James Penn: Purpose can make or break you

Colin Kaepernick tweeted this image of his Nike advertisement to twitter. Photo / Supplied

Nike's "Just Do It" campaign featured Colin Kaepernick, the quarterback who knelt during NFL pre-match national anthems.

Climate change, inequality, mental health, LGBT+ rights, gender equality, cultural and ethnic diversity, accessibility: these are but some of the topics CEOs and boards are now asked to weigh in on.

Commercial entities are corporate citizens, and they had better start acting like it, say the emerging generation of employees and customers. These millennials want purpose as well as products from their companies.

And, on occasion, the companies are all too eager to oblige, with many viewing these issues, social and political, as a potential source of market differentiation and cultural identity.

Nike, for example, knowingly drew the ire of President Trump when their latest "Just Do It" campaign featured Colin Kaepernick, the quarterback who knelt during NFL pre-match national anthems. Kaepernick did so in protest at the ongoing police brutality towards blacks in America, but the move was divisive with many seeing it as unpatriotic.

San Francisco 49ers outside linebacker Eli Harold, quarterback Colin Kaepernick and safety Eric Reid kneel during the national anthem. Photo / AP

The campaign prompted a boycott of Nike's products from Trump's vocal supporters — so much so that grown men were filming themselves burning the Nike sneakers they probably paid hundreds of dollars for.

But the campaign is nevertheless viewed as a success, defining the company as a progressive vanguard in the eyes of its mostly young, urban and liberal customer base.
That's the power of purpose: when customers and workers feel a company shares their values it ceases to be merely a transaction they engage in, and instead becomes a relationship.

That leads to higher average spending and increased loyalty (if doing the "right" thing wasn't already enough in and of itself).

It is worth drawing a distinction, though, between the politically divisive issues such as in the Nike case, which are increasingly common in the US, and the more benign and widely supported social issues such as mental health and LGBT+ rights.

New Zealand companies have not yet seen the need to adopt political stances for the most part, but on social issues an ever-increasing number are highlighting their policies and views in order to foster a more rich internal culture and position themselves favourably in the eyes of would-be employees and customers.

Policies such as flexible and remote working practices, increased parental leave allowances, awareness programmes, and advocacy group certification such as the Rainbow Tick, are now near-mandatory for any company wanting to position itself as a forward-looking and attractive place to work for young employees.

Customers are also demanding that the companies they buy products from are living their values: take, for example, the removal of plastic bags from New Zealand's supermarkets.
Environmental groups had long campaigned for that change, but the critical mass required for Countdown to announce the phasing out came off the back of Stuff.co.nz's "Bags Not" campaign to raise awareness. Countdown's move created commercial pressure for other supermarkets to follow suit, and before long Prime Minister Jacinda Ardern had joined the crusade and was announcing intentions to sign a ban into law.

Today's world of digital and social media magnifies the exposure of these stances, enlarging both the carrot for positively received policies and the stick for companies that fail in their duties in the eyes of the public.

For example, after two black men were arrested in a Philadelphia Starbucks simply for waiting for a friend without buying anything, a video of the incident went viral and protests against the coffee chain erupted. The company responded about as well as they could in the aftermath, closing over 8,000 of their stores in order to give employees racial bias training, and compensating the men, but the damage was done and Starbucks rightly suffered the consequences.

Closer to home, clothing label WORLD offered a masterclass in how not to respond to a PR crisis. Founder Denise L'Estrange-Corbet was rather less apologetic when some of the brand's items were exposed as having not, in fact, been made in New Zealand, despite the label on them saying so. The story and its fallout received multiple days of coverage, particularly online, undoubtedly resulting in significant brand damage.

By contrast, companies such as ANZ received vastly more applause than they would have in yesteryear for their "GayTM" pride initiative. The eminently Instagrammable cash machines were an instant hit, and the initiative in Sydney reportedly received over 62 million media impressions.

Meridian Energy's recent decision to cut its prompt payment discount — essentially removing 'late fees' that it described as "unjustifiable" — received widespread celebration on social media, and positioned the company as an ally of the consumer class.

ASB Bank has been celebrated for its commitment to promoting women internally too, while Perpetual Guardian made waves with its move to a four day working week for employees.

These decisions — particularly the ones that directly affect internal working culture — are encouraged by a modern-day labour market in which individuals feel empowered to "shop around", make decisions based on more than just salary, and demand more from their employers.

Companies now have to understand what society sees as a worthy purpose, and translate that into the way they do business.

What remains to be seen is how valuable this strategy can be in an ongoing sense. As more and more companies throw their weight behind plainly popular social causes, the differentiation value will be diluted. This could result in companies feeling pressure to find a voice on even more divisive issues, as Nike did.

But doing so carries inherent risk: Pepsi's protest-themed advertisement last year failed spectacularly in its attempt to project a purpose, and was pulled after just one day amid mass mockery and criticism.

While both Nike and Pepsi's campaigns attempted to capitalise on elements of the Black Lives Matter movement, the former used an active leader from within the community to spread the message, while the latter paid Kendall Jenner to play the lead role.

Where Nike focused on the issue and its gravity, Pepsi implied that a can of carbonated cola would solve all ills.

And that reflects the broader point: that purpose loses its power when it is only motivated by transparent self-interest.

The companies that ultimately benefit most from the power of purpose will be the ones that are least focused on benefiting from it in the first place, and instead pursue it because it is righteous. Otherwise, purpose is merely projection.