Business can change the world

Pohjoisranta Burson-Marsteller organized an event together with Directors’ Institute Finland to discuss about the purpose of the companies 11th April 2017 in Helsinki.

The keynote speaker was Geoff McDonald who has was integral to the transformation journey Unilever is on to a new success. Rediscovering Unilever’s purpose has been key to the transformation and McDonald shared this story with the Finnish directors in April.

-We are living interesting times, where a form of capitalism where short-term shareholder return is no longer sustainable, McDonald says.

Moreover, McDonald argues, society is beginning to demand that all stakeholders benefit from good business.

For the past 10–15 years the business world has ignored its other stakeholders.

Unilever as an example

In Unilever a trigger point for rediscovering the purpose in 2009 was unsatisfying performance of the business and difficulty to hire employees. By rediscovering and implementing the purpose throughout the organization, the company gained growth, reduced costs and attracted employees again.

-The purpose of a company these days needs to have something to do with attending to either – or both – social and environmental challenges and opportunities, McDonald emphasizes.

The purpose of a company cannot be to make money. Growing and being profitable is the consequence of good business. Its purpose is something else and McDonald explained how Purpose has driven growth and profitability in Unilever.

By defining the purpose a company can bring value to all stakeholders. Unilever responded to the environmental water challenge by reducing water consumption with their products for example. Thus, mitigating its risk on water dependency.

Contributing to SDG’s

While redefining the purpose is a task of a management, it needs to be in line with the strategy and it should be measured. A purpose statement without goals and measures means nothing, according to McDonald. It just leads to “purpose washing”.

-To find a new purpose businesses could consider the Sustainable Development Goals and which of these could they contribute to, and in so doing grow and be more profitable.

With a credible purpose a business attracts the best talents in the future – whether they are millennials or +45 years old. Both of which are looking for ways to “save the world” and looking for a meaning in their own lives.

The purpose differs from vision and mission in a rather simple way. While the purpose answers the question “why this company does what it does”; the vision answers “what would the future of the company look like”; and, the mission then tells “how the company is going to achieve that”.

The whole reason why we are currently discussing about the topic of purpose – according to McDonald – is that for the past 10–15 years the business world has ignored its other stakeholders and the value add to them. Too much focus has been given to the shareholder. This has led to greater inequality and a widening gap between rich and poor; businesses have behaved in unethical ways. Customers now have the power, through the advent of social media, and they expect more from business today.

Now it is about the time to ask your board members, whether they are aware of the purpose of the company.