During my writing about a purpose-driven bank, I tried to find good examples of what purpose-driven actually means. Googling the question the number one result is from the Plato Project, who outline eight great purpose-driven organisations. The list is:
“With great courage, integrity and love,” reads the higher purpose statement of Whole Foods, the United States’ first certified organic grocer, “we embrace our responsibility to co-create a world where each of us, our communities and our planet can flourish.” To this end, the multibillion dollar business donates over 5 per cent of its annual net profits to charitable causes and is involved in efforts to safeguard the environment, foster fair trade in its supply chains, improve food safety and ensure the humane treatment of animals.
Low-cost air carrier Southwest Airlines believes in “democratizing the skies” and this goes further than a marketing strategy to offer the cheapest fares. The airline, the world’s largest low-cost carrier, is also a leading corporate citizen taking a triple-bottom-line approach while being committed to transparency and responsible business practices. Southwest makes charitable donations of over $US11 million in combined value (cash and sponsored travel) each year, while maintaining its position as an industry leader in fuel efficiency and greenhouse gas reductions.
For every pair of glasses purchased, Warby Parker donates another pair to non-profit organisation VisionSpring, which provides glasses to people in developing countries. This farsighted idea stems from its goal to offer designer eyewear at a revolutionary price – not just for its customers, but for the less fortunate too.
A commitment to sustainability is sewn into the very fabric of clothing company Patagonia. In addition to supporting numerous environmental initiatives and remaining transparent about their sourcing and production processes, the company has gone so far as to tell its customers not to buy its products, launching the Common Threads Partnership program to encourage people to repair, reuse or recycle instead.
With so many companies pledging their commitment to customers or stakeholders, it comes as a surprise to learn that storage solution retailer The Container Store’s core purpose is to put its employees first. The company pays 50 to 100 per cent above the industry average and provides 240 hours of training compared to the measly mean of seven. During the 2008–2009 recession, not a single employee was let go, and this bold investment has since paid dividends in increased loyalty and productivity.
It makes perfect sense that Life is Good feels optimistic. Starting with a $200 investment in 1989, the apparel and accessories company has since grown into a $US100 million business. Guiding it the entire way has been the goal of helping spread that optimism to others. The company donates 10 per cent of its net profits to children in need, in addition to raising even more money through events such as the Life is Good music festival.
There is far more purpose behind technology giant Google than what is suggested by its unofficial slogan, “Don’t be evil”. From its outset, its aim has been to “organise the world’s information and make it universally accessible and useful”. Google provides its employees with exceptional work environments and flexible working arrangements to drive the experimentation needed to achieve this purpose.
In the 1890s, Unilever founder William Lever set the company’s purpose as “making cleanliness commonplace”. In 2010, the consumer goods giant further honed this purpose to better respond to a world that is “starting to exceed its capacity”. Under this revised purpose of “making sustainable living commonplace”, Unilever has three targets to measure its progress against: improving the health and wellbeing of one billion people, reducing negative environmental impact and sourcing raw materials in a sustainable way while enhancing livelihood.
However, they’re not for me. The reason is that I don't find a purpose like don't be evil works well when so many people think Google are evil. It's that statement that makes them feel it. Equally, I think the above confuses mission statements, vision statements and purpose statements.
Mission and vision are about what the company represents and where it is going. I’ve written about this stuff before: Do vision, mission and value statements matter? and see vision as the destination and mission as what the company is trying to achieve. Purpose is what the company stands for. It is its cultural position, rather than its market position. It’s a subtle nuance that may be missed by the text books (I haven’t read any on purpose and how ti relates to companies, so correct me if I’m wrong), and what I’m getting at by being purpose-driven is what the focus is outside the company, rather than inside.
Examples would be that our purpose is:
- to minimise climate impact
- to protect wildlife
- to care for our next generations
- to nurture and invest in the future
- to be good for society
- to be good for the world (is that don’t be evil?)
