This week, I was a guest speaker at Growth Tribe, the leading growth marketing school in Europe. Many teams that Growth Tribe trains see purpose as a trend to adopt, but it is a challenging topic on many levels, especially when growth and brand sometimes seem to get into each other’s way. What’s an interesting development, is that we train changemakers to think like brand builders, while increasingly, brand builders want to think like changemakers.

Though I am all for companies working from a higher purpose, I also think it’s important to understand where the movement is coming from, and if and how it is right for you. So I put together a talk for the Growth Tribe community, playing the devil’s advocate.

Some timestamps from the talk:

[14:00] The origins of the purpose trend
[17:00] Criticising the business case for purpose
[23:15] Where is the evidence for purpose strong?
[27:00] The biggest misconception of purpose
[27:50] What are different inroads to defining your purpose?

Find the full transcript of the talk below.

The history and origins of the purpose trend

When you think of brand, you probably first and foremost think of consumer products. 

That's because branding came of age after the Industrial Revolution when the distance between the producer of a product and the consumer of it grew exponentially. Brands became a mark of trust to span that distance and brands that did well were able to command a premium. Advertising added the desire to get the real, ‘branded’, product, ie: the original. A whole set of aspirational values was added to products, and brands like Coca-Cola and Nike leveraged the art of the Big Brand in order to charge premiums for their products.

In the 90s, this starts to shift. Many products are becoming commodities. People have a lot of different options, and the differences in quality aren't that big anymore. So innovation becomes more and more important. Apple takes the lead as the global poster boy for innovation. Other companies that wanted and needed to innovate looked towards Apple. Why are they so great at innovation?

In 2009, a relatively unknown guy called Simon Sinek steps onto the scene and in a historic TED talk on a tiny stage, says that the key to innovation is for companies to pursue a higher purpose, to discover their WHY. That’s the leadership mechanism that allows companies like Apple to outperform other companies, because “people don't buy what you do, but they buy why you do it”. 

The world of business took notice. The concept of Purpose gained traction. But there will always be those people who will say “Show me the data”. So along comes Jim Stengel, and he builds the business case behind purpose.

He ran a study and concluded that businesses with ideals grow faster and are more profitable than businesses that don't. He publishes the results in a book called Growth. This business case really is the impetus for the massive uptake in businesses of all kinds of sizes to think about how to incorporate this higher purpose beyond profits in order to drive profits. 

Parallel to this development, there are a few other storms brewing. The Triple Bottom Line movement (started in 1994) on the topic of sustainability starts to gain traction, with Paul Polman, CEO of Unilever charting a new course in 2010 with their Sustainable Living Plan.

This merges into the Conscious Capitalism movement in 2014.

And let’s not forget the hippies in business, who were already using business as a force for good without needing to have read about it in a book, like TOMS, Patagonia and Oatly. Their success in the 2010s added to the anecdotal evidence that purpose itself drives business success and growth. 

Add to that the past four years of increased awareness on the climate crisis, growing inequality, social injustice, and COVID... and it’s no wonder we're experiencing purpose to be in overdrive. 

Criticising the case for purpose

People probably expect someone like me to be excited about everyone coming on board with purpose, and in a way I am. Back in 2015, one of the points in our manifesto was that we needed Purpose to be the next paradigm shift and all the big boys to come on board. So yes, I think it's an important trend with lots of positive effects.

But I also see some negatives to development that could hurt rather than help. So if you are considering purpose as a driver of growth, I think it's important to hear someone also argue the other side. I'm not necessarily the most obvious person to do that, but I really believe that we shouldn't drink our own Kool Aid too much. 

First of all, purpose is in a hype cycle where there's a lot of abuse and misuse. Instead of purpose driven companies, but it's more purpose driven marketing. Then you get situations like the Pepsi commercial with Kendall Jenner tapping into Black Lives Matter and the police. When big brands jump on a social issue, without aligning it with any other aspects of their business, you get some pretty horrendous results. People don't buy that anymore. People have a really built in bullshit radar. It's a good lesson for companies on any size: don't just take any social and environmental topic and appropriate it for marketing. 

So: is the business case for purpose really as solid as people make it out to be? 

Does Stengel’s research prove that purpose-driven brands outperform conventional brands?

