Warning: This column contains information about CEOs extolling the virtue of purpose. If you believe the only goal of a CEO is profitability, it might shake your beliefs. If you think CEOs can have many objectives, purpose amongst them, as recommended in a report last week by the non-profit Global Canada, it may be reassuring.
In recent memoirs, three prominent ex-CEOs share the programs of purpose they instituted at the helm. Their stories suggest purpose comes in three different forms that can be interrelated, but are worth describing individually: A tool for more engagement (and profits); a strategy to align better with societal trends that could threaten the corporation’s future; and, finally, a humanitarian ethos or obligation.
Shortly before he was invited in 2012 to become Best Buy’s CEO, Hubert Joly figured the ideal way to take the temperature of the ailing retailer was to visit a store and purchase something. He found the simple transaction of buying a screen protector and having it installed was like pulling teeth. “Yes, they helped me, but I could tell their work brought them no joy and their attitude and the way they did their work certainly did not inspire me, their customer,” he writes in is book The Heart of Business.
His priority was to build revenues and improve margins, preferably without eliminating jobs and closing stores. But if he told everyone at the company their purpose was to double earnings per share, he figures not much would happen. Employees don’t jump out of bed in the morning eager to improve the stock price.
Businesses – and particularly CEOs – must pay attention to profits. But Mr. Joly says companies need a noble purpose, something employees can rally around and customers can relate to. That corporate reason for being stems from what the world needs, the team is passionate about, the company is good at and what it can be paid for. In that vein, Best Buy’s purpose was to enrich its customers’ lives through technology.
He believes that purpose served as a tool to help the company grow, inspiring employees, and opening up new opportunities and markets. Certainly, the company bounced back and grew.
As a rising executive, Indra Nooyi began to see the need for PepsiCo to reconfigure itself when she hosted a birthday party for one of her young children and some of their friends had to call home for permission to drink the cola. She also noticed she was the only executive at the firm still drinking the full sugar version. And she says she was discomfited that it took 2.5 gallons of water to produce one gallon of Pepsi-Cola or other beverages. “The more I thought about PepsiCo’s future, the more I felt it was incumbent on me to connect what was good for our business with what was good for the world,” she writes about becoming CEO in My Life in Full.
Ms. Nooyi launched a Performance with Purpose program, aimed at delivering excellent performance based on three imperatives: Nourish humanity and the communities in which its workers live, replenish the environment, and cherish the people in the company. This wasn’t intended as philanthropy or corporate responsibility but something deeper – transforming the way the company did business to be more in touch with the world it was operating in.
The company still makes lots of stuff that dieticians sneer at. But the portfolio of food in its “Good for You and Better for You” offerings accounted for almost 50 per cent of revenues when she retired in 2018, compared to 38 per cent in 2006. They figured out how to cut the amount of water in a bottle of Pepsi by 40 per cent. So not perfect, but progress with purpose.
Paul Polman went further as CEO of Unilever from 2009-2019. The Lever brothers who founded the company wanted to improve the health of Victorian Britain by making Lifebuoy soap and Sunlight detergent. Like them, he says companies must improve well-being for everyone it affects and through all its functions – every product, every operation, every region, and for every stakeholder, including employees, suppliers, communities, customers and even future generations and the planet itself.
We hear much these days of “net zero” for climate change. But for Mr. Polman, that’s not enough. “The ultimate question is this: Is the world better off because your business is in it?” he asks in his book Net Positive, written with eco-strategist Andrew Winston.
Anything less than a full declaration of fealty to profits can draw out financial vultures, eager to buy the company and make more money. Unilever had to fend off such a bid from Brazilian cost-cutter 3G Capital, owner of Kraft Heinz. Even the head of Greenpeace Britain called Mr. Polman to offer assistance, a sign of Unilever’s net positive efforts. Mr. Polman notes that in the following few years Unilever’s shareholder returns grew four times that of Kraft Heinz, indicating net positive can also mean net profits.
Cannonballs
- The Great Resignation has led some managers to talk about a new “war on talent.” Consultant Kevin Eikenberry urges you to ditch the metaphor, since wars are costly and the metaphor suggests you are fighting your talent. Instead, he offers another metaphor: Become a magnet for talent.
- Ideally, organizations should pay people in proportion to their cognitive work, since it’s more difficult than logical thinking and crucial to creativity. But in practice we tend to reward critics more than synthesizers, success coaches Pronita Mehrotra and Anu Arora and business school dean Sandeep Krishnamurthy argue.
- Two questions that might help you interviewing job candidates, from Laith Masarweh, CEO of Assistantly staffing solutions: “How do you refuel your energy,” since that’s important for success on the job, and “think back to your days in college or high school and when you had a test in 10 days’ time – how did you study?” which will probably indicate how they handle work tasks.
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