A true brand purpose doesn’t boost profit, it sacrifices it

Time and again companies have proved unwilling to stick to their lofty purpose statements when it costs them money. For purpose to have any meaning, corporations need to put it before profit.

Starbucks digital
Starbucks’ mission ‘to inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time’ contradicts its inability to align its tax responsibilities accordingly.

I was at a conference in Stockholm this week. One of the attendees asked me over coffee about Verizon’s new brand purpose and what the statement actually meant. I confessed my ignorance of Verizon’s new brand work and then my surprise that a Swede needed any help with a translation. In my experience their English vocabulary invariably exceeds that of your average Brit.

“Humanability,” the Swede said. “Excuse me?” I replied spluttering into my coffee.

“Humanability,” the woman repeated as I looked at her blankly. This, it turns out, is the new stated purpose for Verizon, one of the world’s largest mobile phone operators. No longer satisfied with combining the usual beige mix of verbs and nouns beloved of purpose agents, Verizon has pushed the boundaries of bullshit even further by making up a stupid word and then putting it at the centre of its brand strategy.

“It means they don’t know what the fuck they are doing,” I finally informed the curious Swede, who pondered my answer for a moment and then nodded in thoughtful agreement.

Intelligent asphalt, tinkling pianos and humanability. Welcome to branding in 2019. But in retrospect I am starting to think Verizon may be on to something. I’m clearly not going to defend the company’s idiotic brand purpose but it does have one valuable advantage. Because its purpose is, quite literally, nonsense there is no way that anyone can accuse Verizon of being inconsistent to it in the future.

How do you not deliver on humanability? It’s like accusing my daughter’s imaginary friend of being ugly or getting angry because the way the dragons fly in Game of Thrones is unrealistic. When you make stuff up, you can’t be held accountable.

But for other purposeful brands who have opted for actual words over nonsense there is the very real risk of falling foul of the ancient error of brand inconsistency. In the barrage of conference speeches and impassioned articles about brand purpose there has been little discussion of the ability of brands to actually deliver on their stated purpose.

READ MORE: Thomas Barta: The first rule of brand purpose is do no harm

Sure, they might have a sexy new purpose to point to and glitzy ads to promote their new-found societal co-ordinates to customers, but we learned long ago that it takes more than advertising and statements to build a brand.

What a brand says is less important than what it actually does. Is the positioning driving every aspect of the company’s activities? Purpose, like any other attempt at positioning, should align absolutely with how a brand operates.

Time and again we encounter the lofty, admirable sheen of brand purpose only to discover it flakes off with even the slightest scratch to reveal a darker, more commercial sub-surface beneath. Starbucks’ famous mission ‘to inspire and nurture the human spirit — one person, one cup and one neighbourhood at a time’ is about as lofty as it gets. But it contradicts mightily the company’s abject inability to align its tax responsibilities accordingly.

For its first 14 years of operation in the UK Starbucks averaged just over £600,000 a year in tax on £3bn of cumulative revenue, according to a Reuters investigation in 2012. For the most recent tax year, the Financial Times estimated the effective tax rate paid by Starbucks’ European operations, based in the UK, was still around half the level of corporate tax paid by most British businesses.

Profit contradicts purpose

My point is not to accuse Starbucks of doing anything illegal – tax minimisation is one of the most efficient and legitimate ways to increase operating profit. But a brand that is talking about “nurturing” communities should have paused and realised that its purpose precluded the pursuit of tax minimisation; not just because such a thing would be inconsistent but directly contradictory on every level to Starbucks’ community purpose.

The fact that Starbucks did no such thing illustrates the recurring fallacy of any business that purports to purpose: the ultimate objective of profit usually gets in the way.

It’s a similar explanation for Gillette’s apparent case of gender inconsistency. While the razor blade brand is entirely comfortable lecturing its customers on how to improve their behaviour around women, the company sees no issue in charging those same women 25% more for ostensibly the same five-bladed razor blade than men have to pay.

Gillette charges more for women’s razor blades despite its brand purpose urging men to respect women

I get that pricing is more than just manufacturing cost and can be driven higher by demand scale, customer perceptions and competitive context. But not when your purpose is levelling the unfair asymmetries of gender.

Rather than hide your ‘pink tax’ on women by selling them blades in three packs versus the male option of four packs, Gillette should offer the same blade price irrespective of gender. Why doesn’t Gillette do that? Because losing 70p of margin for every woman’s blade sold in the UK would cost them, based on my maths, around £5m a year.

It’s also why State Street was able to erect the Fearless Girl statue on Wall Street to protest the marginalisation of women in finance and yet, according to the US Department of Labor, pay its own female executives significantly less than its male ones – an accusation it still denied when settling with the Government.

The Fearless Girl statue in New York, commissioned by State Street (Photo: Anthony Quintano)

Do as we tell you, not as we ourselves behave. It should be the rallying cry for all those enamoured with brand purpose. In fact, purpose is probably the wrong word for it. I’d recommend we call it ‘inconsistabilification’ from now on. Hey if it works for Verizon, it works for me too.

The latest case of inconsistabilification is the most serious and the most tragic exemplar yet to emerge. The oldest and most established brand purpose of all time is inarguably found at Johnson & Johnson (J&J). The personal care manufacturer established its famed ‘credo’ back in 1943. Then-chairman Robert Wood Johnson sat down and articulated how his company would always operate in a manner that balanced a decent return for shareholders with a prime focus on the wellbeing of its customers.

