Chapter 11: The Power of Purpose – Customer CEO: How to Profit from the Power of Your Customers

11

The Power of Purpose

Key Customer CEO Question:

Imagine if you turned on your television one night to see a commercial featuring an attractive young woman speaking directly to the camera. In a sincere, heartfelt manner she had a simple message for you:

Isn’t it time that a company told you the truth? Well, here it is: we don’t care what you think. We’re here to sell you stuff you don’t really need. The more of it, the better. Our products don’t really do what we say they will do and we won’t service them when they break. And that warranty we sold you? C’mon, you’ve got to be kidding! Our job is to simply try to separate you from as much of your money as humanly possible. Please don’t be offended. It’s not personal, it’s just business as usual. We’re just doing our job of enriching ourselves at your expense. The only world we want to improve is our own. Now, can we please have your credit card number?

The Power of Purpose is the last and the most difficult Customer CEO power. I’ve left it for last because it is the toughest stuff in this book. In this chapter, I am confronting something that every business leader needs to consider. It doesn’t matter whether you are a CEO, a middle manager, or a frontline employee. You are a leader in your own way because you have influence for good or bad. This influence extends to both your coworkers and your customers. Take a moment to reflect on whether the ad I just described is a message that your company is subliminally sending customers and prospects. I’m not talking about just the advertising you do. That’s just the tip of the iceberg. It’s what is—or isn’t—underneath that counts. It’s your values.

Right up front, let me confess that I am a dyed-in-the-wool, free-enterprise-loving capitalist. I believe that in most cases, the best road to prosperity for people and nations is through free-market capitalism. A company’s first order of business must be to make a profit. In fact, it should strive to maximize its profit. Profit provides the necessary capital to innovate, retain the best talent, and sustain the enterprise. But the question is, are too many of us failing to lead enterprises with core values that we can share with our customers and employees?

John Mackey, CEO of Whole Foods, said, “Long-term profits are maximized by not making them the primary goal.”1 This is so true. When I began my sales and marketing career in the 1970s, I observed that some of the other salespeople and managers were engaged in some kind of strange Kabuki dance each month in order to maximize their commissions. This often meant bending the rules, including what was called “hanging paper.” This was the unethical practice of writing orders that the customer had never authorized, hoping the invoice would somehow slip by an unsuspecting accounts payable person. I watched it happen. These kinds of games never made sense to me. I felt that if I could just focus on generating better results for my customers the commissions would take care of themselves. And they did.

A high calling for us as businesspeople is service. But a higher calling than service is character. In my customer research work over the years, I have seen a growing hunger on the part of customers for companies that don’t just talk a good game, but really live by a more virtuous code. I have heard the phrase “just do the right thing” more times than I can count. I believe that the poor attitude we so often see exhibited by employees is a direct result of poor values leadership. And here’s the deal: If company leadership tolerates poor values by allowing customers to be treated poorly, why should we expect customers to behave any better?

Let’s be frank: for many companies facing the complexities of modern business, it is too much work to create, teach, and live values. We’d rather cut corners and look the other way. Human resource departments are so worried about lawsuits that disciplining employees is often a thing of the past. Poor values are tolerated. So, many customer-facing employees are left in their jobs far too long. To the customer, service becomes a bad joke. The public relations and advertising spewing forth from these brands hardly resemble the reality the customer encounters on a daily basis.

Customers, no matter how cynical they may appear, are hungry for a difference. They want the truth. Entrepreneur and philanthropist John Paul DeJoria said, “The world today needs truth and we’re not getting enough of it . . . speak the truth, don’t be afraid of it. People need to know the truth of what’s going on . . . just take responsibility and you move on.”2

Simon Mainwaring founded We First, a social brand consultancy, because of the disconnect he saw between business as usual and what people want. He believes there is a new set of dynamics in today’s marketplace, with two integrated forces at work. First, customers want a better world and second, the future of profit is purpose. He says:

As more consumers insist that capitalism work in the service of a better world, companies will become increasingly purposeful, and thus more profitable. Replacing the old capitalism paradigm of supply and demand, this dynamic between profit and purpose will become the new economic principle that drives the marketplace. Consumers who want a better world will drive the profits of corporations that provide greater purpose through their activities. Meanwhile, corporations that provide too little purpose for consumers will fail.3

Another way of seeing this is to understand that more and more of your customers today buy the why before the what. They want to do business with companies they can believe in. You have to be crystal clear in defining your purpose. Spell it out as plainly and as often as possible. Customers have dreams and hopes, and they want to align themselves with yours.

