News & Insights

Is there a problem with purpose?

An “authentic” corporate purpose, in the form of a clear declaration of the company’s values and the role it wants to play in society, is increasingly being promoted as answer to the challenge of reputation management.

As Magaret Hefferman suggests, in her excellent book Uncharted, the speed at which purpose has been adopted speaks volumes about just how purpose-less most work feels now.

I am a firm believer in the power of purpose. I believe that companies with a strong sense of purpose are intrinsically better companies – better to work for, better to work with, better for society and a better place to invest your money.

And, even if you don’t accept the moral or societal case – purpose provides a powerful and necessary framework for decision making in a fast-changing world where directive management by long-term plans is no longer as relevant. When investors like Larry Fink publicly call for companies to focus on their purpose and how they contribute to society, even reluctant CEOs will surely have to follow.

But is purpose really a panacea?

I have wrestled with these issues for many years and spent time trying to codify an approach, with some successes. I was part of a team working with Barclays, using opinion research (internal and external) to identify ‘reputation drivers’ that we could incorporate into a corporate affairs strategy and narrative. For Pepsico, I helped to create a global campaign from the meagre pickings of a CEO speech entitled ‘performance with purpose’. I remain proud of these projects, and much similar work, but in each case, there were many lessons to learn.

Ultimately, we fell short where we didn’t have sufficient C-suite buy-in. And even where we had a direct CEO mandate, executional effectiveness would always be limited if delivery was restricted to the corporate affairs function.

 

This is the difference between just leading with purpose and truly managing with purpose. Too often we were informing communications campaigns, not corporate strategy.

If we are to see purpose as the foundation for long term reputational strength, we also need a practicable approach for day-to-day management that sees purpose:

embedded in corporate and business level strategy
underpinning effective incentives and sustainable scorecards
providing consistent and understandable way to communicate with shareholders and stakeholders, inside and outside the business
providing a clear and compelling proposition to customers and employees
Here’s another way to think about it.

In the same week that Alex Gorsky, chairman and CEO of Johnson & Johnson signed the BRT’s statement saying the purpose of a corporation is to serve all stakeholders and not to simply create value for its shareholder, his own company was fined $572million for their role in increasing opiate addiction in Oklahoma.

Reputation is a function of Purpose, Promise and Delivery. The purpose implies a promise, and delivery fulfils it. So, if the corporate strategy does not or cannot deliver, then the promise is broken and the purpose counts for nothing.  In fact, worse, the promise is seen as false and the purpose becomes a reputational drag.

Interested in learning more?

Please reach out to Jon Rhodes to learn more about how BOLDT can help you.

More News