If you're into data and science, I think you will love this topic. I'm not a researcher myself, but I tend to look at claims with a healthy dose of skepticism and also some common sense. So if you look at the study that Jim Stengel did back in 2010, about purpose being the reason some brands outperformed others, I think there are some real issues to how that study was conducted.

Stengel looked at the 50 top financial performers of a list of 500 global brands, and he looked at what the common thread is amongst those companies, and honed in on purpose.

That’s a pretty big stretch because:
A) You are already self-selecting the most profitable businesses, so I think that in itself is problematic unless you offset it by proving that the least profitable ones have no purpose.
B) How do we really define ideals and purpose? So to give you an idea of who's on that list, that's Moet Chandon, Mercedes Benz, or Blackberry, those are not exactly brands that I would associate with a higher purpose. If you look at Moet Chandon, they state their purpose as “We exist to turn any occasion into a celebration”. Now, I think that's a really nice hook for a brand. But I would be really hard-pressed to be able to prove that that is a purpose that drives the performance of Moet Chandon champagne, more than the fact that, for instance, it's a heritage luxury brand that successfully managed its reputation for decades. 

Did someone go looking for the reason why the most profitable companies are so successful or was this a search to prove the business case of purpose? I think the second is more likely. 

In the first instance, they just as well could have found that highly successful lobbying for tax breaks and offshoring makes you the most profitable. 

In short, I find the evidence on Jim Stengel’s side not so strong. 

Questioning self-reported demand for purpose driven brands

There has been a lot of other research following similar lines. Again, this week, there was an article on Fast Company in which Adele Peters reports that purpose is a big thing, because there are a lot of consumers who state that they prefer purpose driven brands over conventional brands. We should be suspicious of those kinds of studies, for several reasons. 

First, is that these are often done by PR agencies who also sell some sort of brand purpose service. Which is a little bit like a car salesman doing the research that shows that people should really get new cars.

The second reason why I would be suspicious is because they are asking people to self identify that they would be willing to make an altruistic decision, and that they would be willing to pay a premium for it. And the reason why I'm suspicious of that, is because we know from other research, that more than doing good people want to be seen to do good. 

If I'm asked if I'm willing to do good, I'm far more likely to say yes. But am I actually going to put my money where my mouth is? 

You would want to do a study where you'd actually have the comparison of two products, one with a higher purpose and one without, and see if people actually make that purchase. And then you discover that actually, we don’t need to do that experiment, because we already have lots of evidence in the world for that: the marketplace that we are already in. And that shows that there is only a small percentage of people who are willing to pay a premium for sustainable fashion, fair trade produce. It’s a percentage that is growing, but it for sure is not the 70% that is being reported all around.  

What other studies show that purpose is a driver of performance?

What I think is very promising is when brands are willing to open up their playbook and show how the incorporation of a higher purpose at the center of a brand helps them perform better. While writing my book Brand The Change, I spoke to Macmillan Cancer Support, one of the biggest cancer charities in the UK. Back in the early 2000s, there were many shifting issues around cancer, and their brand was not appealing very well to people to get involved. They invested 120,000 pounds to reposition the brand around the purpose of ‘being a force of life’ in the lives of people living with cancer and their loved ones. As a result, they increased their fundraising from 98 million to 220 million pounds over the course of 10 years. 

They themselves attribute that themselves to that new brand positioning. Another great metric for success is recruitment: 50% of job applicants for both paid roles as well as volunteer roles cite the brand as a reason they want to work or volunteer with the charity. 

That's a really important one in a world where we're constantly competing for the best possible talent for our team. And the fact that brand improves company culture and employee retention, I think, would be just as big of an argument to adopt a purpose, as it is, for instance, in attracting more customers. 

purpose as a driver for HR: easier hiring, employee retention and higher productivity

A study that I think people in the Growth Tribe community probably really love is research from the University of Chicago. 

They recreated a company that hired people for data entry services, and they placed  two different sets of ads. So one ad that had a social purpose message looking for people to do data entry, with a purpose, and one ad that showed this job without the purpose, and so just purely data entry.

So the ad that had the purpose message inside of it got 30% more applications, even though the pay was lower. And once the workers were actually employed and engaged in the work of the data entry, the workers who applied to the purpose add were 30% more efficient in their duties. I think that's a really interesting data point. 