Clarity around values also speaks volumes to your employees. Tony Hsieh, CEO of Zappos said, “A funny thing happened when we actually communicated [our purpose] to our employees. We found that suddenly employees were a lot more passionate about the company, a lot more engaged, and when customers called they could sense the personality at the other end of the phone wasn’t there just for a paycheck.”4 When a jury in the infamous patent case found that Samsung had unfairly competed against Apple, Apple CEO Tim Cook sent an e-mail to his employees that said, in part, “For us this lawsuit has always been about something much more important than patents or money. It’s about values. We value originality and innovation and pour our lives into making the best products on earth. And we do this to delight our customers, not for competitors to flagrantly copy.”5

When high-profile CEOs are saying that the values of their companies outweigh money, something new is beginning to stir in the marketplace. It gets back to what we believe in most deeply. The John Huston classic movie The Treasure of the Sierra Madre tells the story of three Americans who ended up in Tampico, Mexico, in search of fortune. A crusty old-timer named Howard, played by the fine character actor Walter Huston, tells his two younger partners, Dobbs and Curtin, played by Humphrey Bogart and Tim Holt, that a desire for gold will eventually destroy any man who spends a lifetime in search of it: “As long as there’s no find, the noble brotherhood will last, but when the piles of gold begin to grow, that’s when the trouble starts . . . I’ve never known a prospector who died rich. That’s what gold does to a man’s soul . . . men are friends until they find the gold.”

In the final scene of the movie, a windstorm gathers up the gold dust the men have extracted from the mountain and blows it all away. All of their efforts have been in vain. Howard bursts into a manic fit of laughter. With tears rolling down his cheek, he exclaims, “This is a great joke played on us by the lord, fate, nature, or whatever you prefer. But, who or whatever played it had a sense of humor. The gold has gone back to where we found it.”6

And that’s really everyone’s story, isn’t it? In the end, the gold goes back to where we found it. This creates an added imperative for our organizations to build themselves on a foundation of rock-solid values like integrity, fairness, and honesty. The world has experienced far too many Ponzi, Enron, WorldCom, and Madoff schemes. Your business, in fact every business, can be a force for good. There are big problems in the world that our political system has failed to solve. Business can begin to shoulder a greater role in being the solution, not the problem. Instead of being portrayed as the guys in black hats, how about reversing the trend?

It starts now with the Power of Purpose. Your customers are demanding nothing less, so you might as well get started. Let’s take a look at three companies that already have.

One for One for Everyone

When you hear the offer, “Buy one, get one free,” you think about taking two things home in your shopping bag, whether you need it or not. I never even considered the idea of buy one, and send the other to someone who needs it more than me. That’s absolutely brilliant!

Andi, Orlando, Florida

Participant in a customer interview about retail

Have you ever thought of your business as something more like a movement? If you haven’t, you aren’t alone. Most of us are so fixated on keeping our trains running on time that we don’t stop to consider making a bigger mark on the world. Neither did Blake Mycoskie.

In 2006 he was in Argentina, and the last thing on his mind was starting a new business, much less a movement. Mycoskie said, “When I went down to Argentina the idea was to play polo, drink some red wine, have some fun, clear my mind.”7 He noticed that the polo fields were adjacent to some of the poorest areas of Buenos Aires. He was shocked at the abject poverty he saw. That’s when he realized the children had no shoes. Local shoe drives only collected people’s castoffs and worn-out shoes. They were falling apart and weren’t suitable for children. Mycoskie saw a dire need and believed he could do something about it. He asked, “What if I started a shoe company and every time I sold a pair of shoes, I gave a pair away?” That was how TOMS began. The brand is built on a simple promise: “With every pair you purchase, TOMS will give a pair of new shoes to a child in need. One for One.”8

The lack of shoes actually creates three major problems for people. The first is health. The World Health Organization says that 740 million people are affected by hookworm, a soil-transmitted parasite that can cause serious illness.9 According to UNICEF, nearly ten million children under the age of five die every year from largely preventable causes.10 The Asian Development Bank estimates that thirty thousand people living without shoes in just a single Philippines landfill walk over debris that includes syringes and glass.11

