Race to Recovery: Purpose-Driven Co's Come Out on Top
The Harvard Business Review ran this article in 2010 as the world was about to start digging itself out of the Great Recession:
“...the current crisis also marks an inflection point: The world after it is unlikely to resemble the one before it. Their priority, when they get a moment’s respite, must be to remake their organizations to cope with the “new normal.” But CEOs, like generals in the heat of battle, are so busy tackling short-term priorities that the future is obscured by the fog of war.”
Words that apply even more today. As I write this at my desk, the front page of the Wall Street Journal screams “Virus Shrinks Economy by 4.8%” led by a consumer spending drop of 5.3 percentage points in one month. Ouch. Shockingly, as most of the country has been locked inside, consumers haven’t been shopping as much. Luckily, the sky isn’t falling.
Don’t worry, as we all emerge from lockdown, consumers will start shopping again, albeit slow at first. But consumers have built new habits and have shed old consumer loyalties - assuming that was ever a thing to begin with. Companies will have to reintroduce themselves. The ones that do this best stand to gain the most in a post-Covid world.
What does doing this look like? We’ve all heard the happy stories of the brand that doubled down on advertising spend during a recession and came out a champion. The truth is a little more complicated than that. Money in market alone is not the answer. Success will come down to purpose.
A purpose is not what the company does but why. It’s a shared dream every employee at the company has and the reason they show up to work. Well crafted, it becomes a rallying cry and a filter for every decision at every level of the company. And it starts not with marketing but with the executive office.
Apple has dedicated itself to product design. Everybody who works there knows it and is dedicated to products more intuitive with smaller learning curves than any other company on the market.
Disneyland exists to “create happiness for others.” Wear a “First Visit” pin at a Disney resort and be amazed as you’re greeted by the gardeners - a role usually told to be invisible at any other property.
While these companies recognize the need to make money and show a profit - they are businesses after all - they place a higher, laser-focused emphasis on their customers.
Before I hear a collective cry of how obvious this is, before Larry Fink’s 2019 Letter to CEOs, the number one concern of almost every public company’s executive team was shareholder value. For many companies, it still is.
Funny enough, companies that put shareholders second seem to deliver more for them. According to Deloitte, purpose driven companies grow 3x faster than their competitors, while retaining key staff longer. Cool.
All that said, this is not a general call for companies to drop everything to save the whales or support whatever happens to be the popular social cause of the day. In pondering why a particular company exists and the needs it serves to its customers, remember those same customers exist in an imperfect world.
There are myriad ways to improve their lives as a member of their community and customers seem to respond to the effort. Unilever did the math and realized their top 28 growing brands have made positive community involvement a pillar of their purpose. Blackrock has seen the same math and announced in January that companies without strong sustainability plans as part of their raison d'être will no longer be part of their portfolio.
So before we aggressively turn on the ad dollar spigots, marketers need to get together with the executive team and ask some very hard questions: What are they passionate about? What are they good at? What does the world need? What is the company’s responsibility to its community?
The companies that successfully do so well will be the marketing case studies we’ll all be reading in short order.