Deriving value from purpose. Understanding the critical role of the CMO

Transcription

1 Deriving value from purpose Understanding the critical role of the CMO

2 Contents Foreword 1 Executive summary 2 Methodology 4 Purpose: an idea whose time has come... 6 Why now? The drivers and returns 9 There s work to be done 14 The CMO plays a critical role in purpose 20 For the CMO, a new purpose-infused role 25 Acknowledgements 27 ii Deriving value from purpose: understanding the critical role of the CMO

3 F o r e w o r d N earl y al l com B ut do they? p anies say theyhav e a p urp ose. T he research that f ol l ow s show s that certain com p anies tak e their purpose significantly more seriously than the rest of the p ack. A grow ing num b er are so f ocused in their ef f orts that al m ost w ithout ex cep tion, k ey stak ehol ders such as w ork ers, m anagers and custom ers are intim atel y f am il iar w ith the organiz ation s p urp ose. T he p urp ose is so cl ear and so com p el l ingl y articul ated that p eop l e b oth inside and outside of the com p any understand it and of f er b uy -in, and the host com p any reap s the rew ards. B m m m p p T p m b l m p l R p m b b f m p l T b p m T f m f p m b p ut achiev ing such a state inv ol v es uch ore than erel y ex ressing urp ose. o succeed, urp ose ust e authentic, deep y ingrained and integrated. Mere sl ogans and ark eting cam aigns w il not achiev e the desired resul ts. eal urp ose ust egin y guiding corp orate strategy, and rom there, ex ecution ust attain com ete al ignm ent. o e trul y activ ated, urp ose ust inf orm and driv e day -to-day actions. hroughout the enterp rise, the w ork orce ust eel em ow ered to ak e decisions ased on urp ose. G etting there req uires constant com m unication and reinf orcem ent of p urp ose. Perf orm ance ev al uation and ev en com p ensation, b onuses and recognition/ aw ard p rogram s m ust f ortif y the p rem ise of p urp ose. L eaders say that cap ab l y executed, purpose delivers benefits ranging from stronger sales to greater custom er l oy al ty and em p l oy ee engagem ent. ( p b p l p A b m p f I f f p m l H R A. The research also reveals that for chief marketing officers CMOs), urp ose is ecom ing a critical riority, reaching the top tw o ist at 79% of com anies. nd y no eans is the ath orw ard an easy one. ndeed, this ast-ev ol v ing rol e req uires the CMO to lead or influence a wide range of functions and activities ranging rom roduct dev el op ent, to ogistics, sourcing, and ev en M& So does y our com p any hav e a p urp ose? I s that p urp ose cl earl y articul ated and activ ated? A re y ou deriv ing al l of the v al ue there is to b e f ound in com m itm ent to p urp ose? H ow can y ou im p rov e y our p urp ose-driv en resul ts? T hough it w il l rem ain f or each company to find its own answers, we believe the report that f ol l ow s can p rov ide v al uab l e guidance. Bruce Rogers, Chief Insights Officer, Forbes Insights D eriving value from purpose: understanding th e critical role of th e C M O 1

4 1 Executive summary 2 Deriving value from purpose: understanding the critical role of the CMO

