Moving day for corporate purpose

Purpose may be this year’s buzzword, but is it superseding the importance of brand? David Benady examines the rise of purpose and its impact on corporate and product brand management

Tesco has quietly deflated expectations about its purpose in life. Over the summer, the supermarket chain dropped a grandiose claim about why it exists. For some time, it had boasted that its corporate purpose was, “To make what matters better, together.” Incoming boss Dave Lewis, European and British supermarket chain Tesco’s chief executive since September 2014, decided to replace this ambitious statement with a much more humble promise. He has redefined Tesco’s purpose as, “To serve our customers a little better every day.”

Purpose is a trendy buzzword which is bandied around a lot in corporate boardrooms these days. Since the 2008 financial crash and the recent explosion of social media, companies have had to face growing questions about their impacts on the economy, society and the planet.

CEOs are scrambling to explain why their organisations exist beyond simply making money for investors. Barclays defines its purpose as, “To help people achieve their ambitions – in the right way.” Southwest Airlines in the U.S., says its purpose is, “To connect people to what is important in their lives through friendly, reliable, low-cost air travel.” It has created a 15 minute video featuring customers giving examples of this. It calls its purpose, “The simplest and purest expression of why we exist.” UK telecoms giant EE says, “Our vision is to provide the best service so our customers trust us with their digital lives.”

Purpose statements range from the high-flown to the downright mundane. The Royal Bank of Scotland promises simply, “To serve our customers well.”

But what do these promises really mean? And do they provide an adequate framework to guide the conduct of employees? They often seem general and lacking in vision, easy to ignore and hard to measure.

However, some argue that corporate purpose is rapidly becoming the most important compass by which organisations orient themselves, eclipsing even brand as the central tenet of corporate philosophy.

Robert Jones, a strategist at Wolff Olins, argues that there has been a ‘Copernican Revolution’ inside companies as the centre of the corporate universe has shifted from brand to purpose. “Brands used to sit at centre of any diagram, now I think purpose should sit at the centre,” he says. “The word brand has lost a bit of its glamour inside organisations as a management tool and other concepts like purpose or customer experience or company culture are currently slightly sexier concepts.”

He adds, “I’m sure brands still have that powerful hold over us.” But he argues that brands should be the end result of corporate activity, rather than the starting point. The brand is created in the minds of consumers after they have experienced the quality of the product and customer service. Brands and marketing are important, he insists, but they are not CEOs’ central concerns anymore.

There does seem to be mounting evidence that companies are focusing less on marketing and brands. The titles of marketing director and chief marketing officer are being replaced in many companies by roles such as ‘chief customer officer’ and ‘customer director.’ UK-based retailer John Lewis has recently promoted marketing director Craig Inglis to customer director while British Airways has hired veteran marketer Troy Warfield as director of customer experience. Meanwhile, marketing is becoming more automated through ‘cloud’ solutions, while social media is challenging advertising as a means of engaging customers.

Are brands a leftover from the 20th century, harking back to a time when media was one-way, when all companies had to do was slap a nice logo on a product and do some sexy TV ads then they could define how people should think of them? Interactive media has given users greater power to shape conceptions of brands. The new breed of digital services, from Uber to Airbnb, are built on participation through reviews. Brands are increasingly created by consumers and are beyond companies’ control.

“You have to embed your purpose in the brand to make sure it is clear and shows up in what you do. Purpose is a form of words, you need to make things evident and tangible.”

Are brands a leftover from the 20th century, harking back to a time when media was one-way, when all companies had to do was slap a nice logo on a product and do some sexy TV ads then they could define how people should think of them? Interactive media has given users greater power to shape conceptions of brands. The new breed of digital services, from Uber to Airbnb, are built on participation through reviews. Brands are increasingly created by consumers and are beyond companies’ control.

Many of those working in branding agencies take exception to this view. “The death of brands has been rather exaggerated,” says Rita Clifton, chair of agency BrandCap. “Every time there is a consumer downturn or new technology, an article appears in the media saying ‘Does this mean that brands are dead?’ The truth is, human beings aren’t going to be able to stay awake long enough to read all the rubbish on social media. People need navigational tools to stay sane, and that means finding a brand or organisation that they like spending time with and trust.” She says brands make a company’s purpose evident to the outside world. “You have to embed your purpose in the brand to make sure it is clear and shows up in what you do,” she says. “Purpose is a form of words, you need to make things evident and tangible.” Brands are the concepts that allow companies to live on when the people who have worked in them are long gone.

