The currency of the word, “Purpose” is at risk. If you haven’t already seen it, you’ll see it soon. “Purpose” is the new “authentic”. Or the “values-based leadership”. And I worry that many a leader will say many a beautiful thing, but not know anything of what they say.
Take Unilever as a case in point. COO Harish Manwani recently gave a TEDtalk in Singapore with the key idea that, “profits are not always the point, but purpose is.”
Capitalism is missing something, he says. Modern economics encourages you that “If you continue to operate in your own self-interest you will do the best good for society.” But what does that actually get you? You can destroy that which we share – water, for example. Or clean air. So, he says, “companies cannot afford to be just innocent bystanders in what’s happening around in society. They have to begin to play their role in terms of serving the communities, which actually sustain them. And we have to move to a model of an and/and model, which is how do we make money and do good? He believes the answer to that is “going to be leadership. It is going to be to redefine the new business models, which understand that the only license to operate is to combine these things. And for that you need businesses that can actually define their role in society in terms of a much larger purpose, than the products and brands that they sell. Values and purpose are going to be the two drivers of software that are going to create the companies of tomorrow.”
For his specific story to prove his argument, he shares how Unilever used Purpose to increase their reach in rural areas of India. My colleague, Tim Kastelle, (with whom I am writing a follow on book what advantages actually fuel performance and growth in Social Era) has studied this and teaches on this case in his class, so I turned to him to get his take.
Was this really about purpose, and profits co-existing? Was it really about a new business model?
And here’s what Tim said:
It’s an absolutely fantastic innovation case study, and a template for how big firms should do it. Their scaled approach was close to perfect. But in all of the early accounts that came from the firm, the main problem that they were trying to solve was that with the high levels of rural population and poor infrastructure, HUL was only able to reach about 60% of the people in India with their products. This program was designed to reach the other 40% (to win market share and grow the topline) – and it has succeeded in that. Yes, there have been a ton of great social outcomes from it as well (though most have been unintentional!), but this was ALWAYS framed as a straightforward commercial problem. I don’t know, maybe I’m over-reacting to his tone in the talk. But it did rub me the wrong way. To me, it sounds like the purpose version of greenwashing (purposewashing?).
So, it turns out that Tim and I had a similar response.
It’s not that we don’t think purpose matters. Just the opposite. We’re very clear (having just done some research) how much it is a driver of performance. But when corporate execs use the words of purpose to tell a story of same-old-business-models with a focus on profits, they risk being called out for it. When you pursue only the veneer of the idea of “purpose”, you miss the opportunity for the larger idea of purpose to change you. You risk ending up with things that are only surface-deep. In the archives of corporate history, this has looked like meaningless mission statements or values carved into the lobby of builds that nobody lives by. What starts out as a good intent gets distorted.
Enough people do this, and the currency of words that matter — like purpose, and communities, and values — gets debased.
It’s not that Harish Manwani is wrong about needing to balance purpose and profits. He’s dead on. As I’ve already written about in Social Era, this is a central aspect of value creation in modern times:
Things we once considered opposing forces – doing right by people and delivering results, collaborating and keeping focus, having a social purpose, and making money – are not in opposition. They never have been. But we need a more sophisticated approach to understand business models where making a profit doesn’t mean losing purpose, community, and connection.
The companies that do stand for something – a purpose that is shared with their community – can bring a real coherence to their work, and have a real advantage in the modern market. People want to believe in something real, of substance. Purpose brings out the best in people and the best people.
But let’s not purposewash something that was never started with that goal. It only hurts your long-term credibility, the trust that shared purpose builds. It would be better to say “we have evidence the two can co-exist, and now the leadership question is can we / will we use it to shape the direction from the very beginning.”
When our organizations embody the values we talk about, and use them from the beginning to shape our collective work, then it is REAL and thus deeply resonant to say “this is who we are”. When you embody an idea, it builds trust. It causes people to follow you. That’s what you’re going for as you navigate your lives and careers in the social era — Don’t just use the words, but embody the ideas. Your actions will tell the story of what you believe MUCH more than any words you choose to use. Ask yourself, “instead of talking about it, what can I do to live it?”
Then, truly, you’ll be walking the talk.