Purpose might be the business buzzword of 2018, but some purposes beat others

Patrick Durkin
05 Dec 2018
AFR
If three makes a trend, 11 seems more like an epidemic. Since AFR BOSS magazine branded purpose the business buzzword of the year in July, it has been hard to find a corporate lunch or conference where top chief executives and chairmen aren’t talking about their company’s purpose.
When BOSS compiled the purpose of Australia’s top 50 listed companies (as of October 1, 2018), we discovered that at least 11 have introduced or updated their purpose (or, in the absence of a purpose, their mission or vision statement) in the past two years. More changes are on the way, we are told.
Opinion on the trend diverges widely. At one end are disciples such as Carolyn Tate, author of The Purpose Project, who became fixated after a six-month sabbatical in the south of France following a 30-year corporate career at Westpac, Merrill Lynch and running her marketing business. At the other are corporate communication experts, including one 30-year veteran who says it is “social signalling” used to paper over the worst sins of a business.
“Eventually everyone is going to have to do this if you subscribe to the Fink point of view,” says Brambles CEO Graham Chipchase. Louie Douvis
The sceptics cringe when National Australia Bank chairman Ken Henry crows that the bank is “backing the bold who move Australia forward” before, in his next breath, having to justify closing country branches.
The NAB purpose was front and centre when CEO Andrew Thorburn appeared at the Hayne royal commission in late November and said the bank “never had a purpose” until last year. Counsel assisting, Michael Hodge, QC, became bemused by the discussion, asking “presumably your purpose is to be a bank, is it? It seems like as a bank your purpose would be to take deposits and lend money and to do that as well as you could.”
Thorburn responded that those were the “functions of the bank”, adding: “If you can have a purpose and a vision that really orientate your people from their head and their heart to living the purpose and vision … hopefully you’re an even better bank.”
Coca-Cola Amatil chief executive Alison Watkins says most of her investors don’t want to talk about the company’s wider social purpose, and Westpac chief executive Brian Hartzer says “our purpose has been clear since 1817. We exist to enable the Australian economy to thrive.”
But Graham Chipchase, the British chief executive of logistics giant Brambles, says this year’s annual letter to CEOs from BlackRock chief Larry Fink crystallised that “if you don’t have a social purpose you won’t have a business any more”.
“If you can show you do good as well as make money, I think those two are absolutely aligned,” Chipchase says of the global pallets, crates and container company.
NAB chairman Ken Henry, left, and CEO Andrew Thorburn have enthusiastically spruiked the bank’s purpose, “backing the bold who move Australia forward”. Jesse Marlow
After meeting with a contact from British public relations firm Brunswick Group, Chipchase began formulating Brambles’ purpose. The company’s senior leadership team, customers and stakeholders became involved to see which ideas resonated, before the company unveiled its new purpose: “To connect people with life’s essentials every day.”
“It pulls on the fundamentals of what the company does,” Chipchase says. “‘Connecting people with life’s essentials every day’ is a big statement, but it’s also a very focused statement and doesn’t rely on any one of our brands, so it stands alone.
“Of course you have to make a few editorial decisions but actually that bit wasn’t that difficult once we agreed on the key strands we needed to bring in, and what we were trying to get from and to.
“A key learning for me was that we needed to keep it fairly punchy and short. It doesn’t need to be something that everyone has to learn by heart and you can use different pieces of it. That is quite different from the old vision statement where everyone was forced to learn it by rote.”
Coca-Cola Amatil CEO Alison Watkins says most investors don’t want to talk about the company’s wider social purpose. Josh Robenstone
Chipchase says that before he launched the new purpose, he used different parts of the company’s extended purpose in interviews with journalists, such as being the “invisible backbone of global supply chains”, “transporting life’s essentials more efficiently, safely and sustainably” and creating “one of the world’s most sustainable logistics businesses”.
“We are using it when we go out to recruit people as part of our employment proposition because younger generations want to work for companies doing good in the world … and being sustainable has a really strong pull.”
Chipchase says that while Brambles, which does a lot of business in the United States, is at the vanguard of companies updating their purpose, he thinks almost all will follow.
“Eventually everyone is going to have to do this if you subscribe to the Fink point of view, so the question is what comes next to differentiate yourself,” he says.
BlackRock’s Larry Fink suggested that “if you don’t have a social purpose you won’t have a business any more”. B
Tim Riches, head of strategy at branding agency Principals, has worked on several purpose rebranding projects and has seen good and bad examples. He gives credit to NAB’s Henry and Thorburn for openly talking about their purpose, saying it is not something you can hide from.
“Having a short, clear, motivating statement of purpose makes it much easier to communicate and set consistent expectations and then hold yourself to account for something,” Riches says. “People will do this anyway, so you may as well accept it.”
