«It’s Not What You sell, It’s What You staNd For Why Every Extraordinary Business Is Driven By Purpose Roy M. Spence, Jr. with Haley Rushing WHAT ...»
Harvard Business School faculty members John Kotter and James Heskett studied blue-chip firms across twenty different industries and found that firms with strong adaptive cultures based on shared values significantly outperformed firms with weak, values-neutral cultures.
Over the four-year period they observed these companies, revenue grew more than four times faster, rate of job creation was seven times higher, stock price grew twelve times faster, and profit performance was significantly higher than comparison companies in similar industries.1 In a book entitled Firms of Endearment, the authors identify thirty companies (three of whom include our past or current clients: BMW, Southwest Airlines, and Whole Foods Market) driven by a sense of purpose and humanistic principles. These companies put the needs of their stakeholders ahead of the needs of shareholders and are bringing about a profound change in the existing capitalist paradigm. The authors found that companies that choose to put their employees and their customers first are outperforming conventional competitors (who have an eye almost exclusively on profit and shareholders) in stock market performance on the order of 8-to-1. Not only is overall stock performance significantly better, employee turnover is lower, productivity is higher, and pricing strategy is not subject to the same low-pricing pressure experienced by pure profit-driven, shareholderfocused competitors.2 Far from being some touchy-feely concept, purpose and values have been identified by the best business gurus of our time as key ingredients of high-performing organizations.
Just to be clear, having a strong purpose in place does not make an organization immune to setbacks that may inhibit financial performance from time to time. We’ve all seen strategic decisions or What Is a Purpose and Why Should You Want One? 17 marketplace forces derail even the most beloved purpose-driven organizations. But organizations with a strong purpose are much more likely to get back on track and create a legacy of high performance over time.
PURPOSE FOSTERS VISIONARY IDEAS
AND MEANINGFUL INNOVATIONLet me share another story from Jim Stengel, which demonstrates how purpose can unleash innovative thinking in an organization.
Jim believed that Pampers was more than just a diaper that prevents wetness. As he expresses it, “We’re talking about babies and mothers and birth and life. Shouldn’t we as a company have a higher aspiration other than to just keep the bottom dry?” He describes the powerful transformation that happened when Pampers began to earnestly explore how they could do more than “just keep the bottom
We asked ourselves: What’s the one thing that every mother cares about? And what she cares about is her baby’s development in every way. So we began to seize that idea. And we switched from being a brand about functional dryness to a brand that helps mothers around the world with their baby’s physical, social, and emotional development. And in the beginning, that idea sounded crazy.
But it started to get people inspired. It got the imagination going.
The agenda for innovation started to change. The way we approached consumers began to change. We began having daily interactions with mothers and babies onsite. We began thinking about our product experience differently. We identified “sound sleep” as a key to healthy baby development. We began asking questions like what can Pampers’ role be in helping babies have deep, healthy sleep so they can wake up with energy, with rejuvenation and better brain development? We did clinical studies in that area. We learned that mothers around the world care about one another. One thing led to another and now we have a partnership with UNICEF in over 40 countries; when a mom buys a bag of Pampers, we donate one vaccination delivered through UNICEF. And now, ten years later, the brand has doubled in size. It’s one of the leading brands in the world and has become P&G’s first $8 billion brand.
18 IT’S NOT WHAT YOU SELL, IT’S WHAT YOU STAND FOR As they made the conscious decision to get out of the dryness business and into the baby-development business, new and innovative thinking spread like wildfire throughout the Pampers organization. The purpose provided the inspiration and direction necessary to develop innovations that have made Pampers a hugely successful brand.
Innovation is on everyone’s mind. “Departments of Innovation” have sprung up in corporations across America. “Chief Innovation Officers” are being anointed. Innovation conferences in hotel ballrooms are regularly sold out. There is a restless urge to stay on the cutting edge of what’s next. But in the absence of a purpose, innovative thinking can be difficult to ignite.
