BM_IMD_REPORT-How-Authentic-is-your-Corporate-Purpose

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live the values, determine the strategy and take on the role of ensuring that long-term investment decisions reflect the core purpose. The degree of operational alignment is also important in purpose-driven organizations, including consistency between brands, purpose, supply chain and marketing. At Unilever, sustainable sourcing policies guide all decisions so that they are aligned with purpose. For example, wherever possible, ingredients are sourced from the country where the food is being produced, so that value is retained in the producing country and eco-efficiencies are exploited. HR practices including recruitment and training are central to attracting and retaining talent that shares the organizational values and lives the corporate purpose. Toyota ensures that corporate purpose is a key consideration in decisions at all levels by differentiating between organizational roles; those in charge of operations have a day-to-day focus while experts are explicitly tasked with taking a long-term view. In this way, it creates accountability for purpose at the individual level. At the board level, Toyota’s chairman has also explicitly taken on the role of taking a long-term view. Google gives employees 20% of their time to work on their own projects, and provides the opportunity to communicate and articulate how their innovation projects are aligned with corporate purpose. Barriers Half of the companies interviewed cited financial short-term pressures as a barrier to implementing purpose authentically. Executives referred to pressure to “make the numbers,” as well as consumer pressure on cost and/or failure to recognize externalities. A few executives mentioned internationalization as a barrier; as the company globalizes, making sure that local operations and partners remain aligned with corporate purpose can be a challenge. In order to overcome these barriers, companies are taking a combination of internal and external measures. Internal measures There are a number of efforts to ensure that human resource (HR) practices, including recruitment, training, performance evaluation and incentives, are aligned with corporate purpose. This helps to mainstream corporate purpose into the organization. When selecting talent, one executive at Google said, “You need individuals who see the opportunity, are able and willing to connect the dots, be challenged frequently and be made very uncomfortable.” Some companies (including Tetra Pak and Unilever) include clear targets to reward contributions to corporate purpose. A clearly communicated purpose, including how to translate it operationally, helps employees have a clear mandate for action. A focused message is key. While purpose is by nature aspirational, it needs to be realistic and credible. External measures Three of the companies interviewed mentioned the importance of engaging with external stakeholders. For example, Unilever has developed several platforms with external stakeholders. One such platform is the Sustainable Agriculture Initiative Platform, which has 60 food and drink 26
companies as members. Other such forums include the Roundtable for Sustainable Palm Oil and the Roundtable for Sustainable Soy. A Unilever executive mentioned its clear focus in this regard, with a view to fulfilling purpose and having impact: “You always try to get more industries around the table to work on sustainable solutions in value chains. And then your impacts can be much, much bigger.” In this way, Unilever has developed the partnerships it needs to make the positive impact it seeks. When engaging with partners, having deep and extensive knowledge related to the areas touching corporate purpose is important. Tetra Pak, for example, researches how its partners can improve on sustainability indicators and works with them to do so. For instance, it seeks to understand the drivers of the carbon footprints of its preferred suppliers so that it can work with them to understand and reduce their carbon footprints. Also, authenticity is important for building trust, as is addressing the very specific concerns of different stakeholder groups. Lack of authenticity can very quickly erode trust. As stated by one executive at DuPont: Authenticity is in the eye of the beholder. NGOs don’t care if – from the company point of view – they are trusted suppliers who deliver on-time and on-budget. It depends on the audience. You have to build credibility. It takes a long time to build credibility, but just one error to wipe it out. 7.4 The role of leadership All the companies interviewed agreed that the role of leadership was critical to ensuring that organizations lived their corporate purpose. By providing the long-term vision, articulating and communicating the purpose internally and externally, leaders provide the direction and clarity and set the course. By ensuring their behavior is consistent with the values espoused, leaders inspire those inside organizations to live the purpose and thus provide credibility externally. The leader is the initiator and challenger, providing the organization with the continuity required to stay the course. 7.5 Recommendations Nearly all of the companies we interviewed mentioned the importance of the founder in clearly articulating the purpose when setting up the company. Can companies who have not benefited from such clarity of intent from the outset set a corporate purpose? If so, what are key ingredients to ensuring that they are successful in doing so? Executives repeatedly mentioned the following elements. Know thyself: Companies need to have a clear knowledge of what they are and where they want to go, and they need to conduct a careful analysis of where they can make an impact. Focus: Companies that have an authentic corporate purpose are aspirational in the impact they want to make while retaining enough focus to ensure they can retain credibility. Resonance: To ring true, a corporate purpose needs to resonate with its audience, whether it is external (e.g. customers), internal (e.g. employees) or other stakeholders. 27
Page 1 and 2: How Authentic is your Corporate Pur
Page 3 and 4: Contents Executive summary ........
Page 5 and 6: Executive summary Introduction Over
Page 7 and 8: although awareness is critical to a
Page 9 and 10: Research by Burson-Marsteller and I
Page 11 and 12: To validate the dimensional structu
Page 13 and 14: Leading Image: In contrast, researc
Page 15 and 16: 4. Survey Results and Key Findings
Page 17 and 18: Figure 4: Top Five Companies with a
Page 19 and 20: We then asked more specifically for
Page 21 and 22: 6. Leadership and Authentic Corpora
Page 23 and 24: 7. Qualitative Research Findings In
Page 25: One executive described the “doub
Page 29 and 30: - Is the organization aware of the
Page 31 and 32: 1) Seeking feedback from stakeholde
Page 33 and 34: knowledge for the broader good. Tha
Page 35 and 36: - Does the organization openly shar
Page 37 and 38: • Strategy has to illustrate purp
Page 39 and 40: making process. If managers are not
Page 41 and 42: De Hoogh, A. H., Den Hartog, D. N.,
Page 43 and 44: Leading 13. Appendices Appendix I:
Page 45 and 46: Appendix II: Qualitative Interview
Page 47 and 48: Appendix III: Qualitative Interview
Page 49 and 50: Appendix V: Characteristics of Surv
Page 51 and 52: Appendix VII: Industry Demographics
Page 53 and 54: Appendix IX: Companies Identified a
Page 55 and 56: Appendix XI: Ranking of Full List o
Page 57 and 58: Appendix XIII: Status of Authentic
Page 59 and 60: Appendix XV: Standardized item fact
Page 61: Appendix XVII: Confirmatory Factor

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