Organizational Governance

Q&A:
Dr. John Izzo on Creating Competitive Advantage in an Age of Social Good

Good products and profits have long been the hallmark of successful businesses, but in a shifting economic landscape these traditional metrics no longer hold up, as consumers, employees and investors are increasingly looking to corporations to act on environmental and social issues. So how can businesses succeed in an age of disruption?

By Libby MacCarthy | Published 6 years ago | About a 8 minute read

Image: The 2017 Women's March in Washington, DC | Vlad Tchompalov/Unsplash

In their new book, released today, The Purpose Revolution: How Leaders Create Engagement and Competitive Advantage in an Age of Social Good, bestselling author Dr. John Izzo and renowned change consultant Dr. Jeff Vanderwielen explore the answer to this question. Unilever CEO Paul Polman, often heralded as ‘the poster child for purpose,’ called The Purpose Revolution “an important book that shows why purpose needs to start at the top, then shows how to embed it everywhere in the organization.”

We spoke with Izzo to learn more about the growing imperative of purpose-beyond-profit, and how to do it right.

An ever-increasing amount of evidence shows that purpose-driven companies outperform their business-as-usual peers — not only in terms of profit but also in regards to customer loyalty, innovation and employee retention. Why is that?

John Izzo: There are three main reasons for the improved performance. The first is that employees who work from purpose perform better on every metric, from productivity, retention and engagement to the kind of ambassadors they are for the brand. Over time that gives major advantage. Second, customers are more loyal to companies that align with their values. Ben & Jerry’s, for example, knows that about a third of its customers never buy other ice creams even when they go on sale. Even a third of your customers being that loyal can make a huge difference. Finally, there is tremendous opportunity solving society’s problems — take Toyota and hybrids as a great example.

JI: In the book, we walk you through how to do that and share many examples from companies large and small. The first step is to identify a compelling purpose-beyond-profit that is about making life better now and in the future for all stakeholders. The purpose should fit the business. A simple example is how IBM evolved towards “Building a Smarter Planet.” It is a perfect fit for a company focused on information, while 3M’s “Advance every life, improve every home” fits a science company. Coca-Cola is “refreshing the world” through optimism and happiness. Makes sense. But some of the best purposes really grow from inside, such as Heineken Mexico’s “To Win Big for a Better Mexico” — which we feature in the book — which emerged from an authentic quest leading to a desire to influence a whole society for the better.

With purpose, do you ever run the risk of alienating portions of your audience? And if so, is there anything to be done about it?

JI: I find that purpose is a compelling concept for most people. We all want purpose in our lives and so the desire is there. The potential turn-off is that we live in an age where words get adopted and thrown out in short cycles. The two dangers are thinking purpose is a fad. It’s not — we show in the book that the desire for it cuts across every culture and generation — and it’s growing. The second potential turn-off is something like “it’s old news, we have purpose.” Again, we hit this hard in the book. Seventy percent of employees say the company they work for mostly cares only about profits and consumers think only about 6 percent of the companies they buy from are good. That is why we show people how to truly embed purpose — because almost everyone is failing at it, they just don’t know it.

Once a business has determined its purpose-beyond-profit, how can it ensure that it succeeds and comes off authentically? Who are the key actors that will need to champion this purpose?

JI: The CEO as purpose champion is critical. Look at companies such as 3M and Unilever, their CEOs are real believers in the power of purpose. You can’t fake authenticity; people will find you out. The key actors are your internal team members. Many companies make the mistake of focusing first on the marketing story rather than the internal one. Embed it inside first, show you mean it, drive it through your strategy, then start to tell your story. The purpose of marketing and communication is to tell your purpose story, but you have to have an authentic one first!

One of the other key things is what we call in the book “Moments of Purpose Congruence,” where you make a decision that shows you are taking your purpose seriously, like when Whole Foods stopped selling unsustainable seafood altogether or CVS stopped selling tobacco. There are opposite moments too, like when VW failed to own up to what it did in a genuine way on the emissions scandal.

Consumers represent an important piece of the purpose puzzle. What are some ways companies can connect consumers to their purpose and convince them of its authenticity?

JI: Consumers want to buy “good” but they are very skeptical. They have been fed a great deal of fluff around doing good. They only believe about 16 percent of what we tell them about our company. So, of course, the first principle stays — you have to have a real purpose story to tell. Assuming you do, there are three things to ensure you do. First, at the point of sale, find a simple way to tell people your story. A restaurant chain in Switzerland has a large wall that communicates “what we mean by good” so you can see it right there — how we are defining and living being good. Make it simple and compelling. Get your employees to tell your story of purpose — best done with real videos; not scripted, branded ads — 63 percent of customers say they believe what employees tell them about a company.

**What do you hope The Purpose Revolution will add to the conversation about purpose? Who stands to benefit the most from this new resource?**

JI: There are two audiences for this book. The first are people just now discovering the value of purpose who want to know what customers, employees and investors want. We bring a great deal of research into one place — we interviewed over 60 companies and reviewed hundreds of studies. But the people who will really love the book are people who want to really embed purpose in their company, team or leadership. Those who have read the book already say they love that it tells you how to do it — how to embed it into your leadership and team practices. It is a very practical book showing you what those who are winning at embedding purpose are doing and how you can do that. It will also help you identify your purpose and live it. And we wrote it so that whatever level you are at, you can be an agent of change for purpose. It is not just a book for senior leaders and business owners.

What prompted you and Jeff Vanderwielen to write this book? Can you tell us a bit about the process of putting it together?

JI: We have been talking about and advising companies to move towards purpose for 25 years, since my first book, Awakening Corporate Soul (1994). But we felt that few companies were really embedding purpose deeply and that people were struggling with how to do it. So, we went out and interviewed scores of companies to find out what was working. We spent two years researching it because we wanted to advance the conversation. We also felt the book was needed because of what we call “The Purpose Gap” — customers want good but are confused about who is good, employees want it but 70 percent say it’s not happening in their company. Closing that gap will help companies succeed and make a better world. That is our purpose.

**What are the top 3 lessons business leaders will take away from The Purpose Revolution?**

JI: The top three lessons I think will be:

Start with personal purpose and drive it through your coaching. Heineken Mexico started by getting people to identify their purpose in life, then the business higher purpose grew from there.
Focus on Job Purpose more than Job Function — start focusing on the real difference people make. Create Line of Sight to Purpose so employees, customers and investors regularly see your purpose in living color.
Finally, get what we call Hands-On Purpose. Involve your people and your customers in creating a better world with you, not just observing you doing it.