The credo states in simple terms that J&J “believe our first responsibility is to the patients, doctors and nurses, to mothers and fathers and all others who use our products and services”. And you can’t miss it. Every J&J person I have ever worked with makes mention of it. It’s literally chiselled into the walls of the company’s New Jersey HQ.

But that credo is now being shown to be little more than a bit of promotional spin. The company’s most iconic product, baby powder, is at the heart of a major scandal in America.

Talc is mined from metamorphic rocks in certain parts of North America and Europe. But so is asbestos and, according to reporting from Reuters, as early as 1971 J&J became aware that some of its talc products also contained small doses of the deadly substance, which can cause mesothelioma cancers among those who are exposed to it. The idea of rubbing it into the skin of babies and women on a daily basis takes on a horrific and frightening aspect.

Now a series of court cases have been brought against J&J by women who claim they have been diagnosed with cancer as a result of using the company’s talc. Last week saw the latest case in which Terry Leavitt successfully argued that her repeated use of J&J’s baby powder resulted in a 2017 diagnosis for mesothelioma. A Californian jury agreed and awarded her $29m dollars in damages.

The Leavitt verdict is the third successful prosecution of J&J. The total damages now add up to $5bn. J&J is appealing all of the verdicts – hardly surprising given the enormous existing bill and the fact that there are still 13,000 more cases in American courts. The US Department of Justice is now also investigating the company, and its share price is bouncing around like a kite on a stormy day as investors try to assess what this potential liability might mean for J&J’s commercial prospects.

It’s a potentially existential threat that, once again, illustrates the fallacy of companies that claim to be driven by a higher purpose but fall foul of it once they are expected to make commercial sacrifices to deliver on their much-touted purpose.

J&J’s problems and the reason the company could eventually be litigated out of existence stem not from the tragic proximity of asbestos and talc in the mines of northern Italy, but from the company’s alleged inability to admit that it knew about the problem for decades or to do something about it. If true, this is not just a morally bankrupt decision, but one in exact opposition to the words carved into the wall of its headquarters.

The problems with a profit motive

But like Gillette, with its multimillion-dollar profits from women’s razors, or State Street’s significantly reduced payroll, J&J was apparently unprepared to put its purpose into practice given the gigantic financial implications of such a move. The financial rationale for introducing a brand purpose to the market also precluded each company from walking the walk when it encountered a meaningful inconsistency within its business. The bottom line is still the bottom line. Still a company’s ultimate purpose.

There is a conceptually flawed argument built on highly specious data that says brand purpose and profit are perfect bedfellows because the presence of the former results in more of the latter. But the problem is two-fold.

It’s crucial we draw a line between businesses that were founded from purpose and those that originated with a profit agenda and applied purpose to secure more of it.

First, if my rationale for purpose is profit, then I am not purposeful at all. The minute I can show you that inappropriate business practices can make you even more money you would, based on the profit rationale, drop everything to pursue this dodgier and more lucrative path.

Second, it’s simply not true that purpose always delivers profit. In all of the cases above the companies would have had to lose millions, perhaps billions, to do the right thing. And for businesses built on traditional corporate reporting standards, such things are inconceivable.

That was the point that Patagonia’s marketing director Alex Weller made to Marketing Week last year when he talked about his brand’s approach to purpose. Unlike corporate brands that are based on an entirely fiscal agenda and use purpose as a marketing device, Patagonia is the real deal. It was founded by Yvon Chouinard to make products but also to support environmental causes.

READ MORE: Patagonia on why brands ‘can’t reverse into purpose’ through marketing

That purpose, forged within Patagonia’s DNA, means the company does not see a contradiction between commercial profits and corporate mission. Mission comes first. “It’s the will of the ownership and it’s the will of the organisation to use this important platform as a brand to do more than generate profit,” Weller explained.

Patagonia was founded for the purpose of supporting environmental causes and puts this mission first

That’s why the company has always dedicated a significant slice of its profits to good causes. It’s why, in direct contrast to Starbucks, when it was handed a massive tax break under new Trumpian tax codes, the company gave all the money away to environmental charities.

It’s also why it refuses to take part in Black Friday and the orgy of over-consumption that occurs in that commercial frenzy during Thanksgiving. The company does not drop its prices on Black Friday. Instead, it maintains them and then donates every dollar of profit it earns during that day to environmental charities.

And as Weller observes, it is also the reason why so many big brands that have suddenly jumped on the purpose brand-wagon are struggling when it comes to authenticity and consistency.

“You can’t reverse into a mission and values through marketing,” he said. “The organisations that are struggling with this are probably the ones that are thinking about marketing first. The role of marketing is to authentically elevate that mission and purpose and engage people in it, but the purpose needs to be the business.”

There is no way to avoid brand purpose for the next few years. Like passing fancies such as millennials, return on investment or agility it has become the latest fashionable chimera to hunt in the marketing jungle. But it’s crucial we draw a thick red line between businesses like Patagonia that were founded from purpose and those that originated with a pure profit agenda and then applied brand purpose to secure more of it.

And then there is the darkest part. What if many of the firms proclaiming purpose and falling foul of inconsistencies are not failing to execute their strategy, but actually succeeding? Is the reason BP goes on about recycling so much in its ads to make up for the fact it pollutes the planet so badly? Does Facebook keep promoting trust and community in its messaging because it knows, fundamentally, it cannot be trusted and that it has a deleterious influence on society?

Are some of the unfortunate contradictions between stated brand purpose and actual corporate activity really that unfortunate? What if they were meant to be misdirection all along.