Get Smarter on Measuring Purpose

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By Stephen Hahn-Griffiths

In the 1970s, the economist Milton Friedman famously described “profits” as the social responsibility of business. It reflected a pervasive view of corporate self-interest, and it captured the driving force behind capitalism for more than a generation. That philosophy, however, is increasingly being challenged and criticized for promoting outsized greed, inequality, and irresponsible

In a statement released by the Business Roundtable in 2019, 181 CEOs of multinational companies pledged to redefine the purpose of a corporation beyond profit and to completely rethink how they operate. Coupled with the Sustainable Development Goals mandated by the United Nations and the raised expectations among consumers for companies to improve society, a strong countervailing view is emerging. And it is inspiring a new agenda and the need for all organizations to deliver on capitalism with a conscience.

In this brave new world, increasingly impacted by major cultural and societal life forces, companies are expected to be responsible on a multidimensional level. That means not only being fiscally responsible to satisfy profit motives, but also delivering on the expectations of social and environmental responsibility. (Click here to learn how purpose drives Mars, Inc.)

C-suite executives are now expected to manage their companies more purposefully, and with higher integrity, than in the past. Beyond satisfying shareholders, they need to serve and fulfill a broader social agenda to meet the expectations of employees, consumers, customers, investors, regulators, and other stakeholders. With this need comes the requirement to radically change the priorities for how a company and its corporate brand are managed. It changes the stakes of the game for business leaders, who now must be as concerned about the company’s impact on society as they are about the bottom line.

Larry Fink, CEO at BlackRock, perhaps best captured the changing sentiment behind purpose in his 2019 letter to shareholders: “Purpose is not a mere tagline or marketing campaign; it is a company’s fundamental reason for being — what it does every day to create value for its stakeholders.” He went on to write that “profits are in no way inconsistent with purpose — in fact, profits and purpose are inextricably linked.”

Consistent with this point of view and the emerging macro-economic market forces, the concept of fulfilling a “higher purpose” has evolved to describe a company’s reason for being, or how it contributes to society beyond profits. That premise changes the emphasis of “why a company exists” from merely selling products and services to validating its very existence and motivating employees to fulfill higher expectations.

This shift was further evident in The RepTrak Company’s 2020 study of global trends, which revealed that the fulfillment of a higher purpose is one of the biggest challenges business leaders face today. But while most leaders would acknowledge that they care about being purposeful and already have a defined declaration of a “higher purpose” in place, few have a good handle on how to activate or measure it.

This is problematic, especially for CMOs and chief communications officers (CCOs), because activating and communicating a higher purpose can be a powerful differentiator and motivator in the marketplace. But while CMOs and CCOs accept that living to a higher purpose is increasingly critical, the 2020 RepTrak study indicates that only 3 percent of companies are believably viewed by consumers as having a strong purpose. That leaves a significant majority of CMOs and CCOs with having to answer questions from their CEO and board of directors about how to get more credit for the company’s purposeful actions and to prove that purpose truly creates incremental value for the business.

An Answer for Measuring Purpose

Taking this into consideration, RepTrak, in collaboration with the movement marketing company StrawberryFrog, set out to find a way to decode and measure purpose. The process began with the premise that purpose is linked to an increase in key supportive behaviors, such as the likelihood to purchase from a company, invest in it, or work for the organization. As part of the discovery journey, we uncovered a behavioral trifecta in play, based on the impact of brand expression, reputation, and overarching purpose (see Figure 1). In doing so, we were able to calibrate purpose and the impact it has on driving human behavior relative to brand expression and reputation.

As shown in Figure 1, we uncovered that 28.7 percent of supportive behavior can be directly attributed to purpose. Put another way, we learned that if a company is only fixated on managing brand expression and reputation (a combined 71.3 percent of behavioral support), it is missing out on fulfilling its true potential. By not leveraging the power of purpose, a company is falling short of the possibility to drive elevated levels of behavioral support.

Germane to how purpose is defined lies the potential to measure it. In thinking about purpose as an overarching belief, we were able to normatively develop a “purpose score.” This measurement of purpose is defined by an algorithm that calibrates the internalized belief among stakeholders based on how they perceive a company. In this way, we were able to capture an individual’s emotional, rational, and visceral reactions according to how purposeful they believe a company to be based on responses to the following questions:

•     Does the company pursue objectives beyond profits?
•     Do the company and its products create positive benefits for society as a whole?
•     Is the company attempting to change the world for the better?
•     Is the company truly improving lives and supporting the communities it serves?

Any given company can be purposefully scored based on these questions. And in aggregate, empirically evaluating a company in this way provides the basis for deriving a purpose score according to how they believably deliver. This score is scaled on a spectrum of 0–100 and provides the basis for a reliable quantitative measurement of purpose over time that can be applied across different companies, industries, and geographies.

Subsequent to the development of the means by which to measure purpose, we have globally advanced our RepTrak studies as part of a statistical exploration to define the underlying drivers of what it means to be purposeful across the G15 economies. Our work identified seven drivers that a company can tap into to believably fulfill its purpose, including product morality, egalitarianism, sustainability, societal welfare, data privacy, employee advocacy, and champion of progress (see Figure 2, above). These drivers provide examples of messaging trigger points based on what a company can “do and say” to believably deliver on “purpose beyond profits.” These drivers are also examples that a company can leverage to outplay the competition and drive increased levels of support, including higher sales.

Motivation to Measure Purpose

Purpose should be viewed as an organizational North Star. And when applied in that way, it creates the potential to use purpose as a strategic inspiration for decision making, especially for CMOs or CCOs. It can be a litmus test for driving a company’s integrated marketing communications strategy and corporate narrative, and by activating purpose, it provides a way to elevate brand expression and reputation. Ultimately, it underscores societal and business impact.

But to unleash purpose, it must be continuously measured. It also needs to be linked to the likelihood that a consumer will buy from and buy into what the business stands for. The incremental ROI should be tied to how effectively the organization activates and communicates its stated higher purpose. The more purposeful the company, the stronger the level of support.

As demonstrated in Figure 3, companies with an excellent purpose score garner almost universal support from stakeholders. While effective communications can play a key role in amplifying purpose, a company’s actions also speak volumes. It is important to have a measurement model that is sensitive to capturing the impact of what the company does and says.

What is truly irrefutable is that the power of purpose, when mindfully executed through all available means, can be a strategic aphrodisiac in driving deeper emotional connection and belief into what a company stands for.

About Author: Stephen Hahn-Griffiths (@shahngriff) is EVP at The RepTrak Company.