Purpose, Incorporated: Turning Cause Into Your Competitive Advantage by John Wood and Amalia McGibbon


Book reviewAccording to John Wood, a former Microsoft executive turned literacy philanthropist, and Amalia McGibbon, an author and publicist, there used to be only two types of companies: for-profit and non-profit.

In Purpose, Incorporated: Turning Cause Into Your Competitive Advantage, they both argue that the time has come to realize the two are not mutually exclusive. Profitable companies can also be driven by the goal of doing well by doing good. Wood and McGibbon harken to the so-called “4Ps” of marketing, devised by the American business school professor Edmund Jerome McCarthy in the 1960s: product, price, promotion and place. For modern consumers, especially millennials born from about 1980 to 2000, Wood and McGibbon argue that the 4Ps no longer define what sets a company apart. “Unless you have first mover advantage, the odds are good that a rival has already optimized those 4Ps long before you and your product arrived.” Thus, the book argues for a fifth P, purpose, as a “largely unclaimed frontier.” Millennial consumers, they write, citing a Goldman Sachs report, rank corporate social responsibility (CSR) higher than any other attribute, including lower price, easy availability, quality or prestige.

Businesses that leverage purpose win the war for talent, especially among millennial employees, who are forecast to account for 75 percent of the global workforce in 2025. In this year’s Deloitte Millennial Survey, six in 10 said “a sense of purpose” is part of the reason they chose their current employer, 90 percent want to use their skills for good, and more than half of millennials would take a pay cut to find work that matches their values.

Wood and McGibbon detail the road to employment taken by Matt Dee, a Hong Kong-raised computer scientist, roboticist and mountain climber who turned down a hot job at Snapchat, the photo-sharing “unicorn” in Silicon Valley, because he couldn’t discern the company’s sense of purpose and the recruiter couldn’t articulate one. He passed on Facebook, mobile-payment company Square and big data software company Palantir Technologies before joining Oscar, an ambitiously reform-minded healthcare start-up in the United States.

The authors posit that the most successful and innovative companies are not the ones that treat CSR as a nice-to- have or publicity stunt, or keep it “siloed” in a single department. Rather, they “bake” a strong sense of purpose into the fabric of the organization, and ensure that every employee, customer and stakeholder is aligned with that purpose.

The result, they conclude, is that companies then have a much stronger competitive advantage in key areas that are critical to their continued success and growth, including customer retention and employee recruitment, motivation and retention. More importantly, “purpose isn’t just for limping millennials,” Wood writes. “For starters, it’s been proven that Gen Xers and baby boomers are starting to communicate and shop like millennials.”

The authors pepper their crusade for the fifth P with interviews and anecdotes with a wide range of companies that have scented the advantages of a sense of purpose, altruistically or otherwise. Many are from the U.S., the authors’ home country, including domain host Namecheap, school-lunch provider Revolution Foods and the Asia-inspired skincare company Tatcha. Non-U.S. examples include Canada’s low-cost airline WestJet, Australia’s enterprise software company Atlassian, the Japanese-owned Financial Times and telecommunications company Hong Kong Broadband Network (HKBN).

Wood cites his own experience as a Hong Kong resident and telecoms customer. While he had “zero problems with service” at established rival PCCW, HKBN’s identity appealed more, when he saw it “publicly declaring that whether the company made Hong Kong a better place to live would be the litmus test by which it would judge itself and by which the public should also evaluate it.”

Social media drives much of today’s perception of the corporate world. Wood and McGibbon warn that customers, employees, former employees, government regulators and citizen watchdogs are often in charge of a conversation that was “formerly controlled by television- advertising buys.”

That means pitfalls for companies, who, the authors argue, should avoid trading coal or shark’s fins or doing business with payday lenders. Worse, don’t trivialize the importance of purpose, as PepsiCo found in 2017, when it decided to make an ad showing model Kendall Jenner “defuse” a riot with a can of soda.

“Doing purpose is much harder than most companies believe,” Wood and McGibbon write. It probably would help if the company actually believes in it.

Author interview: John Wood

For someone who built his career in business, John Wood has little regard for Milton Friedman, the economist and leading advocate of free-market capitalism. “For too long, business leaders have followed Friedman’s advice that there is no social purpose of business beyond delivering maximum profits to shareholders,” he tells A Plus.

Wood was director of business development at Microsoft Greater China when a holiday in Nepal in 1998 brought him in contact with a local principal who had barely any books in his school’s library. He quit his job to found Room to Read, a non-profit organization for improving literacy and gender equality in education in the developing world. The organization, by Wood’s count, has helped about 14 million children in 15 countries.

He described his own journey from capitalism to charity in his 2006 memoir, Leaving Microsoft to Change the World: An Entrepreneur’s Odyssey to Educate the World’s Children (HarperBusiness). Wood’s goal in writing Purpose, Incorporated was not to divert executives from their traditional roles, but to enhance their decision-making. “I wrote this book as a call to action to the world’s business leaders to stop missing a major opportunity,” he says.

The author believes that putting a philanthropic element into a company not only makes the world a better place, but also builds better, more motivated and more profitable companies. “Purpose is fundamentally a mature, long-term- based approached to business,” he says.

“CSR activities,” he adds, “create shareholder value by reducing expenses through, say, wind energy or plastic-less packaging, or reducing the risk to those cash flows through tax advantages or avoidance of future environmental penalties.”

As well as pushing companies to develop their CSR roles, Wood has used lessons from his own career at Microsoft to make his Room to Read charity more efficient. “We use the Berkshire Hathaway model of keeping the headquarters tight and focused, while devolving as much authority and resources as possible out to the field,” he says.

Room to Read has more than 1,600 employees in Cambodia, Sri Lanka, Nepal, Tanzania and elsewhere. But Wood’s personal HQ is Hong Kong, where he spends about half the year.

“Hong Kong has the greatest combination of things that appeal to me,” he says. “Wealth and businesses that support Room to Read, a great airport and airlines, high speed rail, awesome beaches and hundreds of kilometres of running trails.” I love the efficiency of this city. I can’t think of a better city in which to base myself as a globetrotting ambassador for the organization.”

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July 2018 issue
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