The second problem is education. In many areas of the world, governments require children to wear shoes in order to attend school. The third is individual opportunity. Healthy children are much more likely to be successful students and future citizens who can play a role in building better communities. TOMS has given away over one million pairs of shoes (as of 2012) in twenty-five countries. The company conceived a new way to create awareness for this cause with an event called One Day Without Shoes. Over 250,000 people, including business executives, agree to go shoeless. This annual event has been enlisting new people in the mission since 2007.12

Part of the TOMS model is to hand deliver the shoes to children. Employees and volunteers place each pair on a child’s feet. Mycoskie believes that meeting a child one on one intimately connects each employee with her purpose. Seeing the joy of a child, Mycoskie says, “That changes your life.”

The One for One idea has taken root around the world. There are now dozens of like-minded “philanthropic entrepreneurs” with similar business models for a wide array of products, including books, baby clothing, toys, socks, T-shirts, health food, vitamins, pet beds, cold-weather clothing, and toothbrushes. In 2011, TOMS launched its second product line. TOMS Eyewear provides prescription glasses or eye surgery for children.

The Power of Purpose is really about giving customers a way to spend their money with companies that care to make a difference. Blake Mycoskie simply saw a need and he filled it. He encourages everyone in business to do the same: “Don’t wait for perfect timing. Don’t think that you’ve got to be in this perfect place. Just do it.”13

Discover the Statue Inside

I have learned the hard way that low price only takes you so far. Price is important, but I want suppliers with character. If a company treats their employees badly, how in the world will they treat me as customer? I look for people who will do the right thing; those are the ones I can count on.

Sam, Pittsburgh, Pennsylvania

Participant in an interview, general contractor

The dictionary defines the word “luck” as “the force that seems to operate for good or ill in a person’s life, or simply ‘good fortune.’” Charles Luck III says luck has nothing to do with his company’s success. He’s the chairman of Luck Companies. Luck says, “Our success is based on people, not necessarily on machines. My dad taught me that if you treat people fairly, then they’ll treat you the same.”14 A simple quarry that started in 1923 has been continuously operated by the same family for nine decades. The company has firmly held to the same simple values. With more than a thousand employees, the Richmond, Virginia-based company operates more than fifteen plants in two states. The Luck Companies run a diversified enterprise, producing construction aggregates, architectural stone, and clay tennis courts and accessories. They also operate a real estate development company.

“We’ve never lost our focus on people, yet at the same time we provide products and services that our customers can depend on,” explains president and CEO Charles Luck IV. “We’ve taken our core product, a rock, and wrapped it with services and features that are unique in our industry. And we remain committed to our customers, neighbors, associates, and communities to never lose sight of our roots, and the core values my grandfather established more than 85 years ago.”15

But a crisis driven by rapid growth caused the company to consider a different, somewhat unorthodox path. The management team began pulling in different directions and the company was losing touch with its customers’ needs. It decided to enlist a leadership development firm, Holt Development Services (an outgrowth of Holt Cat, discussed in chapter 7). Holt had experienced a similar situation in the late 1980s, and it led the company to adopt a values-based leadership (VBL) model of operating. Harry M. Jansen Kraemer Jr., author of From Values to Action: The Four Principles of Values-Based Leadership, explains the underlying idea behind VBL: “When you truly know yourself and what you stand for, it is much easier to know what to do in any situation. It always comes down to doing the right thing and doing the best you can.”16

With the company a firm believer in VBL, Luck is out to change people by helping change business. “We are incredibly passionate about this,” Luck said. “Our mission as a company is to ignite the potential in people around the world so they can positively impact others using values-based leadership.”17 After serving as a senior executive for the company for more than twenty years, Mark Fernandes is now an ambassador of sorts, with a mission to help companies adopt VBL. The Luck website boldly asks:

What’s your purpose? Transforming your organization by identifying and adhering to a powerful mission provides purpose for your employees and customers. They understand where your company is going and why it exists. Your mission gives clarity for decision-making, long-term strategic planning and communication. Your company and associates have a clear purpose to align around, work toward and get passionate about. Values Based Organizations develop a mission that leads with making a difference in the world, ultimately resulting in a strong business performance.18

The company believes that people can only truly reach their potential when the things they hold dear—their values—align with those of the customers they serve and the organizations they work for. Not content to just print the sentiment on posters to hang in their break rooms, the Luck Companies have created a philosophy it calls “Ignite Human Potential.” Here’s how the Luck website explains this concept:

