From Purpose to Profit

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The CEO of a shoe company was enjoying an evening out with friends. As the group took their festive cheer back to their hotel, one friend decided to order pizza from room service and discovered the kitchen was closed. The CEO, so confident in his company's service culture, dared his friend to call the shoe company's customer service number. The friend took the dare. When the customer service representative answered, the CEO's friend explained the situation: It was late, he and his friends were hungry, and he wanted to order pizza. The customer service representative, without knowing his boss was listening, responded, "Hold on, please." A few minutes later, the representative returned to the line with a list of pizza places located near the hotel that were open late. The friend was shocked. The CEO, on the other hand, fully expected the response. After all, the customer service representative was simply living out the shoe company's purpose: "delivering happiness."

Around the world, some of the most successful and trusted companies have simplified their brand messaging and are inspiring stakeholders—from employees to customers to shareholders—by aligning their companies around a simple statement of purpose.

Why? Because a body of evidence shows that when a clearly defined purpose is activated throughout an organization, it ignites a positive chain reaction that drives sustainable profit.

Activating a purpose starts with leaders who exhibit behaviors and look at every decision through the lens of whether it aligns with and supports the company's purpose. Consistent, purpose-driven leadership behavior creates a values-based culture that builds trust with employees who, in turn, emulate leadership behavior. Over time, trusting employees become engaged employees, which drives loyalty, innovation, advocacy, and productivity. Happier, more engaged employees have a positive impact on customers. They believe in companies that have a core conviction (or purpose) that aligns with their own and whose employees deliver consistent and authentic experiences one interaction at a time. Trusted relationships are the foundation of trusted companies, which, through increased stakeholder engagement and loyalty, deliver sustained profitability. Purpose-led companies reinvest a portion of profits to support their purpose-driven, values-based culture, which creates a positive, principled cycle.

So, what is a purpose statement? A purpose statement is an aspirational declaration that inspires a call to action. Every good purpose statement generally has nine characteristics. Those characteristics are as follows: 1) aspirational and belief-driven; 2) humanistic; 3) derived from and resonate with the company's values; 4) applicable to and shared with all stakeholder groups; 5) simple and easy to understand; 6) specific, with terminology and language unique to the company; 7) a long-term objective; 8) action-oriented (start with a verb); and 9) outwardly focused.

Powerful examples include:

Satisfy curiosity

Refresh the world

Accelerate sustainable transport

Empower humanity to live well

Businesses driven by purpose-led and trust-based relationships enjoy a unique competitive advantage. Competitors can copy a product or match a price, yet it is impossible to copy or fake trusted relationships and a values-driven culture.

In the pizza example mentioned earlier, although the product (pizza) was completely outside the company's core competency of selling shoes, the company's purpose—delivering happiness—empowered the customer service representative and drove a behavior to keep that promise. In activating and living its purpose every day, this shoe company quickly grew from a start-up to being bought for a billion dollars in less than 10 years.

Woody Driggs is the global advisory customer leader and a principal in Ernst & Young LLP's Advisory Services Performance Improvement practice. He is based in Washington, DC. Jeffrey Stier is a principal in the Global Customer practice of Ernst & Young LLP. He is based in New York. The views expressed herein are those of the authors and do not necessarily reflect the views of Ernst & Young LLP.

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