A few weeks ago I was invited to Koblenz, Germany to present the Barcelona City Branding Project.
Oriol Iglesias, from Esade Business School summoned me to the annual meeting of Medinge Group, a European think tank that promotes ‘branding with conscience’. From this association, professionals from all over the world think about how companies can work for their benefit and, with a purpose, work for a better world in equal parts.
The formula could not seem more attractive to me. Branding = profit + purpose.
The change in the change of change
In this 21st century of accelerated changes, there are different circumstances that also push the change towards a more sustainable economic model:
The financial crisis started in the US in 2007 with subprime mortgages, triggered reactions and changes in society over time in different areas. Consumers lost trust in their governments and turned it to companies and brands as an agent for change.
According to the Edelman Trust Barometer 2019, 73% of respondents around the world believe that a company can take measures to increase profits and improve the economic and social conditions of the community in which it operates. And 76% say that CEOs should take the initiative in the change and not expect governments to do so.
The 4th industrial revolution, or the technological tsunami is changing the way we live, work, and relate. And also consumer behavior is changing to new criteria beyond price. For instance, trust in the brand.
The climatic crisis. As a consequence of the massive insatiable impact of the human being on the planet’s resources, Earth Overshoot Date reported that in August 2018 we had already consumed all the natural resources that the planet could generate in a year. When they started calculating it, in 1970, the resources of a year were exhausted on December 29.
Among the technological tsunami and the climate crisis, “technology can help us save the planet; but, more than anything, we must learn to value nature “in the words of Marco Lambertini, General Director of WWF International”
But what about people? With over 800 million hungry people today, hunger continues to grow as a result of climate change, war conflicts and economic slowdown, according to WHO 2018.
Therefore, urgent changes in economic and consumer models are needed towards a more sustainable economic development that benefits the planet, people … and the company of the future.
Purpose and benefit to change the world
I immersed myself in the subject and I found several studies showing how companies focused on environmental, social and governance improvements (ESG) tend to record a better financial performance, generating a positive impact for the company, investors and society in general.
Aaron Hurts, CEO and Founder of IMPERATIVE, is the creator of the concept ‘Purpose Economy’. In a study carried out in 2016, he shows that the involvement of employees with the purpose provides a measurable impact on business. Specifically, 42% of companies that were not considered “purpose-oriented” experienced a decrease in year-on-year earnings. In contrast, 85% of targeted companies had positive growth.
Mr. Larry Fink, CEO of Black Rock, who according to Wikipedia is at the forefront of “the most powerful investment corporation in the world,” writes a letter every year to the executives of hundreds of companies worldwide where their company participates, sharing his vision of the market.
The letter sent last January 2019 is called “Purpose and Profit: An Inextricable Link”. In this letter, Mr. Fink talks about how society, distressed by global changes and the inefficiency of governments to face them, seeks in the business environment the response to the great problems of the 21st century.
Mr. Fink leads a new trend that has come to stay, which demands big corporations sustainability and awareness of the environment, for social issues and corporate governance as sine qua non conditions to invest and prosper in a sustainable way.
His shows an accredited defense of the purposes of the company as a driver of business benefit, but also as a driver of change for a better world.
Purpose: “why” we do what we do
The purpose is the reason for being a brand, what it hopes to achieve. It transmits what the organization represents in its founding terms and must be the engine that allows it to develop its business model, in an authentic and coherent way.
The purpose of a brand gives meaning to its activity and affects the entire value chain. With a clear intention, the company, more than selling products and services that are suitable for customers, adds value to the community in which it carries out its activity. In the words of Bill Damon, author of Path to Purpose, “it is a long-term intention to achieve goals that make sense for oneself and consequences for the world beyond oneself.”
With the purpose, we work with suppliers, investors, workers and clients for a high purpose that will give coherence and sense to the work of all the agents involved, shareholders included. And selling will not be the goal, but it will be the consequence.
Ha Nguyen, Omidyar Network’s Product Partner defined it at the Leader Product Summit last 2018 in New York: “The purpose unites us as employees to something bigger than ourselves. It’s something bigger than you.
