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Putting purpose at the heart of business
Cain Ullah, CEO of Red Badger and Manny Amadi, CEO of C&E Advisory, on why businesses should be purpose-led.
Cain Ullah, CEO of Red Badger, in an interview with Manny Amadi, CEO of C&E Advisory. Manny is a trusted advisor to some of the world's foremost companies, non-governmental organisations, trusts & foundations, and high-impact philanthropists. He has recently joined Red Badger’s advisory board.
This edited video version is part of our Mission Beyond initiative.
Cain Ullah: How do you define a purpose-led business, and how have they evolved to be more purpose-led?
Manny Amadi: Purpose is really about a company's fundamental reason for being: how it behaves and how it goes about delivering its services day-to-day.
A purpose-led company puts societal consideration at the heart of its strategy and business practices, across its value chain. This affects how it sources, markets, distributes, produces goods and services, and engages with stakeholders. It seeks to create shareholder value by serving society rather than exclusively focusing on creating shareholder value.
The agenda towards purpose-led business has evolved over the last two centuries. In the 19th century, many business leaders were very enlightened and progressive in terms of their approach to doing business.
The likes of John Cadbury, a founder of Cadbury’s, or Jesse Boots, who transformed Boots into ‘Chemist to the Nation’, thought about their mission of serving society and how they were treating their employees and communities. In the late 20th century, there was a greater emphasis on more short-term oriented shareholder capitalism to the exclusion of other stakeholders.
If the company, for example, created environmental pollution or operated sweatshops in the process of allegedly creating shareholder value, that was all that seemed to matter. Not all companies were like that, of course, but that was dominant logic.
In the last 20 years, there has been an evolution toward a purpose-led approach. It’s been a slow evolution, companies initially thinking about philanthropy, making donations and gifts to good causes, and hence deeming themselves as “good companies”.
That evolved towards Community Investment, implying an expected return for the company, through to corporate social responsibility (CSR). More recently, there’s been a focus on sustainability, responsible business and shared value.
To sum up, purpose sits at the heart of a company. It’s a system change when a company is thinking about its role in society. When you have that right, it motivates and inspires employees, and galvanises action on behalf of all the stakeholders, including consumers. The purpose is the fundamental reason for being which really excites people internally and connects stakeholders outside.
Does it make business sense to be purpose-led?
Unequivocally, yes. The business case for purpose net growth has two elements: tangible and intangible. The proof of its value is becoming more and more explicit.
For example, Unilever has worked very hard over 10 years on a Sustainable Living Plan which involves change for the whole organization. 70% of Unilever’s revenue in 2017/18 came from the brands that have a clear social mission or purpose such as enabling people to wash their hands and promoting good hygiene.
BlackRock, the world's largest asset management company, has released research showing their Environmental, Social and Governance (ECG) tilted investment portfolios have outperformed their counterparts during this current coronavirus.
There’s really strong evidence showing that doing things like looking after employees, connecting more deeply with your consumers and stakeholders, and meeting everyone's interests creates sustainable value over time. Larry Fink, the CEO of BlackRock, has a great phrase - “shareholder value and purpose, are not mutually exclusive”. In fact, the two things are very strongly interlinked.
What can businesses do to ensure that purpose is understood and lived throughout their organisation?
Manny Amadi: First of all - take purpose seriously. As a leader, you don't always entirely have a proof of concept. It’s essential to find your own path. That’s one of the things that leadership is about. Plus, you have to have the courage to make decisions without having every single piece of the answer.
The starting point is about definition and setting clear goals. What is the greatest value that my company can add to the world? How can we make a difference to our consumers and to society by leveraging our competencies and our assets?
It’s important for a leader to engage the whole organisation, stakeholders inside and outside of the organisation, not just the management team.
What issues are most relevant that the company can help solve? Ambitious goals can galvanise people to wake up in the morning excited about going to work. Keeping your employees engaged and inspired drives retention. Beyond that, communicating goals as effectively as possible, internally and externally.
Another important step is to lock the commitments in the business processes and systems. I like to talk about hardware and software.
The hardware is objectives, commitments, goals, processes or systems. The software is about reward systems, relationships and culture. It’s similar to a leadership team that has a balanced scorecard methodology for driving business performance and results.
You also need to think about incentives and sanctions. When people are not living the purpose of the company, it’s important to ensure they're called out and held to account. These will be quite important steps for leaders to take to deeply embed a purpose culture.
This will then drive a sustainable purpose so that when a leader moves on from an organisation, for instance, this is not just a single person's passion, but the purpose is embedded and locked into an organisation.
Finally, accountability - not just having clear goals but reporting to stakeholders, employees on how they're performing whether it's on diversity, inclusion or the impact of their products or services on people and planet.
What is the catalyst for starting to put those things into motion? Is it a change of leadership, or can an existing leadership change the strategy?
Manny Amadi: Sometimes, it’s the change of leadership, sometimes it's a particular trigger such as a burning platform, and sometimes it’s competition.
There are three key factors: risk, opportunity and values. Let’s start with risk: this might be a reputational, operational, or legal risk. Being a purpose-led company that takes sustainability seriously allows companies to better understand the world around them. Having inclusive voices in the decision-making process makes companies more resilient.
When it comes to opportunity, the UN’s Sustainable Development Goals (SDGs) provide important orientation. They have shown that by helping to tackle some of the world's greatest challenges, companies can create shareholder value.
There are trillions of pounds worth of value to be attained in companies seeking to address issues, whether that is education, health, environment or various other areas. Finally, it’s the values of the business. Businesses can decide that being purpose-led is their approach to doing business.
How do you see the impact of COVID-19 on companies driving towards a purpose-led business approach in the future?
Manny Amadi: We clearly see trends moving towards purpose-led growth. Companies that take the sustainability and responsible business agenda seriously are outperforming their counterparts. I'm pretty confident the COVID-19 pandemic is likely to supercharge purpose in companies. The pandemic is a moment of truth for businesses.
Pre-pandemic, it was becoming fashionable for increasing numbers of companies to describe themselves as sustainable or purpose-led. Some of these companies came under fire for their initial responses to Covid-19 as they stumbled in the eye of the storm.
What should, in your view, be the current focus of purpose that business leaders should drive and how can they help make change happen and contribute to the UN Sustainable Development Goals?
Manny Amadi: It's an exciting and busy time. At the moment, company leaders are still very much focused on business continuity and looking after their employees - as they must.
It's also time to reimagine the future to build back better. We need to ensure that the world that comes after COVID-19 is a much better, more inclusive one. It’s similar to the end of the Second World War which gave birth to organisations such as the United Nations that have benefited everyone.
What needs to be done? There is an opportunity for business leaders to play a role in their own organisations and outside.
If appropriate and necessary, companies should revisit and reimagine their purpose and value proposition to understand how relevant they will be to the world. For instance, NGOs and international agencies are looking at their theories of change and changing their business models. Businesses are facing the same challenge and opportunities.
On top of that, exploring how they can create better value for their employees and for society. Collaborating with others within their business sectors and outside their sectors will be very important. And finally, business leaders really need to use their influence and advocate to make sure that the world post-COVID-19 is better than it was before.
To sum up, there are some micro-actions within the company and there are macro-actions, which means using the power of influence.