The Case for Purpose-Driven Companies
Why having a meaningful purpose in the workplace is good for business, talent retention, and customer loyalty
There are two types of companies in this world. Business-driven companies and purpose-driven companies.
A business-driven company defines itself by the business it’s in, and uses incremental innovation to grow within that definition. On the other hand, a purpose-driven company aligns itself with a higher purpose, a vision, a quest that transcends financial success, and uses disruptive innovation to grow in any direction that supports that purpose.
Back in 2015, I watched Ty Montague give a compelling talk on the subject at the Chief Innovation Officer Summit in SF. He talked about how business-driven and purpose-driven companies have different trajectories when it comes to growth and innovation.
He gave many examples, but the one that stood out for me was his Pepsi vs. Red Bull comparison.
The Business Case
Pepsi has been a leading soft drink company for years now. It’s in the business of making and selling soft drinks and snacks. That’s the only thing that company does. That’s how it defines itself.
Pepsi has innovated in that particular vertical for years. From caffeine-free and diet drinks to non-carbonated beverages. With acquisitions and mergers, it’s gone to great lengths to create ecosystems that support and grow its core business: selling soft drinks and snacks.
Ty argued that even though Pepsi has done very well for so long, the company’s growth has slowed down considerably in recent years. In 2018, the company’s expected revenue growth is 3%. Pepsi is a business-driven company that’s reached maximum growth within its business vertical.
Then there’s Red Bull.
Red Bull might be widely known as an energy drink company, but it’s far more than that. Red Bull has successfully created several companies outside the energy drink space, each with its own business model and P&L. Red Bull has its very own Formula 1 team, that was sponsored by Infiniti for millions of dollars. It also founded Air Race and Media House, both of which are very successful companies in their own right. Red Bull holds its own action sports events, with big focus on extreme sports like surfing and snowboarding. The company is worth $10.4 billion and was named one of The World’s Most Valuable Brands by Forbes Magazine.
Red Bull is in the business of helping all of us live our lives to the absolute extreme
Red Bull’s purpose is to help us live our lives to the absolute extreme and they’re in any and every business that helps deliver on that purpose. As a result, Red Bull has gone beyond being an “energy drink company” to launching very successful media and extreme sports enterprises that have proven boon to their growth.
Red Bull was founded in 1987. Pepsi was founded in 1898.
So is Red Bull an energy drink company? Yes. Is Red Bull an actions sports company? Yes. Is Red Bull a media company? Yes! So what business is Red Bull in? Red Bull is in the business of helping all of us live our lives to the absolute extreme.
Pepsi and Red Bull are two incredibly successful companies that take two different approaches to doing business. Each approach has its positives and negatives with clear implications on growth and innovation.
The Talent and Customer Case
According to Gallup, 4 out of 5 millennials are disengaged at work. They are indifferent and apathetic, which is not surprising. Over 75% of millennials desire working for companies with purpose and a transcending mission, yet very few companies offer that.
Daniel Pink’s famous drivers of better performance and satisfaction at work hold true to this day: Autonomy, Mastery and Purpose. People care about making a profit, but care about purpose more. That’s why when profit is unmoored from purpose, good talent leaves or becomes disengaged.
Same is true for customers. 4 out of 5 Americans are more loyal to purpose-driven brands than traditional, business-driven brands. The numbers are astounding:
78% of Americans believe it’s unacceptable for companies to just make money
88% would buy a product from a purpose-driven company
66% would switch companies to buy a product from a purpose-driven company
57% would pay more for a product from a purpose-driven company
The data shows that companies that believe in something bigger, do better.
It Matters to Me
When I joined Ticketmaster four years ago, I was very excited to work with leaders like Jody Mulkey. The company was beginning to reinvent itself and I wanted to be part of that journey.
When I was doing my homework on what Ticketmaster stood for, I came across this post by Jody. The title–Powering Life’s Experiences–captured my imagination instantly. It was inspiring and transcendent.
Beyond the ticket and the transaction. Ticketmaster as the engine, the capability, and the platform that unlocks life’s most unforgettable experiences. Now that’s a purpose I got excited about and saw myself easily getting behind.
At Ticketmaster, I built a team rooted in the core belief that every fan deserved fair and easy access to the magic of live entertainment, because we knew that live only happened once and those memories lasted forever.
That team went on to create meaningful products for fans worldwide because it was in the business of connecting all of us to the unforgettable moments of joy in live entertainment.
Now I’m at UpKeep, a purpose-driven startup based in LA, operating out of the core belief that service workers, the most underserved workforce in the world, deserve better, and using technology to deliver on that belief.
At UpKeep, the customer’s needs and pain points decide what we work on and how we do it. It’s refreshing to see that level of commitment to the customer at every level of the organization.
It’s easy to understand what business UpKeep is in because of a strong culture rooted in the customer. It’s even in the company’s core value statement:
If you are driven by a strong sense of purpose, come join us at UpKeep as we improve the lives of millions upon millions of underserved workers around the globe one task at a time.
If you believe in our mission and want to join us on this journey as we literally reshape an industry, get in touch. We’re always hiring ☺️