How does a company get its employees to believe in the values of the company? Having a strong brand is a definite draw – people want to work at Nike, Apple and Virgin. But the glamour of brands is no longer a strong enough attraction. New recruits are demanding to know what the company stands for beyond the paycheck. A sense of purpose can give the company a sustainable advantage in hiring, in relations with suppliers, in discussions with regulators and politicians.

Many see the concepts of corporate purpose and brand as interwoven. The idea of a siloed brand managed by the marketing department and ad agency is old school. “Brand is the story of the company, what it stands for and against, why you do what you do, why it matters, why anyone cares. I think finally we are seeing recognition that it is more than just one department in any business,” says Liana Dinghile, strategy director at Siegel & Gale. She points to some strong brands that are driven by purpose – IBM’s ‘Smarter Planet’ initiative, Coca-Cola’s drive for happiness and Ikea’s ‘The wonderful everyday.’

Branding consultancies often work with companies to uncover their corporate purpose by asking them what the problem was that they were created to solve. Laura Haynes, chairman of Appetite Consultancy, a UK-based brand and design company focused on purpose, said at an event, “It’s not enough now to just manufacture a product or deliver a service that people want, or even just to have the best customer service. Businesses, like people, are part of a larger community and they’re being recognised by their part in that community, their impact on the community, what they’re delivering and how they’re delivering it. I’ve seen companies come to realise, to be better, they no longer could opearte in a vaccum.”

Dinghile adds that companies have been figuring out why they exist for some time, but a lot are waking up to the importance of this as they consider their relationships with customers and non-customers and how their purpose extends into the wider community. She says Wolff Olins’ Jones is, “Recognising the degree to which purpose is embraced and important across company culture.”

But Andy Hayes, managing director for northern Europe at Lambie-Nairn, says, “I don’t agree that purpose has somehow superseded brand. We often use ‘purpose’ to help define our clients’ brands – why they exist and where they are heading, as well as what they promise to deliver, and how they behave – their personality and attitude. Expressed in a simple, clear and engaging story, this is
a powerful tool that CEOs can use to create the right environment internally for employees to deliver what their consumers want.”

That Wolff Olins, which has been so closely associated with corporate identity and rebranding over the past three decades, should argue that brand is being eclipsed by purpose is significant in itself. This is more than just a semantic argument, it goes to the heart of how chief executives set the tone and strategy.

If Jones is right and CEOs are thinking less about brands and more about purpose, this will be a revolution for branding and design agencies. They have forced their way into corporate boardrooms by offering company bosses a broad strategic vision based on building up the brand. In a world where brands are no longer central, they will have to think again.

How one software company created a business-built purpose

Purpose is one of the many elements that underpins a brand, though the most important thing is to build a great product which people love using.

This is the view of Andy Lark, the marketing director at accounting software company Xero.
Founded in New Zealand a decade ago, Xero is a fast growing global brand with $200m NZ annual turnover. It offers to make accounting software for small businesses beautiful, a notion that seems oxymoronic.

As Lark says, “No one starts out their day looking to using accounting software and no one starts a small business saying I really want to use accounting software, that will be fun. They pursue a passion, they pursue a way of life. We’ve done a really good job building a product that they can fall in love with and focus on the experience of that product. So even for the most mundane accounting chore, what we’ve done is make that simple and beautiful for them and that is a huge shift because up until now all of those tasks have been awful, the software is cumbersome and ugly.”

Corporate purpose is something that sits separately from the brand, he says, although it is part of it. “Our purpose is really driven by the idea that if we can create these small business connections and streamline them and make them efficient then people do better,” he explains.

He adds that defining purpose is often more important for big corporations which need an idea that can unify hundreds of thousands of employees across many markets. Smaller businesses have less need to clarify their purpose, as it is usually more intuitive. For them it is more relevant to create a powerful brand.