It’s wanting to make a difference.
It’s what you do for others.
It’s the legacy you’re going to leave behind.”
The purpose feeds the benefits of the company, which will be achieved with this formula:
– Most motivated employees
– More happy, faithful and satisfied customers
– Better business results
A brand purpose: some examples
• Unilever: Our Corporate Purpose states that to succeed requires “the highest standards of corporate behavior towards each one we work with, the communities we touch, and the environment in which we have an impact.”
• Danone: Bringing health through food to as many people as possible.
• Basf: Through research and innovation, we support our customers in almost every industry in meeting the current and future needs of society. Our products and solutions contribute to conserving resources, ensuring good nutrition and improving quality of life.
• Patagonia: We’re in business to save our home planet. Our Reason for Being. At Patagonia, we appreciate that all life on earth is under threat of extinction. We aim to use the resources we have-our business, our investments, our voice and our imaginations-to do something about it. (…)
• Ebay: Empowering people by connecting millions of buyers and sellers around the world, and creating economic opportunity.
Purpose: “how” we do it
Let’s see. The most important one would be the participatory process to define the purpose of the brand. It is necessary to redefine its founding purpose, where representatives of the entire value chain are involved. In the end, all the agents must identify themselves with an authentic message which they will defend in a consistent way in their daily activity.
An authentic purpose will enhance the involvement and constant learning of everyone in the company. It will be necessary, however, to accompany or give tools to the intermediate commands to land the purpose in actions and calendars. There will probably be some professionals with more energy that, with the purpose ‘top of mind’, can be a light for their colleagues during this process.
The company of the future will be sustainable or will not be: the purpose will be the engine for a sustainable economy and the benefit, not only economic, will be the consequence. A benefit for shareholders, workers, clients and more widely for society and the environment where the company performs its activity.
Sustainability, purpose and local benefits that will become global.
When will we design a protocol to help companies and professionals incorporate it into their future strategies, with the SDG?
Brands with a Conscience: How to Build a Successful and Responsible Brand, Nicholas Ind, Sandra Horlings
2019 Edelman Trust Barometer https://www.edelman.com/news-awards/2019-edelman-trust-barometer-reveals-my-employer-most-trusted-institution
Global Consumer Insights Survey 2018 Whom do consumers really trust? https://www.pwc.com/gx/en/retail-consumer/assets/consumer-trust-global-consumer-insights-survey.pdf
Past Earth Overshoot Days https://www.overshootday.org/newsroom/past-earth-overshoot-days/
World Economic Forum hunhttps://www.weforum.org/agenda/2018/08/here-s-how-technology-can-help-us-save-the-planet/
Seeking Return on ESG Advancing the Reporting Ecosystem to Unlock Impact for Business and Society del World Economic Forum (January 2019) http://www3.weforum.org/docs/WEF_ESG_Report_digital_pages.pdf
Companies with strong ESG scores outperform, study finds https://www.ft.com/content/f99b0399-ee67-3497-98ff-eed4b04cfde5 I AXIOMA
The Power Of Purpose-Driven https://ladyin.tech/the-power-of-purpose-driven-8580488950b0
Carta Anual Larry Fink 2019 para Consejeros Delegados https://www.blackrock.com/americas-offshore/2019-larry-fink-ceo-letter
Imperative – 2016 Workforce Purpose Index https://cdn.imperative.com/media/public/Global_Purpose_Index_2016.pdf
The power of purpose https://www.productleadersummit.com/2018-nyc#slides-nyc
From me to we, the rise of the purpose-led brand
The Importance Of Building Brands With Purpose https://www.forbes.com/sites/forbesagencycouncil/2018/10/23/the-importance-of-building-brands-with-purpose/#113ec16c4b09
Deloitte – impact that matters
“Profit for a Purpose”: A Business Model Whose Time Has Come
A Harvard Business Review Analytics Service – The Business Case For Purpose
Profits with purpose: How organizing for sustainability can benefit the bottom line