“If you embed purpose in the very DNA of your business, the rewards can be invaluable.”
Part Two: Chapter 4 Purpose 101
By Holly Branson
“Even if we launch Virgin Sport and it doesn't make any money— it really doesn't matter.”
“I don't understand what you mean, Richard.? Why would we launch a business and not care if it makes money or not!? No offense, but that doesn't make business sense.”
This is an actual conversation between my husband and my dad in South Africa a couple of years ago. They had just competed in Cape Town Cycle Tour, the largest timed cycling event in the world. Dad and Freddie had an amazing few days cycling hard, more than 100 kilometers through mountainous Cape Town, and the rest of the family joined them to cheer them on.
Freddie was buzzing; he's always loved sports, and is always training for something—the next Strive Challenge, the next triathlon. He has the bug, big time! He'd often wondered why Virgin didn't have a business under our Health and Wellness arm to put on these incredible events. Surely they were huge moneymakers. Having come from a suit-and-tie job in the financial heart of London, Freddie was still coming to terms with how to do business the Virgin way, which is much less rigid and formal. So when he discussed his idea with Dad, he was shocked by the response. Freddie tells it better than I can:
“Richard said: ‘Don't make it about the money. There's got to be a reason you're setting up this company, an underlying issue you're trying to tackle.’”
Easy to say when you own a hugely successful global brand and don't have to worry about money, right? But Dad has been a believer in purpose and passion as the driving force for business since his very first venture, before he made a single penny.
Freddie admits he never truly believed in the concept until he launched Virgin Sport.
“I always thought the reason for starting a company was to make a phenomenal business out of it; to make money. But when we set up Virgin Sport, we knew that our purpose would be absolutely vital to getting it right. We listened to Richard and made it our first priority to agree on our purpose. It changed and evolved, but ultimately became: Inspiring People to be Fit, Active, and Healthy. It defined our business model and strategy. I know that Virgin Sport will be successful financially, because putting purpose at its core has made it a valuable business proposition and investment opportunity. Don't you just hate it when your father-in-law is right?”
What is Purpose?
When you think just two decades ago, corporate social responsibility meant writing a check for the local little league team—a nice gesture, but hardly enough. Now the acronym CSR is banned at Virgin Management Ltd., because it hearkens back to the days of a single office or unlucky person tasked with reversing the negative effects of big business on the planet—sort of an apology for turning all of Earth's resources into products. For the longest time, business has used resources as if they were limitless, with no consideration for the environment or for what it might mean for future generations. But resources are running low, and companies are already feeling the burden on their supply chains. This is more obvious for those in manufacturing, and more challenging for those in the services sector, who don't build products out of raw materials, to understand. But if you're in retail and believe dwindling resources don't affect you, you're wrong. Today, myriad companies should be examining every link in their supply chains, measuring environmental impacts to improve efficiencies, and leveraging core skills and assets to move the needle on social change. They can do all of this and make a profit.
Virgin's Purpose Pointers
What purpose is:
Why you exist—the role and meaning you have in people's lives
Enduring—a much longer-term view
Insight-driven and co-created
Distinctive and differentiated
Aligned with values and incentives
Embedded in every aspect of the business
A driver for all decisions
Something all employees have a role to play in delivering
A compass when making difficult decisions
A driver for innovation
What purpose is not:
How and what you do
An annual plan or quarterly campaign
A strapline that is not informed by key insights
Desirable, rather than essential
An afterthought when decision making
Solely a leadership initiative
A separate project or business unit
Something you discard when times are tough
About maintaining the status quo
Purpose statements:
Patagonia
Unilever
Tata
Build the best product, cause no unnecessary harm, use business to inspire, and implement solutions to the environmental crisis
To make sustainable living commonplace
To improve the quality of life of the communities we serve
Google
Virgin
We
To organize the world's information and make it universally accessible and useful
Changing business for good
Making doing good, doable
Tesla
Microsoft
To accelerate the world's transition to sustainable energy
To empower every person and every organization on the planet to achieve more
In the WEconomy, purpose is your barometer for the greater good. Where does your business fit into your local and global community? Does it help or harm it? How does the welfare of the community shift the priorities of the company? Does the welfare of the community even register as a priority? Ask the same question about the welfare of your most valuable asset—your workforce. If your “purpose barometer” swings toward the negative—you know you need to take steps within your company to reverse that trend. Part of a company's mission today must involve social purpose, both for the greater good and for the good of the business. This bears repeating, because it's important: social purpose should be embedded in the business model as much as any other value proposition.
Before you raise an eyebrow, know that we're not peddling magic beans. We have proof that purpose is a value proposition. We've gathered case studies, many from our own partnerships and experiences and many from other leading organizations around the world, that show how firms of all sizes have implemented and profited from purpose. We'll show how companies now employing the triple bottom—people, planet, purpose—have saved money in a whole range of industries with razor-thin margins. The Royal Bank of Canada (RBC) appealed to a young demographic rarely seen walking into financial institutions by processing pennies during a nationwide charitable coin drive. This purpose drove 55,000 unique customer walk-ins through the doors of the bank.
