We talk a lot about disruption. How the world has changed. How the world will change. These conversations tend to center around technology. 5G. Robotics. AI. IoT. VR. AR. Industry 4.0 and what it all means for the future of living.
But there are other more disruptive forces at play that demand our attention. Climate change. Poverty. Food waste. Human rights. Income disparity. Mental health. Violence. Gender equality. Clean water. Xenophobia. Isolationism. Tech addiction. Data privacy. Fake news. The list goes on.
It’s now clear businesses of every kind must embrace a greater responsibility for creating a better future. Not only because it’s right, but because it’s also profitable.
We are entering a new decade and a new era in business
This summer some of the most powerful companies in the world banded together to make a provocative statement: the primary purpose of a corporation is no longer to simply serve shareholders and maximize profit. CEOs from JP Morgan Chase & Co., Goldman Sachs, Coca-Cola, General Motors, Procter & Gamble, Pfizer, Walmart, Apple, and more all agreed corporations must now prioritize benefiting all stakeholders.
“Corporations also have an opportunity—and an obligation—to drive positive change on behalf of our employees, our communities, and society at large,” said Alex Gorsky, chairman and CEO at Johnson & Johnson.
Last month Mark Benioff, CEO of one of the world’s most successful tech companies Salesforce, published an op-ed in the New York Times calling for a new capitalism that’s more fair, equitable and sustainable. “Suggesting that companies must choose between doing well and doing good is a false choice. Successful businesses can and must do both,” says Benioff.
Professor Colin Mayer, former dean of Oxford University’s Saïd business school, argues companies must exist to address the issues we face in the world. That the sole purpose of business is not to produce profits, but is instead to “produce profitable solutions to the problems of people and planet.” Mayer claims when companies align their corporate purpose with a social purpose, it gives rise to greater profits, revenues and lower costs.
The market will reward companies who contribute to the greater good
A global study this year found companies which impact individual and collective well-being outperform across a number of key business metrics. Such companies enjoy price premiums, higher purchase and repurchase intent, and inspire more advocacy. Another study done by Boston Consulting Group titled “Total Societal Impact: A New Lens for Strategy” shows higher valuations and margin premiums are strongly linked to a company’s performance on environmental, social, and governance topics.
These types of results will only improve as Millennials and Gen Z, now roughly 65% of the global population according to Bloomberg, make it clear they only want to work for and buy from companies who strive to benefit the world. According to the “2018 Deloitte Millennial Survey”, 80% of both Millennials and Gen Z think businesses should be evaluated based on their positive contributions to society. The same study showed 62% of Millennials feel corporations have no ambition beyond making money.
A clear disconnect exists between what the largest consumer class on the planet wants and what it’s getting. With a combined aggregate income that will reach up to US$42 trillion in the next 15 years, according to American think tank Brookings Institution, satisfying their expectations should be the focus of every organisation.
But to win their wallets moving forward, business as usual will not work. Continuing to rely on traditional CSR initiatives or cause-marketing won’t suffice. Companies must rethink how they create value from top-to-bottom in 2020. And it all starts with a purpose beyond profit.
The connected brand imperative
Companies today must define their purpose in terms of how they intend to add-value in the world for all stakeholders. For customers, employees, communities. Then they need to ensure that everything they say and do as an organisation reinforces that purpose.
They need to consider how their business model and operations deliver on it. New products and services need to be inspired by it. The customer experience needs to be designed around it. All internal and external communications need to champion it.
By doing so, companies unify their organisation to create a connected brand experience that ensures every stakeholder interaction with the company is meaningful and complementary. It ensures companies are best prepared to deliver long-term sustainable growth that’s both good for business, and good for all.
For companies looking to combat disruption, drive innovation, and grow their business in 2020 and beyond, a purpose-led connected brand is the only way forward.
The writer is Brady Ambler, group strategy director, R/GA Singapore.
(Photo courtesy: 123RF)