Either way, what I’m getting at is that a purpose-driven bank focuses upon something outside the business as its guiding light, then translates that into the vision of where it wants to be and the mission of how it intends to get there. A subtle nuance, but maybe an important one. For example, Co-operative Bank, before its destruction by the Crystal Methodist, had a very clear purpose: to be an ethical bank. This is still made clear on their website:
For People with Purpose
At The Co-operative Bank, we have always been driven by something different: an ethical approach to banking. It's why we were the first UK high street bank to introduce a customer-led Ethical Policy - a policy that's been shaped by over 320,000 customer responses since 1992.
In 2017, we marked the 25th anniversary of our Ethical Policy. We have worked together to tackle the things that matter to you. From climate change to human rights. And while a lot has changed in that time, we're as committed as ever to:
- Listen and care about what matters to you.
- Make sure that your money is being used for good.
- Campaign for what you think is right.
Their vision of how to do this translates into the following statement:
To be the efficient and financially sustainable UK retail and SME Bank that’s distinguished by co-operative values.
They don’t have a mission statement as, maybe, their purpose statement is seen to be what it is.
And this is where it gets interesting as it may sound a little confusing to delineate between vision, mission and purpose statements. Maybe it is over-egging the point. The thing is there is a point being made here, and that is that there is a different point being made by purpose versus mission.
The Australian website Effective Governance puts it well:
“Although the terms ‘vision’, ‘mission’ and ‘purpose’ are commonly found in strategic plans, there is sometimes confusion over what they mean.
“The vision statement describes what the organisation will look like in the future. It serves as a guiding beacon that depicts the kind of future to which the organisation aspires. It also provides direction to everyone in the organisation as they focus their efforts on achieving the vision. The BBC’s vision statement is a good example: ‘to be the most creative organisation in the world’.
“A mission statement, on the other hand, describes what an organisation does and for whom. In addition, it can also state the benefit or benefits provided by the organisation. In the case of the BBC, it is ‘to enrich people’s lives with programmes and services that inform, educate and entertain’ …
“A purpose statement provides the reason or reasons you exist. It is about why you exist, whereas the mission is about what you do and for whom. The BBC, for example, has six public purposes, which are set out by Royal Charter and Agreement. They are: ‘sustaining citizenship and civil society; promoting education and learning; stimulating creativity and cultural excellence; representing the UK, its nations, regions and communities; bringing the UK to the world and the world to the UK; and delivering to the public the benefit of emerging communications technologies and services’.”
That shows this delineation between purpose, vision and mission well. The various research I’ve made on this subject however shows it is clearly not well understood and not well articulated. Most firms have a vision and mission statement. Some have a vision and purpose statement. Very few have a vision, mission and purpose statement. However, I think this will become important in the next decade as we talk about sustainable finance, attracting customers and winning the war for talent.
If I cannot see what you stand for, then you could fall for anything. If I don’t know that you have values aligned with my own, why would I want ot work or deal with you? And your mission statements are often trite employee mantras about values and focus, not about how you sit in society and the world.
As we move towards a future where customers and employees want to see that banks and businesses are doing good for society and good for the world, they want that to be attested to by a clear purpose statement. That statement should be the guiding light for how the bank (and business) behaves. For example, the mission and vision of Amazon.com is:
Our vision is to be earth's most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online.
There is nothing there about where it focuses externally, and is the reason why it can sign up for the Business Roundtable’s statement about putting stakeholders above shareholders, and then screw their employees to the floor. It has no purpose.
In the future, purpose will guide the customer, employee and business in its stance, operations and focus. Oh, and if I have my way, it will also guide the shareholders and investors. Remember what I said about greed is good?:
Until activist investors start to truly punish such behaviours, which they don’t today, all this Business Roundtable CEO BS will continue as shareholders will always rise above stakeholders. In fact, it already has: “Whole Foods [an Amazon subsidiary] has shown how we’ll know when companies are reneging [on the Business Roundtable’s statement]. One signal would be cutting benefits for part-time employees. That’s exactly what Whole Foods just did.”
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...