Know who you are, where you are and what’s going on around you. Awareness is knowing who you are, recognizing how you are feeling and what you are thinking . . . awareness involves recognizing your strengths, your weaknesses and your stumbling blocks and looking inward to see if you are showing up the way you really want to. When you are aware of and act in alignment with your core values, your effectiveness in influencing and impacting those around you increases dramatically.19

Luck teaches that there’s no one right way to implement values-based leadership. It encourages businesses of every size to spend time studying some of the hundreds of models that exist. The company explains that VBL cannot work without the “training, process alignment, accountability, stories, and rituals and celebrating success” being in place.

Italian artist and engineer Michelangelo said, “Every block of stone has a statue inside it, and it is the task of the sculptor to discover it.” Luck has proven that every company can discover how to embrace the Power of Purpose by chipping away at the stone to find the values hidden within.

Don’t Buy Our Stuff

It seems to me that everyone is so busy buying and selling stuff that no one takes the time to consider what we are really doing anymore. I mean, how many more things do I really need?

Kendrick, Austin, Texas

Participant in a customer interview about corporate responsibility

Imagine visiting a car showroom and being told by a salesperson, “Thanks for coming by, but we aren’t selling any cars today.” How about driving by an electronics store that had a huge sign in its entrance announcing, “No gadgets for sale today.” Or a mall that locked its doors and had loudspeakers blaring, “Please return home. There’s nothing for sale here, so move along.” What about clicking on your favorite e-commerce site only to find a black screen with a scrolling message that said, “Cyberspace is closed. Return to your planet.” At the very least, you would be irate because, as a customer, you would be mightily inconvenienced by these attitudes of indifference. You’d think, “What kind of nerve do these people have?” It’s your right to buy things whenever and wherever you want!

Patagonia, the outdoor clothing and gear company, took such a pause in 2011 on the two biggest shopping days of the year, Black Friday and Cyber Monday. Visitors to Patagonia’s website were greeted with a large screen announcing “Don’t Buy This Jacket.” Subscribers to the company’s online newsletter were e-mailed the same. The company had also taken out full-page ads in national newspapers that read:

The environmental cost of everything we make is astonishing. Consider the R2 Jacket [shown in the ad], one of our best sellers. To make it required 135 liters of water, enough to meet the daily needs (three glasses a day) of 45 people. Its journey from its origin as 60% recycled polyester to our Reno warehouse generated nearly 20 pounds of carbon dioxide, 24 times the weight of the finished product. This jacket left behind, on its way to Reno, two-thirds its weight in waste. And this is a 60% recycled polyester jacket, knit and sewn to a high standard; it is exceptionally durable, so you won’t have to replace it as often. And when it comes to the end of its useful life we’ll take it back to recycle into a product of equal value. But, as is true of all things we can make and you can buy, this jacket comes with an environmental cost higher than its price.”20

The ad concluded with a radical statement: “Don’t buy what you don’t need. Think twice before you buy anything.”

Consider for a moment that more than 70 percent of the U.S. economy is driven by consumer spending. We have to sell a lot of SUVs, flat-screen TVs, and powder blue ski jackets to keep the ball rolling. Patagonia is a for-profit business that depends on that spending to continue. Was this some kind of clever “anti-marketing” marketing ploy designed to drive sales despite the company’s altruistic admissions? Perhaps, but Patagonia was going where very few companies have ever gone before.

People who were shocked by the anti-jacket campaign didn’t really know Patagonia. The company was publicly embracing the Power of Purpose by shouting out its own set of values. It didn’t matter if anyone agreed. Patagonia is a company that has always marched to the beat of a different drummer, and this was the direction founder and sole owner Yvon Chouinard had been headed for a long time. He never wanted to get big just for the sake of getting big. In 2004, he wrote, “At Patagonia, we are dedicated to abundance. We don’t want to grow larger, but want to remain lean and quick. We want to make the best clothes and make them so they will last a long, long time. Our idea is to make the best product so you can consume less and consume better.”21

