America’s CEOs have spoken: the purpose of a corporation is not just to serve shareholders, but also to promote an economy that serves all Americans—from employees, customers, and suppliers to communities across the nation.
This recent extraordinary announcement by the Business Roundtable confirms what I’ve believed for more than 30 years: that by aligning business and social issues, companies can accelerate growth over the long term. And, that corporations have a duty beyond creating shareholder value.
While the 181 CEOs that signed the Business Roundtable pledge understand and support purpose, it’s important to remember that purpose is a journey. In the context of the Business Roundtable statement, purpose is embedded in the business and core to long-term success.
Too often, purpose manifests as "well-meaning activities that are virtuous side hustles, while key activities of… business are relatively undisturbed," said Anand Giriharada, author of Winners Take All: The Elite Charade of Changing the World.
While more people are asking "fundamental questions about how well capitalism is serving society," says Fortune, it can be tempting for companies to grab onto the first chance to gain visibility as a purpose-driven brand.
With 78% of Americans expecting companies to take a stand on important societal issues, brands are considering purpose as permission to be activists.
But many of them are missing the most important part of activism: Action.
Last year, Nike brought this trend to the fore with its divisive, but ultimately successful, Colin Kaepernick ad. The ad was the focal point of a campaign celebrating the 30th anniversary of Just Do It. Its proclamation to "believe in something, even if it means sacrificing everything" summed up the experiences of several athletes in addition to Kaepernick, including Serena Williams.
This approach ultimately worked because Nike has long been an activist brand. Its customers push boundaries and expect the people behind the Swoosh to do the same. Nike has also made long-term commitments to social issues important to the brand, including equality in sports. Nike’s stance was the right move, at the right time. And this helped Nike realize a $6 billion increase in overall value since the Kaepernick ad.
Purpose falls on a spectrum – starting with cause branding and corporate citizenship and leading to shared value and purpose DNA. At each stage, purpose moves closer to the center of the organization, until you have a business built and operated to serve a purpose beyond profits.
Think Patagonia, with protecting the environment at the center of everything the company makes, does, and says, or Unilever’s Sustainable Living Plan.
Purpose DNA brands are best-equipped to take a stand for something authentic. Patagonia can sue the President and explicitly endorse senate candidates because those moves align with the company’s values – and, arguably, the values of the people who buy Patagonia products. These were brave, first-of-their-kind actions, but they received minimal consumer pushback.
The nuance is that Patagonia acts first, and then advertises (and then, only sometimes).
Patagonia’s focus is to make change, make people aware of how they can make change, and share impact stories. It’s a wildly different approach than most marketers and advertisers take today, which is to release creative ads with little or no substantive action to back them up.
There is even a new trend of "purposeful advertising" – an approach Budweiser is adopting to mixed response. Its 2017 immigration commercial was powerful but hollow in terms of actual progress toward the issue. Its new advertising around Budweiser’s shift to wind power highlights concrete actions that company is taking to reduce impact on the environment. That’s commendable.
Some brands don’t advertise their actions at all. They make a decision, announce it publicly, and act. This is values-aligned activism: decision-making based on company values and how they align with social issues relevant to the business.
Following the Parkland shooting, Delta CEO Ed Bastian announced an end to honoring discounts for NRA members. Cue outrage. Bastian’s response? "Our values are not for sale."
Beyond losing revenue from NRA supporters (minimal), Delta, based in Atlanta, faced backlash from Georgia Republicans. In response to Delta’s move, lawmakers dropped a jet fuel tax break Delta was lobbying for.
But to Bastian and his workforce, staying true to the company’s values was more valuable than losing revenue in the short term. And there was no advertising around the announcement. It was a tough decision and wasn’t for show.
While sparking conversation and raising awareness for issues is admirable, it’s a short-term strategy, often bundled within a finite campaign strategy. Brands might think they have nothing to lose by making a thought-provoking advertisement that gets people talking.
But they have quite a bit to lose if enough people disagree with their message - such as sales, talent, and momentum.
Purpose isn’t just about making our world a better place. It’s also a core business strategy that, when done right, supports business goals and financial performance in lockstep with social impact. When purpose is disconnected from the business, consumers, employees and other stakeholders are more likely to buy from, work for or advocate elsewhere when brands stand for something with which they don’t agree.
Purpose is a proven strategy for driving bottom-line growth. And like any business strategy, purpose is an investment and should be identified, integrated, and activated inside and outside the organization with the same thoughtful planning and execution any other significant initiative would warrant.
It requires cross-functional expertise and leadership, aligning resources across the organization – R&D, people, marketing, finance, and so on. When purpose initiatives are shoehorned into marketing or advertising departments, the result is often an emotional and compelling advertisement, full stop. Call it adver-activism – on the far side of the spectrum from values-aligned activism. The impact is short term: impressions, perhaps a small sales bump.
But would you rather invest millions in an ad campaign, or millions in discovering and activating an authentic purpose built on a sustainable, long-term vision? One that demonstrates a measurable impact on the business and a social issue over time?
As more people place their trust in business above all other institutions, business leaders should think seriously about their role in society. Is it to capture attention and spark conversation? Or is it to engage others in creating change for the long term?
Adver-activism means standing up for today. Purpose means standing up for tomorrow.
Carol Cone is CEO of Carol Cone On Purpose and chair of jury for the inaugural PRWeek Purpose Awards, which will be handed out on the first evening of the PR Decoded: Purpose Principles conference in Chicago on October 16-17.