He says research has shown “purpose-oriented” companies outperform their competitors and can create a common goal, which encourages workers to go above and beyond if they believe in what the company is doing. “I don’t think it takes a survey to tell you that humans are social creatures. People want work that brings the esteem of the people around them. This doesn’t just apply to Millennials.”
He says that a good purpose isn’t just a statement of the obvious or an answer to the question “what is company X?”.
Rail freight operator Aurizon is another Australian listed company that recently launched a new purpose. Supplied
‘This is what unlocks the pride effect’
“It should say why what you do matters to the community at large,” he says. “This is what unlocks the pride effect for employees and also translates into political clout.”
Riches is not a fan of Newcrest’s mission statement: “To safely deliver superior returns to our stakeholders from finding, developing and operating gold and copper mines.”
“All this really says is that they want to make money from mining,” he says. “There’s a nod to stakeholders rather than just shareholders, but does it make you want to get out of bed in the morning and give 110 per cent?”
He finds the purpose of explosives maker Orica, “to make our customers successful, every day, all around the world”, similarly uninspiring. “This one’s true of all businesses, really. To take this customer-centric approach you need to add a twist – some insight into the customer struggle that you share, or some ambition to earn a special place in their lives and businesses,” he says.
“More importantly, I think it’s hard to get your people fired up at the prospect only of making some other business successful.”
He thinks Rio Tinto’s purpose is better: “As pioneers in mining and metals, we produce materials essential to human progress.”
“This one talks to the broader contribution,” Riches says. “However controversial mining may be, it links to a greater good – human progress – and states an ambition to lead. It’s a good example of a ‘why’ statement that also explains the ‘what’. It sounds like a cause that people might align with and aim to be part of, and a way to talk to sceptical parts of the community.”
The Telstra purpose, “To create a brilliant connected future for everyone”, is another winner that speaks to the telecommunications company’s scale and unique monopoly heritage, and optimistically captures the benefits of technology, he says. “I’m sure [former chief executive] David Thodey’s general aura of integrity helped land Telstra’s purpose.”
Greg Goodman, chief executive of Goodman Group, says the company’s new purpose is the culmination of a process it started 25 years ago. Brook Mitchell
Riches notes that companies will sometimes fail to live up to their purpose, but to be authentic and inspiring they need to build some stretch into their purpose statement.
It might be the need to grow fresh food at scale so that healthy diets aren’t available only to the rich, or to protect people’s quality of life in the face of population growth, he says.
For companies at the wrong end of such shifts – Coca-Cola, for example, as a historical sugar business – examining purpose helps build a more defensible strategy and focuses attention on why what they do matters, and why the community should mourn their loss if they were to fail. “It’s often shifting social expectations that drive businesses to reconsider their purpose,” Riches says.
Context is also important, he says. Take Macquarie’s purpose, which is “to realise opportunity for the benefit of our clients, our shareholders and our people”.
“Although it’s a statement anyone could make, coming from Macquarie, you know what they’re on about,” Riches says.
Geoff Martin, associate professor of strategy at Melbourne Business School, is another who has spent a long time examining purpose. He nominates Patagonia as a global front runner with its mission to “build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis”.
“It is a for-benefit company that is genuine about its environmental mission, and the employees have it baked into their approach to business,” Martin says.
Commercial property company Goodman Group recently launched its purpose, “Making space for greatness”. Founder Greg Goodman says it is the culmination of a process started 25 years ago, rather than a case of jumping on the latest bandwagon.
“In the last six years technology has pushed some of the biggest companies in the world to become our customers,” Goodman says. “It always kept coming back to the fact that primarily, we are creating space for our customers and we want our customers to be fulfilling their ambitions or business plans.”
Goodman says the company focused on nine macro themes with key customer and stakeholder groups: cities, sustainability, Generation Z, future of work, corporate image, third-party logistics, e-commerce, retail and transport.
General manager of marketing and communications Alison Brink says that while Goodman might seem to have come late to the purpose party, the company re-examined its values five years ago and wanted everyone internally to have a “rock solid” understanding of its cultural values before “it was announced to the world”, otherwise “it is nothing more than a slogan”.
“Generation Z was really important to us because it represents the future, and we wanted to focus on our customer’s customer and be outwardly focused,” she says.
“With the little girl we put on the front of our annual report, we thought about what kind of company she will want to work for because we try to be a contemporary, fresh brand and attract a diverse workforce. This generation does want to work for a company with a purpose.”
Goodman says the company has always had an operating model centred on customers, but the purpose brings it more sharply into focus. “You can’t get it from a textbook or a consultant. If you don’t know your own business you are in trouble,” he says.
“It’s got to come from the top down and bottom up. Listen to everyone and the changes you need to make and how you stay relevant, assimilate that and then fundamentally take a direction to stay relevant.”