Bold Purpose

8 April 2011

Customer experience experts Shaun Smith and Andy Milligan outline why boldness is key for business.

It's time for leaders to lift their gaze from their numbers to their purpose

"Spreadsheets only reflect the past, not the future" - Richard Reed, Innocent

As we emerge from the recession, chief executives will once more be thinking of revenue growth rather than cost cutting, market share rather than share price and finding the right people rather than 'right sizing'. Well that's fine then, we can put the recession behind us and resume business as usual. Well no, not really; the economic crisis and failure of banks like Lehman Brothers, the environmental crisis and criticism of major brands like BP, the explosion of social media and the emergence of brands like Twitter, Google and Facebook are creating seismic shifts in the world of business.

A different breed of organisation is emerging in this world. They succeed because they have the courage, confidence or just sheer chutzpah to pursue a purpose that is beyond profit. They engage, entertain and educate their audiences, and see their customers and employees as members of a like-minded community. They create an almost cult-like following around their brand - both within and without their organisation - and are not just different but dramatically different and who push to the extremes the consequences of their desired positioning and strategy. They have a bold purpose and are committed to making it a reality.

So what characterises the approach these Bold companies take to their 'purpose'? We think it is four simple but profoundly challenging things:

"A different breed of organisation is emerging in this world."

Their purpose is communicated through a clearly defined brand / customer promise - O2 has achieved market leadership and created a strong basis of fans by providing value that no other operator does. Access to events at the O2 Arena and Rugby at Twickenham all help to cement a strong relationship with the brand and deliver its promise of 'Helping customers connect to the people and things that matter to them'.

The key in defining your purpose is to select something that will resonate with your customers and your employees. 'Becoming the most profitable organisation in our sector by 2014' probably won't do it. "Helping our customers connect to the people and things that matter to them" is much more likely to create energy and focus within the organisation as it does for O2. It also leads the organisation to take bolder steps than competitors.

For example, O2 has stripped out the restrictive contracts and 'weasel words' that have plagued the mobile phone sector to make it easier for their customers to leave. Products like 'Simplicity' a SIM only offer allows customers to have total control over their relationship with the brand but, as Ronan Dunne, CEO of O2 says, "If you give your customers the freedom to leave, what you actually give them is the confidence to stay".

They are willing to trade short-term profit to achieve their long term vision - having defined their purpose as providing the 'very best customer service', Zappos the US on-line retailer, took the decision to stop its 'drop-ship' business model whereby products were shipped straight from manufacturer to the consumer. This business represented 25% of sales and was the most profitable part of the business but the decision was taken because Zappos could not control the customer experience and that was their priority. Tony Hsieh CEO of Zappos said; "We're willing to sacrifice short-term revenue and profits if it's in the long-term interest of our brand" So what motivated that action? The need to ensure their strategy and customer experience delivered their brand promise. And that takes us to our next point.

They align the strategy, the brand, and the customer experience so that they are inseparable - Harvard Business Review research found that those companies whose customers believed had become more differentiated realised a stock-gain of 4.8% on the year whereas those that were considered less-differentiated saw a loss of 4.3% over the same period. One brand that has done this brilliantly is the Geek Squad, the technology support company. The brand has gone to enormous lengths to ensure that the customer experience, the brand and the strategy operate together to create a highly distinctive offer. Roberts Stephens the CEO and founder says "Marketing is a tax that you pay for being unremarkable"

They use their purpose as their 'compass' - It is probably true to say that most organisations start off with a purpose - a vision or mission, an idea that drives them. However it is also true that as many organisations get bigger, the sense of purpose gets lost - trodden down by financial metrics which begin to drive the organisation instead. One organisation that has remained focused on its vision for the brand is Burberry, 155 years old and counting. During the recent recession the luxury retail market declined by 30% yet Burberry continued to grow and announced a 50% year on improvement for the first half of 2010. Whilst many other retailers are issuing profit warnings for the first quarter of 2011 Burberry has announced record profits. It achieved this result by not letting go of the purpose for the brand- 'Democratising Luxury'.

"It also leads the organisation to take bolder steps than competitors."

Whilst other retailers simply focused on cutting costs Burberry invested in the customer experience, both on-line as well as off-line, and introduced innovative digital marketing techniques including streaming its catwalk shows in 3D and via the web to an estimated audience of a million. As Angela Ahrendts, CEO of Burberry says; "There is always this balance between hard and soft strategies, investment and intuition, but if you have a greater purpose, it becomes relatively easy to make those calls"

Seafarers have known through the ages that the way to navigate through dangerous waters is to have a clear course to steer-one that leads to the ultimate destination whilst avoiding immediate hazards. Unless organisations have this same clarity of purpose they will be find themselves continually tossed about in the continuing turbulence ahead. The point that Richard Reed was making is that we cannot navigate our business through spreadsheets that are essentially records of where we have been-we also need a compass to know where we are headed too. That compass is our purpose.

This is an extract from Shaun Smith and Andy Milligan's 'Bold - How to be Brave in Business and Win'

Shaun Smith is founder and partner at smith+co the customer experience specialists.
Andy Milligan, co author of "Bold - How to be Brave in Business and Win"