PURSUING PROFIT WITH PURPOSE

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“People don’t want to buy a quarter-inch drill. They want a quarter-inch hole.” 
 Clayton M. ChristensenThe Innovator’s Solution: Creating and Sustaining Successful Growth

Businesses often mistake the way they create value with the value customers want them to create.

This is not a philosophical distinction; rather, often, the difference between companies that stay on top and ones that stagnate.

A spectacular example of this in practice was the failure of the music industry to anticipate and swiftly adapt to the threat posed by file sharing, which wiped $6 billion off global record sales in the early Noughties.

The fault of the record Majors was fundamental: a conflation of what they did (making and selling a product) with the purpose for which they did it (connecting people to the music they loved).

Companies in all sectors today face a similar conundrum: what value are we in the business of creating?

Disruptive technology should be framed as a marketing challenge, not a technological one.” 
 Clayton M. Christensen

As with the music industry, technology is accelerating the pace of change, but it is not the only disruptive factor: evolving social, economic, and environmental contexts, and the interactions between them, conspire to push and pull companies in often opposing directions. In this maelstrom, it is easy for mature companies to lose sight of what they are about.

A number of new, disruptive business models are emerging that capitalise on these trends by connecting people with what they need, when they need it, in more brutally effective ways than established leaders.

It is no coincidence that so many disruptive market innovations put consumer (and by extension, social) utility at the heart of their value proposition – whether that’s enabling access to funding (Kickstarter, Zopa, Funding Circle), access to mobility (Zipcar/Uber), access to accommodation (AirBnB) or even access to new ideas (OpenIDEO).

The innovativeness of their business model is driven out of the clarity of their social purpose.

And this is something large businesses can and are doing too. Food companies such as Nestlé, Unilever, and Danone are redefining themselves as health, wellness and nutrition companies. Technology companies such as Intel, IBM, and GE are repositioning themselves as enables of smarter, more sustainable cities. And carmakers such as Nissan and Toyota are making low-emissions mobility part of their central mission.

Social purpose sets companies on the right course by bringing the future, as well as the immediate, into the boardroom. It reduces the frictions between external expectations and business ambitions. And more than this, it provides the lens for targeting new market opportunities.

An example of this is Arogya Parivar, a social venture introduced by the pharmaceutical company Novartis to bring access to healthcare to the world’s poorest citizens. The programme became profitable after 31 months, much faster than anticipated, is now serving over 10 million people in India and has been expanded to parts of Africa, Vietnam and Indonesia.

Nestlé has adopted a similarly entrepreneurial mindset to social challenges in developing countries by creating and marketing a growing range of micronutritionally fortified products, designed to address the double burden of malnutrition along with a rise in overweight, obesity and diet related chronic diseases.

Clearly, the examples above amount to substantial changes in business strategy, corporate practice and product development. In many cases, this change starts at the top. It may appear technical, even scientific in nature. But as communicators and marketers, the drivers and levers of change fall within our sphere of influence and expertise. We are world interpreters, equipped to bring the outside in and contour companies to a shifting social landscape. How well companies are seen to do this will determine how relevant they are likely to remain; whether they are fit for purpose or deemed surplus to society’s needs. We have a challenge, but also an opportunity to play an even greater, business critical role.

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