’s number 1 plastic polluter. Micro Scooters is great model for other businesses; doing one thing really well, so that they are the go-to brand, and relatively quietly doing the right thing for the planet at the same time.
To finish this article I want to repeat a debate that I had with Nelson Phillips, Professor of Innovation & Strategy at Imperial College Business School. The debate was about Kodak. Innovation professors love talking about Kodak because Kodak invented the digital camera, the technology that eventually destroyed its business. Kodak didn’t embrace the technology that it invented because it made all of its money from camera film and processing. Nelson’s argument is that companies have a finite lifespan, that Kodak was a film and processing company and when that technology became outdated there was no further need for the company. That may or may not be correct. My argument is that Kodak did have a Purpose statement (even if they didn’t call it that), they were all about “The Kodak Moment”. The problem was that they didn’t believe strongly enough in their purpose of helping people capture Kodak Moments… if they did, not only would they have embraced digital photography, despite the risk to their film business, they should also have invented Instagram. Instagram is the perfect modern-day incarnation of what “The Kodak Moment” should mean.
I have put this story in to finish the article as a cautionary tale, to show that the purpose of Purpose is not to have a statement that purpose-washes your business, as a marketing tool to help you grow because you have read that ‘purpose brands outperform‘. The purpose of Purpose is to have something that you genuinely believe in, something that drives the core of your business, something that your employees believe in, something that your customers believe in, and something that you can actually deliver. If you can make that into a nice alliterative line, good for you, but it’s the Purpose, not the Purpose statement that is important.