Harvard Business School professor Forest Reinhardt says Patagonia is a one-of-a-kind business: “I’ve never seen a company tell customers to buy less of its product. It’s a fascinating initiative. Yvon has the confidence to pull it off.”22 Chouinard values something more than making the next sale. “I never even wanted to be in business,” he says. “But I hang onto Patagonia because it’s my resource to do something good. It’s a way to demonstrate that corporations can lead examined lives.”23 In Let My People Go Surfing, his 2005 autobiography, he wrote, “If I had to be a businessman, I was going to do it on my own terms.”24

In 1991, financial problems and high debt nearly sank Patagonia. The crisis caused Chouinard to reassess everything. He decided that the things he valued the most would guide every corporate decision going forward. The company began to look at everything through the prism of sustainability. Every product was redesigned using more environmentally friendly materials. He created a policy of taking full responsibility for the company’s products. Customers could ask Patagonia to replace, resell, or recycle, and it would. And, as unlikely as it seems, Chouinard has formed a strategic alliance with Walmart to help the much larger business understand that green business practices are really good business. He realizes that he has a rare opportunity to impact American business in a big way by being true to his own values. He said he always thought the revolution would bubble up from below, but now says, “It’s starting at the top.”25

Profiting from the Power of Purpose

Your potential and existing customers are searching for companies they can believe in. They are bombarded with thousands of messages and touch points every day promising purpose, but they are rarely getting it. Cynicism is born from insincerity and dishonesty. What do you expect? You will profit by embracing the Power of Purpose and transforming your culture. It doesn’t matter what size you are or what industry you are in. Look at the amazing impact TOMS Shoes, Luck Companies, and Patagonia are having; their ability to transform people’s lives is inspirational. Your customers and employees want to become united with a company that says what it believes and then proceeds to live it.

Purpose Must Be Real, Not Imagined

Every company will face moments of definition, no matter how established it is. Whether driven by growth (Luck), financial calamity (Patagonia), or identity (TOMS), storms will come. It’s as inevitable as the business cycle. But why wait for a crisis to find your true inner core? It’s hard work. You have to be willing to ask yourself and your people what you really believe in. Do you want to change things at your company? If so, what do you want to change? And don’t kid yourself. This is not some jargon-ridden theoretical exercise. It is personal. If you aren’t willing to examine yourself, you are wasting your time. Transformation can only happen if it starts at the top. Be willing to give yourself and your team the time to really work on this. Rome wasn’t built in a day, and neither is purpose.

Purpose Must Live in the Now

As we saw with the Power of the Platform, today everything happens in real time. If you fail at purpose, it will be broadcast far and wide. You cannot control it so you have to live it all the time. And when you fail at it you have to make serious amends quickly or you risk losing everything you have built: your reputation and your enterprise. This is why it is so critical to teach purpose, so it can permeate the entire organization. For example, imagine how Patagonia’s “Don’t Buy This Jacket” campaign would have failed if the entire organization wasn’t onboard on those crucial Christmas shopping days. Your company must always be moving forward and projecting your purpose for the world to see.

Purpose Cannot Just Hang on the Wall

There are a lot of companies that profess to be values based. They like to memorialize their values on posters that hang on walls at headquarters and branch offices. They have entire sections of their websites describing them. While there’s nothing wrong with visual reminders, the real question is whether those values are there for show or whether they are being lived across the enterprise, top to bottom. Honestly, in many companies, the values statements have become invisible. I know employees and customers who advocate “ripping them off the wall” if the company cannot properly align itself with its values. Sometimes the unwritten message from leadership is “Do as we say, not as we do.” Your company’s purpose shouldn’t be subject to the blowing winds of management change. The best Customer CEO companies realize that continuity of values is what customers value most. They don’t really care who’s at the helm; they care about the way they are being treated.

Purpose Must Be Overcommunicated

Inside and outside, every day and in every way, you must lead by extolling your purpose. Truly, I believe it is one of the single most important jobs because so many others aspects of the business flow from it. But here’s the thing: purpose isn’t just a set of statements, it is a strategic advantage. You must embed it into the DNA of the organization. Every employee is a reflection of the company’s values. You cannot talk about values too much. We learn and understand through repetition. In your company you should talk to new recruits about what they can expect in terms of your purpose. Train new people on your values. Every leader at every level should model those values. Recognize employees publicly who show a commitment to your purpose.

Purpose is serving. Service is more than a set of performances, it is an attitude and a deeply held belief of the heart.

(How well does your organization engage the Power of Purpose? Visit customerceopowercheck.com to download our free diagnostic tool.)