5 E x ecutive summary Purp ose is not a m ission statem ent or a m ark eting sl ogan, b ut an asp irational reason f or b eing that is grounded in hum anity and insp ires a cal l to action. Com p anies b ring their p urp ose to l if e through: Articulation, the cl ear ex p ression of w hy this b usiness is in b usiness Activation, tangib l e p ractices m ak ing p urp ose real f or decision-m ak ers, the w ork f orce, custom ers and al l rel ated stak ehol ders Som e com p anies are m ore p urp osef ul ( p urp ose-driv en) than others: 29% say p urp ose is of p rim ary im p ortance. T m p p hese 29% ex hib it a com itm ent to articul ating and activ ating purpose to a significantly greater degree than others and are ref erred to as rim ary com anies throughout the anal y sis. T he l eading driv er of p urp ose today is the p erceiv ed need to p ursue continuous transf orm ation, cited b y 60% ov eral l and 77% of resp ondents w ho v iew p urp ose as a p rim ary f ocus. Other issues, such as rising consum er p ow er, l eadership concerns or ev en corp orate citiz enship concerns surrounding gl ob al w ork f orce w ork ing conditions or com p ensation, can al so p l ay a k ey rol e. Ov er hal f of surv ey resp ondents, 53%, say p urp ose del iv ers significant tangible value to their enterprises, rising to 75% am ong those f or w hom p urp ose is of p rim ary v al ue. Over half (51%) say purpose delivers significant intangible v al ue to their enterp rises. Com p anies f or w hom p urp ose is of p rim ary im p ortance consistentl y indicate higher l ev el s of f ocus, ef f ort and inv estm ent in its util iz ation, w ith p ositiv e resul ts. Primary firms, in general, tend to report significantly greater p urp ose-rel ated articul ation and activ ation outcom es rel ativ e to the rest of the sam p l e. Key challenges inhibiting firms abilities to achieve value from p urp ose incl ude: Changing em p l oy ee/ organiz ation b ehav iors ( cited b y 39% of resp ondents) A chiev ing al ignm ent across al l b usiness f unctions ( 36%) A chiev ing b uy -in across the enterp rise ( 34%) T he CEO and the CMO m ust w ork cl osel y together on p urp ose: Ov eral l, the CEO is m ost f req uentl y cited as b eing the k ey driv er/ decision-m ak er in term s of the dev el op m ent/ articul ation of p urp ose ( 79%). T he CMO rank s second ( 53%), w el l ahead of the CF O ( 37%). N earl y hal f of ex ecutiv es ov eral l ( 45%) say they b el iev e p urp ose is the top p riority f or their CMO: This figure rises to 60% at primary companies. N inety -f our p ercent of CMOs them sel v es say p urp ose is a top one ( 42%), tw o ( 24%) or three ( 13%) p riority. T he p urp ose rol e f or CMOs is m ul tif aceted: Must l ead or col l ab orate on a w ide range of initiativ es ( e. g., al ignm ent across custom er ex p erience, m easurem ent and m etrics and new p roduct dev el op m ent) Must collaborate with a wide array of functions (e.g., finance, H R, R & D) Senior executives are likely overconfident in terms of how cap ab l y p urp ose is b eing activ ated: The most senior executives in the survey are significantly m ore op tim istic than others ab out the ef f ectiv eness of p urp ose in their organiz ations. Confidence declines significantly among mid-level managers. D eriving value from purpose: understanding th e critical role of th e C M O 3

6 2 Methodology 4 Deriving value from purpose Understanding the critical role of the CMO

7 M eth odology T m f f b q F I K f f l he insights and com entary ound in this rep ort are deriv ed rom oth a surv ey and ual itativ e interv iew s. Partnering w ith EY, orb es nsights conducted a gl ob al surv ey of 217 ex ecutiv es. ey dem ograp hics rom this al 2015 research incl ude: Title: CEO ( 26%), CMO ( 22%), SVP/ VP ( 17%), m anaging director ( 8%), COO ( 6%), EVP ( 6%), p resident ( 5%), CI O/ CT O ( 4%), other C-suite ( 6%) Location: North America (30%), Asia/Pacific Rim (30%), W estern Europ e ( 29%), Central / South A m erica ( 10%) Annual sales: $ 5 b il l ion or m ore ( 20%), $ 1 b il l ion to $ 4. 9 b il l ion ( 51%), $ 500 m il l ion to $ 999 m il l ion ( 29%) p ( b m ( ; m ( ; ( ; ( ; ( ; p ( ; ( ; m ( ; m m ( ; ( Industry: consum er roducts/ retail 20%), ank ing and cap ital ark ets 13%) tel ecom unications 11%) diversified industrial products (7%); health care (6%); insurance 6%) technol ogy 5%) oil and gas 5%) riv ate eq uity 5%) real estate, hosp ital ity, construction 5%) w eal th and asset anagem ent 5%) ining and etal s 4%) other 8%) I nterv iew s w ere conducted w ith senior ex ecutiv es f rom f our l eading com p anies. Q uoted interv iew ees incl ude: J oey B ergstein G eneral Manager and CMO Sev enth G eneration A ndy B urtis SVP Corp orate Mark eting and Com m unications McK esson C h ristine M cg rath VP W el l -B eing Mondelēz International F orb es I nsights ex tends its gratitude to our surv ey resp ondents and interv iew ees. D eriving value from purpose: understanding th e critical role of th e C M O 5

