05 Mar Do-gooders or hypocrites? Why purpose credibility is elementary
Do companies need a purpose to stand out from the competition? And how do they succeed in developing, properly anchoring and living this from their own brand origin? In an interview with the marketing trade magazine W&V, Carina Hauswald explains the typical pitfalls on the way to a socially relevant corporate purpose and purpose credibility.
With the first purpose study, Globeone found out that companies worldwide – but also the vast majority of German companies – “still revolve around themselves far too much when it comes to brand communication,” says Carina Hauswald. “Only 18 percent of German companies are already positioning themselves via a purpose, which places the products in a meaningful context for a larger, socially relevant group.” There is therefore a lot of catching up to do – but a procedure on the way to a purpose cannot be generalized without restriction.
Purpose credibility depends on industry and business model
“Basically, companies that acquire a purpose place people and their environment at the centre of their positioning,” says Hauswald. “This claim must be made as concrete as possible and it must fit the industry.” Industries with a particularly dirty image, such as the oil industry, would naturally have greater difficulties with purpose credibility with this approach. “Or take the defence industry: here it would be sheer mockery to say that it puts people at the centre of its positioning.”
The image of the industry in which a company operates is therefore a first important and critical factor for success. Moreover, the business model must of course be compatible with the message. For example, companies that position themselves in the luxury segment cannot easily develop a socially relevant purpose because their business model is based on exclusivity. “Expensive watches, fast cars – they are made for a small circle and not to advance society one step,” explains Hauswald.
Image of the do-gooder: Determined by trends and fashions?
Of course, positioning is always driven by current social issues. “Every decade produces its own positioning concepts that promise early movers among companies sufficient potential for differentiation,” answers Hauswald. “In the 2000s, for example, this was the issue of sustainability, which has since become an absolutely indispensable part of any positioning.” Now the Purpose theme is topical because it still shows brand managers many white spots on the positioning map – so whoever acts first naturally has more options to choose from.
“On the other hand, the more brands jump on this bandwagon, the more important it is not to remain too vague,” says Hauswald. “If every company in an industry simply wants to make the world a better place in the end – to put it casually – then this concept quickly loses its potential for differentiation. But you can also develop a purpose that is a little more concrete and reflects your own unique company history.” In the end, the strength of such a positioning concept lies in the fact that it is thought out from its own brand origin by explaining “why am I doing this?” and at the same time looking into the future: “What do I want to achieve with my product?”
Purpose credibility: the role of management and employees
It is not only important to communicate the higher brand purpose to the employees, but ideally companies should also develop this purpose together with the employees. The input from the workforce is very important. “Whether brand managers want it or not: in today’s world, employees are the first and permanent brand ambassadors; ideally, they embody the brand purpose. You have to train them for their mission and motivate them again and again,” says Hauswald. For the purpose credibility, a discrepancy to the culture of an organization is an absolute worst case.
The management plays a very decisive role. “In the end, the purpose stands or falls with whether management sets the right example. Leadership by example is an important keyword here. So, it is not enough to simply write down a purpose, but it must be properly anchored in the organization and brought to life,” says Hauswald. This organizational component should not be neglected because it is a transformative process that requires patience and persuasion.
“Purpose is not a panacea, of course”
As is well known, he who rises high can also fall low: Whether this could not become a pitfall if you hang your purpose too high is another question posed to Carina Hauswald in the W&V interview. “Yes, there is a danger. And some industries are known to be under strict observation, not only by regulatory authorities but also by NGOs, think of the chemical industry,” says Hauswald. As a company, she says, it is often not up to you as to whether and when the public’s focus is on a brand. Here, too, it is crucial to be credible and honest and to do what you preach. Then you are less vulnerable when a mistake is made. “And one thing is clear: the purpose is of course not a panacea. The performance has to be right in the overall context of the company, and there are many factors involved.”