Chapter 3 - Demonstrating purpose

In the previous chapter, I explored whether people felt we were becoming more 'purpose-driven' both as individuals and as businesses. By and large the broad consensus was ‘yes’, in spite of the barriers identified. We ended that chapter however on one major question: What does it mean to demonstrate purpose?

How do businesses and individuals genuinely demonstrate that they’re purpose-driven? Is it performative to talk about purpose and impact? Is it simply raising awareness and educating people? Or is it all just purpose-washing / green-washing? And for those who are genuine about demonstrating good, how can that be achieved?

Ergo, how do we walk the walk?

As always, it's worthwhile to start with a definition of what 'demonstrating purpose' means. In the context of the conversations I've had, there were two groups of conversations:

  1. How to measure the impact created by a 'Purpose-driven' organisation, especially when their purpose is related to social outcomes.
  2. How that purpose is communicated to customers and stakeholders in a manner that is authentic and genuine.

How do we measure purpose?

First, it goes without saying that measurement depends on the context of the business or organisation, its purpose, and whether the types of outcomes it wants to achieve are 'hard' (quantitative) or 'soft' (qualitative).

Hard measures - such as redirecting $X money to a cause or creating Y jobs - are comparatively easier to capture and report on, and the easiest for people to understand. Initiatives such as Pledge 1% and the social enterprise model of donating X% of profit are further examples of this.

However, reporting on quantitative results does not necessarily paint the whole picture. For example, it can be relatively easy to report that $50 million was used to improve access to water in developing nations. However how do we ascertain if this actually improved the lives of the communities?

These are tough questions that require significantly more effort to answer. On the topic of water intervention, there are now several case studies on the negative impact of these projects, such as the highly publicised Roundabout PlayPump (in which children playing on a merry-go-round pumps water for the community) that ended up creating more problems for said communities such as forced ‘play schedules’ when water ran low. Or the mass digging of wells in Bangladesh in the 1970s led to mass arsenic poisoning of millions of people, an issue that continues to persist.

As an example closer to home, many professional services businesses focus on achieving diversity and inclusion as part of their purpose. However how is diversity quantified? Along what metrics? What denotes success? And again, just because it's measured, does that mean it's effective? On this topic, one respondent wondered whether this is why businesses often focus more on hiring Diversity and Inclusion Officers, because that may be an easier measure to report on (no shade to those in the Diversity and Inclusion space).

When I explored these questions with other respondents, there were a range of different perspectives. There were some who felt that we needed a consistent method of quantifying impact in order to have a shared language for comparison, measurement, and communication, and to demonstrate some form of ‘social return on investment’. Organisations such as the Australian Social Value Bank (ASVB) were set up to develop a quantifiable set of social measures for this purpose.

Other respondents acknowledged the inherent issues with qualitative reporting described earlier, but felt that it was still important to start somewhere. That being too focused on accurate measurement could distract from energy that's better directed towards action, especially where there may be diminishing returns in terms of effort invested vs precision of results.

Being too focused on quantitative outcomes can also create challenges in terms of expectation management by the broader community and stakeholders, ranging from people who might feel that the results 'aren't good enough' through to people who are cynical of any reporting of results, considering them to be performative in nature.

In listening to everyone’s perspectives, I'm reminded of Goodhart's Law, that states: "When a feature of the economy is picked as an indicator of the economy, then it inexorably ceases to function as that indicator because people start to game it." This is in part why the focus on profit drives businesses to undertake actions that increase profit at all costs.

Whilst Goodhart was describing the economy through this example, it raises valid questions about how we think about demonstrating purpose, and whether focusing on measuring purpose helps or hinders progress. The most notable example that springs to mind is the VolksWagon Emissions Scandal, where engineers gamed the emissions output of their diesel vehicles during testing to achieve a lower emissions rating.

I’ll leave this section with one final thought provoking perspective shared with me by a respondent, in that just as we expect organisations to pivot on their strategies and to be able to learn from business failures, so too should we allow organisations to pivot on their purpose.

Is communicating purpose performative or genuine?

The second component of demonstrating purpose lies within the communication and marketing of the organisation’s purpose and cause to audiences, which is sometimes referred to as ‘cause marketing’.

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This topic also inspired a great amount of debate with respondents, which fundamentally boils down to whether cause marketing is considered performative or genuine in terms of education and raising awareness.

Respondents who were more cynical of cause marketing felt that it could allow businesses to talk the talk but not walk the walk (or at least are not perceived to), especially as all businesses can be 'purpose-driven' to some extent. For example, a locksmith sells locks, but their purpose could be promoted as providing people with security and peace of mind. A bank manages money, but their purpose is to provide financial security and help people build inter-generational wealth.

This can be an issue especially on social media, where businesses and individuals alike can rally quickly behind a hashtag to be 'seen' to be supportive, but then don't undertake any real actions or don't understand the purpose they're supporting.

For respondents who were supportive of cause marketing, they saw it was a necessary practice, and that all businesses have to rely to some extent on marketing so that customers understand what it is they support and care for.

Cause marketing in this context isn't necessarily just about sales and advertising, it can be a valid way of educating an audience and raising awareness especially where there is measurable impact and data available. Done effectively, it can create movements that inspire huge amounts of mobilisation and action, such as the ALS Ice Bucket Challenge or Movember.