Without a purpose, there is no heartfelt motivation or inspiration to drive innovation in a constructive and meaningful way. Innovation for innovation’s sake often results in a lot of wasted time and energy.
Innovation designed to facilitate a core purpose in new and exciting ways is where meaningful progress is made.
BMW is an innovation machine. Every detail of a BMW is designed with the company’s purpose in mind: enabling people to experience the joy of driving. BMW engineers know that anything that doesn’t provide more exhilaration or more comfort or enhance driving safety simply doesn’t belong in a BMW. For example, one of the greatest innovations BMW is known for among driving enthusiasts is the Near-Perfect 50/50 Balance. This creates the signature driving feel associated with a BMW that people love. By balancing the weight over the front and rear axles evenly, they deliver exceptional agility, enhanced safety, more control, and, ultimately, a better driving experience. What that means to you and me is that we can take corners really, really fast without missing a beat. That’s the joy of driving and the kind of purposeful innovation that employees can wrap their head around.
Southwest Airlines is one of the most innovative companies in the country. But we’ve never been asked to help them develop something innovative in a vacuum. What we receive, instead, are assignments asking them how they can deliver “freedom” in new ways. What innovations can we create to deliver more freedom in the Rapid ReWhat Is a Purpose and Why Should You Want One? 19 wards loyalty program? What innovative things might we do with the schedule to give people more and better flying options? What innovations can we create to deliver more spontaneous travel (i.e., freedom) to our customers while lowering our costs?
Having a purpose not only helps foster innovation inside your organization, it also helps all the stakeholders and partners that work with your organization to develop visionary innovations on your behalf. As a marketing firm that has worked with extraordinary purpose-based organizations and not-so-purpose-based organizations, we can testify to the fact that visionary ideas are much harder to come by for the latter.
When we are working on behalf of truly purpose-based organizations, the visionary ideas and innovations tend to flow much more easily. Ideas move beyond the realm of clever tactics that might be noted in an industry publication to meaningful messages, experiences, services, and interactions that will be loved by the customers who are being served.
I suppose our pursuit of purpose-based organizations may in some ways be self-serving. It’s a hell of a lot easier to be in the business of “visionary ideas that make a difference” when we’re working with organizations that are hell-bent on making a difference too.
PURPOSE MOVES MOUNTAINSPurpose can make the seemingly impossible possible. It can rally the troops to overcome seemingly insurmountable odds. It can ignite a fire in the belly to fight the fights that seem impossible to win.
Don’t Mess with Texas It was 1982 and Mark White was elected governor of Texas. He had just appointed Bob Lanier to chair the very powerful Texas Highway Commission. Bob Lanier was on a mission to cut the fat out of this huge department. He started with in-depth briefings from every sector
of the highway department. I mean in-depth. It finally came to the antilitter effort. The person in charge was going through the statistics:
Each year litter on Texas highways grew at an average of 17 percent.
20 IT’S NOT WHAT YOU SELL, IT’S WHAT YOU STAND FOR So, each year Texas taxpayers had to spend 17 percent more on cleaning up that litter just to break even. This was the trend all over the nation, and no one seemed to have any solutions for reversing that trend. Bob was taking it all in, and finally the presentation stopped— with the annual request for a 17 percent increase in state funding of the antilitter program.
The room was quiet. Bob, in his typical way, pushed his glasses down, looked up, and said, “Excellent presentation. But what is the purpose of this program?” No one spoke until the head of the division stood up and said, “The purpose of our effort is to make sure that our Texas highways are clean and beautiful and something Lady Bird Johnson and her whole Keep Texas Beautiful effort will be proud of.” Bob Lanier nodded and sat there peering off into space. Then he made the acute observation, “Has anybody ever thought about the notion of persuading Texans not to litter so that littering goes down each year, and therefore so does our budget?” Silence took hold of the room.