Purpose is also good for individual workers. Even if you don't run your company—and your boss's boss only speaks to you to ask for a coffee—purpose can be a form of personal development, a method to advance your career and build social capital at work. What better way to create meaning in what you do every day? What better way to nab attention from the higher-ups than with leadership on a program that's good for the planet and good for business? Executives love to celebrate those types of initiatives in a public way. And when you make the boss look good, you look good—you get noticed, you get access to senior leaders. Here we'll show you why companies and employees should be solving social problems at the office.
Purpose is the new currency; it's one of the greatest untapped forces in the for-profit world. Without purpose, your business model is incomplete.
In a nutshell, No. 1 on your agenda should be “Define Your Purpose.” This is a fairly new concept. Embedding purpose into the very DNA of your business is, for now, still an emerging paradigm.
Still, it was only about 70 years ago that more than just a handful of companies started to talk about the importance of branding. Today, if you don't have a brand, you don't have a business.
It was only 40 years ago that “people metrics” were being considered in company performance and much more recently that the well-being of people was factored into company performance and therefore the bottom line.
“Your Purpose encapsulates why you exist. It drives every decision your business makes. Your people live and breathe it, and over time it will be the reason your customers keep coming back. Get your Purpose right and it will secure business health, profitability, and future value.”
—Charlotte Goodman
In the words of my Dad: “Happy staff result in happy customers, and happy customers result in happy shareholders.”
We predict that within a decade “Purpose” will sit alongside “Brand” and “People” as the three most important principles guiding the launch of new companies and business models.
So where to start?
Purpose 101 (the Virgin Way)
Embedding purpose into the business was an interesting journey for us at Virgin and, at times, far from easy. Historically, Virgin has always launched businesses to champion the consumer, introducing competition and breaking up monopolies and duopolies to bring fairness and value. But we knew we could do it better. We knew if we got it right, we would be one of the first companies to say that people, purpose, and planet truly described our brand.
Lesson01: Invest
It all starts with People. You have to throw resources (financial and talent) to develop, grow, and sustain your purpose. If you continue to think of it as CSR—as someone's part-time job performed over their lunch hour—you'll get nowhere fast. Purpose should not sit within a separate department, but rather be at the heart of everything your company does. The talent driving your purpose should have access and influence within every department, work stream, and member of staff within your organization. That's the most effective way to ensure your purpose is the lifeblood of your business. We were lucky—we had Jean Oelwang and Charlotte Goodman and their team at Virgin Unite, our foundation. We didn't force this on an unwilling or unsuspecting group—we devoted some of our best, most passionate, and inspired people to the task of putting purpose first. We called them the Business Innovation and Purpose Team. In the beginning, their role was to spur Virgin companies to think more about their impact in local communities and the wider world, and to leverage the power of their staff to ensure that impact was positive. The team was there to encourage the businesses to think bigger than a one-year partnership with a local charity, to get them thinking creatively about impact on a bigger scale, with longer time horizons, and to leverage all assets of the business—including all partnerships. Here is where the magic truly happens—when you devote an entire team and its resources to finding a purpose that fits your core business model. Having the right people holding the wand will make all the difference.
Take Virgin Money (VM, our bank), one of the first Virgin companies to embrace purpose and run with it. VM distilled their purpose statement down to three simple words: “Everyone better off.” Everyone consists of their five Cs: Community, Colleagues, Corporate partners, Customers, and Company. The company won't make a single decision unless they determine all five Cs stand to benefit. A few more examples of clear and simple purpose statements are Virgin Mobile Australia's “Making Mobile Better” and Virgin Hotels' “Everyone Leaves Feeling Better.” You don't need to overthink it; a purpose statement should be concise and punchy. Don't confuse it with your business mission statement; this is your clear and defined purpose statement.
30 percent of a company's value is based on its relationship with society.
—McKinsey
A quick example of how Virgin Money implemented their purpose statement is to look at how they tackled their sponsorship of the London Marathon (that comes under C for Community). At the time, many of the millions raised by the London Marathon were processed through an online donation site, JustGiving, a for-profit business that charged a 5 percent administration fee and took 5 percent of your Gift Aid. Our team shook that up with Virgin Money Giving, which gives donors and charities in Britain a better deal. Drawing on the infrastructure and expertise of Virgin Money, the nonprofit offers the same service for only a 2 percent fee, to cover overhead costs.
It helped that Virgin Money was a sponsor for the race. Launching the digital fundraising service made that sponsorship more than just an act of corporate branding; it integrated Virgin Money into the experience of the event, it drove greater engagement and leveraged our expertise to enhance the business case for the sponsorship, it promoted our banking services and strengthened our brand. All this with a lower administration fee, which meant more money went to British charities. Over £560 million has been donated to charities via Virgin Money Giving since launch, resulting in an estimated £17.9 million more donated to charities due to the not-for-profit model.
“I believe that with great wealth comes great responsibility, a responsibility to give back to society and a responsibility to see that those resources are put to work in the best possible way to help those most in need.”