The growth in this case was entirely attributable to women on the team, the men were less susceptible to altruistic messaging. So if you have a brand that is very much focused on women, purpose might work better for you as a driver, than if your brand audiences are mostly men. 

Purpose as a means to be relevant and connect with milennials and gen z

And this brings me to the topic of generation. So for any brand, you need to be relevant to your audience. And the generation like the millennials, and Gen Z, are just far more concerned about the climate crisis and social justice, and respond to brands that address those concerns. To give you an example, Oatly has been one of the darlings of the brands for change space. And it's a brand I hugely admire. 

But it was surrounded by competitors, who in in a way had the same type of purpose, but weren't able to articulate it as well and didn't manage to ride the wave of the trend of veganism that really captured millennials and Gen Z in the late 2010s. 

The biggest misconception of purpose

If you're thinking about using this idea of brand purpose, then I think it's very helpful to not think of it as making the world a better place. 

To me, the biggest misconception about brand purpose is that this idea that brand purpose, means making the world a better place. It's a very scary thought, actually, to me that every single organization in the world needs to have some sort of social and environmental mission.

Should all companies do their part to be more climate positive, and to advance social justice? Yes, you need to become carbon neutral, you need to be anti racist, but that doesn't necessarily need to be the driver of your brand, those could just be the conditions that underpin how you deliver your product and service. Otherwise, the world will be filled with Kendall Jenner / PepsiCo ads - that’s not a world I want to live in. 

How to find your purpose? What are different ways you could use purpose?

I see four options currently: functional, emotional, service, roots.

You can say we're going to use a functional purpose. You can address one of the UN SDGs. For instance, Khan Academy, which offers math education at a massive scale. 

You could look at purpose from an emotional point of view so that you change or you drive people's aspiration. The most famous example of that, for instance, is the Dove real beauty campaign, which is about changing women's and everyone's perception of what real beauty is. But also a company like D-Light here in Africa. D-Light is a solar light company. And their brand is all built on having light in the evening so that children can study and advance in life. 

What is not getting enough mileage is this idea that your purpose could be to serve: to provide excellent service to others. The fact that there are companies out there that are willing to excel really in serving others and making their lives easier and better. The most famous example is Zappos, which is really, they have this brand purpose of Delivering Happiness, which is quite lofty, but it really translates into everything that they do. 

They really think of themselves as a service company, and that drives happiness amongst their employees, and it drives happiness amongst customers.

If you are an older company, you can go back to your roots to find purpose. For instance, insurance companies or home electronics companies: if you go back to the roots of some of these types of products and services, the original customer insights were very much based on ideas for social progress. 

I once saw some of the first advertisements for refrigerators in a museum, and they were all based on this idea of ‘no more food waste’ and ‘keep your family healthier because food doesn't spoil’. 

Going back to your roots as an organization and staying very true to who you are, I think is another way to use this idea of purpose in a way that you can be comfortable with. And it will resonate better with people because they can sense that it's authentic, and it's coming from a real place. 

Because at the end of the day, I really think that if you're able as a brand to kind of place that human purpose as the center of your strategy, that just increases your ability to be more relevant because it forces everyone on your team to work from this compelling human insight. 

Airbnb: an example of purpose as a good customer insight

And the example that I brought, which I thought might be interesting for the Growth Tribe crowd is Airbnb.

The founders of Airbnb had this insight that a lot of people are looking for more unique travel experiences. Initially, when Airbnb started off, it was just a platform and there wasn't anything aspirational about the brand. 

Then, as more and more other hotels and websites like booking.com started to get in on homesharing and unique accomodation, Airbnb really stepped up their game and defined this human purpose that's really based on a deep consumer insight: Belong Anywhere. 

None of us like to be tourists. All of us like to think of ourselves as travelers or global citizens. We like to be mistaken for a real Parisian. 

This purpose drives everything that Airbnb does, it’s how the hosts make guests feel at home, provide tips on location, it drives what the Airbnb offices look like, their local festivals, their neighborhood community initiatives, and also, how they link to social movements. It connects to the gender movement, or to the anti-racism movement, it’s all clearly connect to this essence of creating places where everyone can belong.