That mandate sent us down the highway to create a purpose that would change the face of Texas and cut Bob Lanier’s budget. Other
antilitter campaigns all had the same worthy goal of reducing litter:
“Give a hoot, don’t pollute” and “the crying Indian,” featuring a Native American brought to tears after looking at the mess we had created. While these messages might have resonated with Lady Bird Johnson and Sierra Club members, to your average Texan in the early 1980s, the antilitter cause was not a cause that many took to heart.
We needed a purpose that Texans could sink their teeth into—a purpose with the power to make a difference, a purpose that would move people.
Tim McClure, one of the founding partners of GSD&M, was walking down the highway one day and saw trash along the shoulder.
He stopped and thought to himself, “This isn’t litter—this is trash.
People are trashing Texas. We’ve got to stop people from trashing Texas.” Now, anyone who has spent any time in Texas knows how fiercely proud Texans are of their state. And that pride is exactly what we needed to tap into. We took the worthy goal of reducing litter and What Is a Purpose and Why Should You Want One? 21 married it with Texas pride to create a purpose powerful enough to clean up our highways and cut our budgets. The purpose of this antilitter initiative was to tap into the pride of Texas to keep our state clean. That purpose was brought to life with one of the most wellknown taglines in America: Don’t Mess with Texas.
Sure enough, Texans rallied around the idea and changed the face of Texas in a way no one could have predicted. With purpose as our guiding light, litter took a nosedive and was reduced by 70 percent during the next five years.
Here’s the point. If a problem seems impossible to overcome, then it’s highly unlikely that well-intentioned tactics will see you through.
Purpose is required to tap into the hearts of your constituents and make the impossible possible.
Markets are always changing. Competitors come and go. Trends rise and fall. Business strategies fluctuate in response to category dynamics. So what’s going to be your anchor? What will you report back to on a day-to-day basis while you travel through the turmoil?
Without purpose to hold you steady, it’s very easy to get distracted by marketplace fluctuations. You may find yourself reacting to every competitor that comes along. Wall Street pressure may send you desperately clamoring down unchartered paths. Trends may suggest you need to consider a new line of business.
Purpose provides a road map to hold your course along the journey. It ensures that everyone stays on track and you don’t end up in a ditch, stalled out and confused as to how you got there.
I can’t tell you the number of airlines that have come and gone, threatening to take out Southwest Airlines over the past thirty years.
22 IT’S NOT WHAT YOU SELL, IT’S WHAT YOU STAND FOR They make their grand entrance with their so-called superior planes, enhanced first-class service, lavish airport lounges—you name it. But the culture of purpose at Southwest Airlines has bested them all.
While there are certainly heated and fierce debates about how to strengthen its offering in the market, Southwest Airlines never questions its primary reason for being in the market—which is what frequently happens when clients without a purpose are besieged by the competition.
Instead Southwest takes stock of its beliefs and values and responds with product innovations that are uniquely and unapologetically Southwest. Some of the best innovations they ever created were the result of competitive pressures that forced them to figure out how to be a better Southwest Airlines.
Competitors said Southwest Airlines didn’t have fancy flight attendants.
Southwest said, “Hot pants are more fun.” Competitors said Southwest Airlines didn’t have a full range of jets.
Southwest said, “Meet Shamu! He can fly you there just as fast.” Competitors said Southwest Airlines’ frequent flyer program didn’t let you fly internationally.
Southwest said, “With Rapid Rewards, every seat is a reward seat almost every day of the year.” Try actually using your frequent flier miles on another airline. The word “freedom” does not come to mind.
In each case, Southwest is true to who they are. They don’t spend time trying to develop products or services to match the competition. They celebrate their own unique strengths and navigate by the core values and beliefs that set them apart from everyone else in the industry.
As human beings our minds easily wander off track. It’s easy to lose focus. A strong sense of values, beliefs, and purpose will keep everyone on track.
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