— Bill Gates
Thanks to the Business Innovation and Purpose team and the passion and dedication of their colleagues across the businesses, by 2017 twenty-five Virgin companies had purpose statements at the heart of the business. The statements continue to evolve as the businesses do. While your purpose should be enduring, it is important to revisit your statement often to ensure you are still living up to it.
Lesson02: Be Brave and be Bold
Lesson two is a little trickier because it requires sticking your neck out. Be brave and be bold. Currently, there aren't enough companies out there doing this meaningfully that can be emulated, so you're going to have to be fearless and accept that you might make mistakes. Don't sit around talking about it for months—jump in and give it a go.
Lesson03: IT's (Still) About the Bottom Line
Let's not forget that we run businesses, and that businesses need to make money to survive. You can start a company with purpose, but ultimately you need a plan to make a profit (no matter what my dad says to the contrary!).
At Virgin, we needed to prove to our operating companies that purpose and profit do go hand in hand. The best example of this is RE*Generation, a project tackling homeless youth issues at Virgin Mobile US.
RE*Generation started with the purpose statement: Empowering a Generation to Help Its Own.
Virgin Mobile, with the help of Virgin Unite, brought together organizations that care about homeless youth and connected them with customers who wanted to help. They donated via text and volunteered. Virgin Mobile provided a platform for their customers so they could easily make a difference and positively contribute to their community. The feel-good factor this created between customer and company was immense. Dan Schulman, CEO of Virgin Mobile US at the time, hired a consultant to assess the customers who had engaged in the RE*Generation project versus those who had not. They found that the customers who participated by using the platform were more loyal Virgin Mobile customers, staying with their plans longer and using more minutes. Dan proudly held up this finding as testament to the fact that purpose brings profit.
Lesson04: Shake up the Team
At Virgin, we decided to take things even further—to integrate purpose firmly, and visually, into our core business strategy. First, we moved Charlotte out of Virgin Unite to sit with our investment team. Charlotte pointed out that it doesn't matter how much she works with existing businesses—if Virgin launches a new company or invests in a new company that lacks purpose, it will undermine everything we stand for. It's much harder to reverse-engineer a social cause than it is to start with it. We made the strategic decision that Charlotte's team should sit at the heart of our investment portfolio.
“Being good is good business.”
— Anita Roddick, founder of The Body Shop
I cannot underestimate the importance of this new seating arrangement—Charlotte, tasked with bringing purpose into every business, sat next to the numbers-driven investment team. Every potential investment at Virgin came under the microscope of purpose.
The establishment of a Purpose Board came next. I chair the committee, which receives input from all staff. We have representation from Virgin Unite and from the Heads of Virgin Management covering people, brand, investments, and corporate communications. We meet six times a year to ensure we have the right governance in place, that purpose is central to our agenda, and that it gives momentum to our strategies.
The Purpose Board, as the name suggests, determines the purpose priorities for Virgin Group each year. We identify key opportunities and best practices, and of course, we share them widely. We also consider any key risks and discuss how purpose is being used by businesses to navigate difficult decisions. A cause can be a very useful compass to keep you on track. The right track takes into account employees, customers, partners, investors, shareholders, society, and the environment. Central to our view is that the business must act beyond its own interests—the Purpose Board provides oversight.
Finally, the Purpose Board ensures we measure and demonstrate the benefits to business, people, and the planet of being more purpose-driven, like Dan Shulman did at Virgin Mobile US.
In a nutshell: to make change happen, you have to take it seriously and give it credence. This doesn't have to come in the form of a Purpose Board—all aspects of a successful business should be innovative, even when it comes to doing good. This means constantly reassessing what sort of purpose implementation works best for your company. A board may not be right for your company. But regardless, your people must see that the top brass take purpose seriously. In fact, why not ask them how you're doing? At Virgin, we ask the following questions of our people:
You know your “Purpose Barometer” is on the money when:
You have a long-term vision, strategy, and budget to deliver your purpose
The Board is reported to, engaged, and accountable—you have effective purpose governance
The leadership team is engaged and accountable
You have developed a measurement system to support the purpose strategy
Incentives, rewards, and recognition are aligned to your purpose
Your purpose is operationally embedded and is driving decisions
Your purpose is considered and evident throughout your value chain
Your risks are being effectively identified, mitigated, and managed
You are using purpose to drive innovation across the business
You are performing better than peers and are creating opportunities to become pioneers
How can the business better embed purpose into everything we do?
How can the leaders better drive purpose?
How do you see your role in delivering purpose and how can we help you do better?
Lesson05: Purpose is a Journey
Discovering, developing, and embedding your purpose is a journey and not always an easy one. But if you truly embed purpose into the very DNA of your business the rewards can be invaluable. Use it as your compass during difficult times, for example, complex negotiations, in cost-cutting initiatives, or when performance managing people. Driving all decisions from your purpose will ensure that you are recommended by customers over competitors because you are purpose driven; you will be “employers of choice” because you offer people a greater sense of purpose at work; and you will positively impact lives in the communities you operate in and across your value chain.
Let that be Lesson 5 and the end of class: YOU need to get actively involved.
