A few years ago, working for a Japanese consumer electronics company whose major competitors included Fuji, my colleague and co-author Shaun Smith asked the team what their leadership purpose was; the reply, after a pause, was, “F..k Fuji”.
Destroying or displacing your competitor is certainly one kind of leadership purpose. It’s a mindset that sees business as a war game and uses other military terms and strategies to achieve victory.
Kevin O’Leary the Canadian businessman behind Shark Tank said, “Business is war. I go out there, I want to kill the competitors. I want to make their lives miserable. I want to steal their market share. I want them to fear me”.
This approach works when it is easy to see who the enemy is: Pepsi versus Coke; IBM versus Apple in the 1980s; Sainsbury versus Tesco or Nike versus Reebok. But in a world where competitors are coming from anywhere, where digital has transformed the ability of brands to nimbly and quickly forge new relationships with customers, where new markets are being created, the traditional category concept of a ‘battle of the brands’ is less relevant.
Furthermore, this type of leadership purpose is self-serving and ultimately self-limiting. What happens when you are number one? Who do you go and kill then? And how motivating is it to customers to know that your purpose is to destroy your competitors? Or worse still, that your objective is to ‘sell them stuff’?
Of course, profits are a good thing: businesses don’t exist unless they make money, but profits should come from providing value. So, the primary purpose of any business must be to create value for its customers.
The best businesses have a leadership purpose that is firstly driven by insight into its customers’ needs but also considers the demands of the society in which they will operate. And there is increasing evidence that customers will reward businesses who do that. The Meaningful Brands Index, a study of the motivations and attitudes of around 300,000 customers in 34 countries, identified in 2015, that the share of wallet earned by brands regarded as having a clear sense of purpose was on average 46% higher than those that were not; and they outperformed on the stock market average by 133% too.
Becoming the ‘right kind’ of purposeful organization or brand is not easy. You can’t force it, fake it or fudge it as VW, BP and Tesco have discovered to their cost. There are three critical steps to becoming a purposeful brand:
Stand Up: Have a clear sense of who you are and WHY you exist. Stand for something beyond making a profit. Represent something of value in the minds of consumers. Think of Apple’s commitment to design. Think of Lego and its commitment to play.
Stand Out: Dramatise your differentiation in your product, service or sales experience Be intentional in delivering your purpose consistently across multiple channels but choose a few key ‘hallmark’ areas. Think of IKEA and it’s design aesthetic. Think of Lush and its product display.
Stand Firm: Create cultures that sustain you and continually innovate to stay ahead. Invest in product and service innovation and be more concerned with using profits to invest in the business and the delivery of the purpose rather than maximizing earnings per share for shareholder and chief executives. Think of Amazon and its relentless innovation. Think of Patagonia and its focus on its culture.
Being purpose-led is vital for businesses who want to succeed. Steve Jobs was famously known to be disinterested in making money but Apple became the most valuable business in the world. ‘We’re here to put a dent in the universe’, he stated. Get your purpose right and the profits will follow.
Caffeine work smartly and speedily with leaders to articulate their purpose and to align their organisations around it.
Andy’s latest book, co-written with Shaun Smith is currently The Chartered Institute of Marketing’s (CIM) ‘Book of the Month’. http://www.onpurposethebook.com/
Image © Mattjeacock[starbox]