One respondent felt that cause marketing can be a valid pathway for businesses to start their journey towards becoming purpose-driven, that even if it may be performative to begin with, it is still a starting point. I thought this was a particularly interesting observation as it reminds me of the practice where people post a commitment on social media to weight loss (for example). They haven't yet achieved their goal, but the public accountability is used to help spur change.

Is Corporate Social Responsibility a demonstration of purpose?

Corporate Social Responsible was coined in 1953 by Howard Bowen in his book Social Responsibilities of the Businessman, a concept that really came into vogue in the 1970s and 80s and was highly encouraged by the Reagon presidency. Interestingly, for those who are a study in history, this is the same era in which Milton Friedman's theories on free market economics also took off.

How CSR traditionally manifests is via a dedicated function of a business focused on areas of social and environmental impact. The function is funded through profits generated in other areas of the business.

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The respondents who spoke positively of CSR felt that it can create tremendous amounts of social impact, especially in large-scale businesses whose profit margins enable significant amounts of funding to be committed. Think Microsoft and the Gates Foundation, whose enormous philanthropic contributions have been funded by the profits generated through Microsoft.

Respondents who were less optimistic on CSR felt that it sometimes manifests as a tick in a score card or company annual report, an activity undertaken purely as a chore and because it was forced upon people. Buying carbon offsets was cited by a couple of people as examples of ‘purpose washing’ for businesses, that this was seen as a way of 'outsourcing' the need for the business to be carbon neutral in their operations.

When I probed these interviewees on why they felt CSR wasn’t the same as being purpose-driven, the response was that CSR sometimes felt too ‘far away' from the people whom businesses directly serve and make money from. Take for instance a mining company who buys their office stationery from a local charity via a CSR function. Is this demonstrating purpose? Or is it merely a performative action? The further the distance, the more businesses run the risk of inadvertently contributing to negative social impacts as per my earlier water intervention examples.

I don’t feel that I was able to reach a definitive conclusion on the function of CSR and whether it was considered to be a genuine example of demonstrating purpose, however I did get a sense of evolution in this space. From businesses embracing B-Corp certification through to participating in initiatives such as the Shared Value Project, I felt that more businesses are looking at how purpose can move beyond the CSR function.

Managing audience expectations

One area of conversation that I wanted to highlight in this chapter is the impact of cause marketing on audiences. I’ve already covered in the previous chapter that people want to engage with businesses that are purpose-driven. However, a few respondents (especially those who work in NFP sectors) shared some of the downsides to this.

At a macro level, they felt the volume of cause marketing can start to become distracting for audiences and contribute to donor fatigue. This is a big challenge for NFPs who rely on donations as a major source of revenue. Private businesses with large marketing budgets to invest in promoting their purpose may have the adverse effect of crowding out the market for NFPs and charities, forcing them to invest even more marketing dollars on fundraising efforts.

I experienced a microcosm of this dichotomy during my interviews, in which one respondent who regularly gives to charity lamented the receipt of glossy flyers thanking them for their donation, wondering instead whether that money could be spent elsewhere. However another respondent with deep experience in fundraising shared that these were necessary actions for increasing donor retention.

Another observation shared with me was the negative impact of audience expectations when it comes to cause marketing. For example, in Australia following the devastating 2020 bushfires, some business owners were publicly shamed on social media for not publicly announcing bushfire fundraising efforts, even if those owners had made private donations. Ironically, this suggests that for a small but potentially vocal percentage of the community, talking the talk is more important than walking the walk.

Unfortunately, these debates often play out in the public arena, which detract and distract from the effort of delivering positive social outcomes.

So how can we genuinely demonstrate purpose?

Throughout my interviews and my research, I got the sense that there is no consistent, clear methodology on how to genuinely demonstrate purpose, beyond a simple objective of ‘walking the walk’. But there are several perspectives that I can draw together and share.

Firstly, is the value of integrity, which I'll summarise as "What would you do when no one's watching? When there’s no marketing campaign to run?" I felt this question is useful in separating the concepts of marketing from action, and asks all businesses and individuals to self-assess whether they are 'purpose-driven' or not. If we were to adopt this mindset, marketing could then be seen merely as a communication strategy, as opposed to a promotional one. This approach could also potentially minimise the risk of businesses being 'called out'.

The second perspective is that some measurement is better than none, as long as the business is genuine about improving that measurement and focusing on outcomes. For businesses starting their transition towards becoming more ‘purpose-driven’, to simply start somewhere and iterate as you go, rather than focusing on being precise and 'getting it right'.

Some respondents continue to emphasise that Triple Bottom Line, a concept introduced in 1994 that balances Profit, People, and Planet, remains the recommended baseline for all businesses to report on as a starting point.

The third perspective is about individuals, with several respondents speaking about the need for individuals to also take responsibility in demonstrating integrity and purpose. That if you want to support a purpose or a cause, do it because you want to do it, and not because it’s something to share on social media. Just as we might call out a business for purpose washin', so too should we recognise that purpose washing can happen at the individual level.

And finally, as the audience, we should be mindful not to be beholden to cause marketing alone. That there is value in doing our own research to keep businesses accountable in situations where they may not be ‘walking the walk’, as well as to demonstrate empathy for businesses who may be genuinely trying but may have made mistakes along the way.

But are all purposes equal? Do all businesses deserve to have a purpose? And is there such a thing as a worthy or unworthy purpose? In my next chapter, I put on the devil’s advocate hat to challenge the respondents about the notion whether all purpose is good.

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