23 Sep Interview with Globeone brand expert: “Purpose becomes a question of survival”
“How hypocritical is the current purpose discussion? And what do companies have to do now? Brand expert, Niklas Schaffmeister of Globeone, explains it in the W&V interview.”
Written by: Verena Gründel
Nowadays every company worth its salt needs a purpose. A higher goal. A deeper meaning. More than just maximizing profits. The discussion about corporate goals beyond profit is so omnipresent that some people are already annoyed by the hype and suspect “purpose-washing”.
However, Germany is by no means as advanced in terms of higher corporate goals as the loudest voices might suggest. That, at least, is the conclusion of the “Purpose” study run by the management consultancy Globeone. According to the study, half of the companies surveyed have considerable “purpose” gaps in their public perception.
For example, Volkswagen, Bayer and Deutsche Bank. On the other hand, Bosch, Continental, Rewe and Aldi, are regarded as credible or “purpose ready”, are much better off. We wanted Niklas Schaffmeister, Managing Partner at Globeone, to break down the Purpose discussion for us:
W&V journalist: Mr. Schaffmeister, everyone is suddenly talking about Purpose. Wouldn’t you consider the whole purpose hype hypocritical?
Dr. Niklas Schaffmeister: The term ‘hype’ suggests that we are dealing here with a short-term exaggeration. But I believe the reasons for the ‘purpose’ breakthrough are much deeper. The search for a higher corporate purpose reflects the social and cultural change in the western industrial countries.
It’s getting harder and harder to justify unethical behavior. Customers expect concrete answers. Even now, the effects on consumer behavior are real: meat renunciation, waste avoidance, sharing economy, packing bikes instead of cars, flight shame. It is also about the future of capitalism. The basis for this development appears to be quite robust.
Is that hypocritical, then? I think it all depends on the company. Surely there are many companies that misunderstand “purpose” as a communication topic. Showing attitude through a campaign is barely the tip of the iceberg. We work with a number of companies that take this topic very seriously. If you use it well, it’s a great opportunity to make the company fit for the future and take the middle management and the entire workforce with you on this journey. Of course, I could also leave the subject to an advertising agency – then it is indeed hypocritical.
W&V journalist: Why does a company need a purpose at all today? And, is this really new?
Dr. Niklas Schaffmeister: In 2016 a Harvard study provided clear evidence of the positive link between purpose and economic success. And there is much more evidence to be found. However, this only applies if the purpose is clearly articulated by top management and firmly anchored in middle management.
Leaders who have pursued a higher purpose and have seen their actions in a social context have always been there. What is new, however, is that this leadership model proves to be superior to an authoritarian approach. Otherwise, young academic talents no longer want to work for them. So, purpose becomes a question of survival for many organizations. And now investors are also taking a closer look at what kind of business they are investing in. The equation that economic activity must always have negative consequences is no longer correct.
W&V journalist: The goal of a business enterprise has always been to earn money and now suddenly you expect there to be a deeper meaning, a higher drive. Isn’t purpose-washing preprogrammed on a grand scale?
Dr. Niklas Schaffmeister: Without profit, a company cannot survive and consequently will not achieve its purpose. Profit is therefore good. However, in its most extreme form the sole focus on shareholder value is often dysfunctional. This becomes evident when watching socially conscious entrepreneurs take on long standing corporations.
There are many companies for whom it is relatively easy to define their purpose: for example, if you are advancing electric mobility, developing the medicines of tomorrow, mixing up the financial sector with a Fintech, or getting involved in the education sector. In other industries it can often be more difficult – but there are always opportunities. However, a purpose only delivers the positive effects if you really mean it and provide relevant proof points. People are not easily fooled, and the employees are very attuned to deception.
W&V journalist: Is it possible for companies that have never thought about a higher goal to develop a purpose at all?
Dr. Niklas Schaffmeister: Every company can develop a purpose. One could argue that is always exists, it is simply waiting to be exposed. But it’s not that simple. There are companies that, as mentioned above, deal with topics that automatically have a relevance for social progress for whom it is relatively straightforward.
For most companies, however, this is not so easy. But in our experience, there are areas or topics in almost every company that are particularly innovative and sustainable. You can build on this, steer your strategy step by step in a better direction, invest in the right fields and innovations, make positive contributions and take your employees with you on this journey. Often the development of a purpose is the starting point for a real transformation process.
W&V journalist: And how do you develop a higher goal? Doesn’t the purpose have to come from the company’s DNA, which would mean that it can’t be developed?
Dr. Niklas Schaffmeister: A higher corporate purpose is developed in a multi-stage, structured process in which employees, middle management and managers are involved. If you were to take the trouble to ask your 10,000 employees what the purpose of the company is, imagine what great stories you would uncover!
Based on this and further market and competitor data, the most promising options are identified and then tested against various criteria such as credibility, feasibility and differentiation. But it is true: as a rule, many elements already exist – but there are also cases in which companies take the opportunity to reinvent themselves to a certain extent.
What is important is that the higher goal and the identity – building elements of a company – i.e. vision, mission and corporate values – should be closely interlinked. This also means that a successful purpose project often leads to vision, mission and values being revised.
While working on various projects we often hear the argument that “we are not ready yet”. But that’s not the point: in some areas of the company, resource consumption may still be high and the products not very sustainable. But there are usually also niches in which great new products are already being developed, in which more sustainable solutions are being researched. Based on these areas you could lead by example, provided that management is open to it. Luckily, we are currently experiencing many situations in which top management is actively driving the process.
W&V journalist: Surprisingly Bosch, Continental, Rewe and Aldi performed particularly well in their index. Bosch, for example, was involved in the exhaust scandal at VW, while Aldi is criticized for lowering supplier prices. What are these four companies doing right?
Dr. Niklas Schaffmeister: All four companies have succeeded in establishing trustworthy brands that are perceived as authentic by consumers. Bosch’s resilience to the scandal is aided by the goodwill built through their household appliances and almost indestructible tools. Most consumers do not have the diesel issue on the forefront of their mind, and it is ultimately the manufacturer who decides which technology to install.
Similarly, Continental also represents safety and reliability. The key with Aldi and Rewe is that they are in daily contact with their customers. Expectations are clear and that’s what’s delivered. They keep it honest and authentic. What surprised us, however, was the realization how broken the relationship between citizens and government parties has become. Virtually every company now enjoys a higher level of trust than the federal government.
Read also: Purpose Readiness Study: https://www.globe-one.com/blog/purpose-readiness-study/
The German version of this interview was published first by W&V on September 3, 2019. Translation by Globeone.
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