8 3 Purpose: an idea whose time has come... 6 Deriving value from purpose: understanding the critical role of the CMO

9 : P urpose: an idea w h ose time h as come... P u r p o s e I t s our N orth Star guiding us through ev ery asp ect of strategy f orm ation and ex ecution. Joey Bergstein G eneral Manager and CMO Sev enth G eneration P urpose is taking h old. C onsider: C onsumer products: T hink ab out p urp ose-driv en enterp rises, in consum er goods or otherw ise, and Sev enth G eneration l ands on the l ion s share of inf orm ed short l ists. Specifically, says general manager and CMO Joey Bergstein, the com p any s p urp ose is to insp ire a consum er rev ol ution that nurtures the heal th of the nex t sev en generations, a ref erence to the great l aw of the I roq uois. Com m itm ent to these ideas, say s B ergstein, is not onl y good f or consum ers and the p l anet as a w hol e, it s a v ery sound and sustainab l e b usiness m odel. L p p m l p m m l b m f p : W p ik e the ab ov e three com anies, 92% of the ex ecutiv es articip ating in our surv ey say their organiz ations hav e a purpose. But finding true purpose requires looking well beneath the surf ace. Prob ing ore deep y, it is ap arent that any if not ost of those w il ing to tick this ox hav e not considered w hat it eans or a com any to say, accuratel y e hav e a urp ose. A s this rep ort w il l dem onstrate, in truth, there is a v ast gul f b etw een b eing ab l e to state som e p urp ose som ew here in the company and using purpose to define a set of guiding principles that in turn driv e al l asp ects of strategy and op eration f or the entire enterp rise. F ood and b everage: Sp ringing f rom the 2012 sp l it of K raf t Foods into two independent companies, the Mondelēz I nternational w eb site p rocl aim s its intention to create Defining purpose del icious m om ents of j oy f or consum ers around the gl ob e. W e cal l that the dream, say s VP ex ternal af f airs Christine Purp ose is not a m ission statem ent or a m ark eting sl ogan McGrath, a purpose that eventually cascades into five core w hich are b oth in ev idence at nearl y al l com p anies. R ather, strategies, one of w hich is the p ursuit of gl ob al w el l -b eing p urp ose is an asp irational reason f or b eing, grounded in ( w here McG rath l eads the charge). N o m ere l ip -serv ice to the hum anity, w hich in turn insp ires l eaders, the em p l oy ees, cause, the com p any em b eds p urp ose throughout its b usiness custom ers, inv estors and other k ey stak ehol ders. More than a p ractices. Ov eral l, say s McG rath, our dream driv es al l the tagl ine, an ef f ectiv e p urp ose b ecom es a cl arion cal l to action, m ov ing p arts in our com p any to f ocus on w el l -b eing as a core cap tiv ating not onl y the w ork f orce b ut the m ark etp l ace. b usiness strategy. Purp ose, f or us, is v ery real. Com p anies p ursue their p urp ose through: H ealth care: A t the nex us of technol ogy and heal th care, A rticulation: I t b egins w ith ex p l icit articul ation the cl ear McK esson has b een l iv ing its p urp ose since its f ounding w e ex p ression of w hy this b usiness is in b usiness. W hat is the do it al l f or b etter heal th, say s SVP corp orate m ark eting and essence of this com p any? W hat f undam ental goal driv es the com m unications A ndy B urtis. U p on cl ose insp ection, hav ing w hol e of its reason f or b eing; w hat is the p ool f rom w hich al l engaged a w ide range of stak ehol ders incl uding custom ers of its value-creation flows? As Burtis of McKesson explains, and inv estors, w e cam e to the concl usion that McK esson w hen y ou re cl ear on y our m ission, on y our p urp ose, has essential l y b een op erating f rom this sense of p urp ose ev ery thing el se f al l s into p l ace. f or 185 y ears. Stil l, the p rocess of cl earl y articul ating and A ctivation: Once articulated defined, universally accepted rigorousl y activ ating inf using p urp ose into the core cul ture b y the m anagem ent team, and com m unicated and shared and b usiness p rocesses is p rov ing w el l w orth the ef f ort. organiz ation-w ide p urp ose m ust then cascade into a T oday, say s B urtis, w e re w ork ing hard to get this right and com p any s strategy and tangib l e, sup p orting b usiness w hen y ou get it right, ev ery thing y ou do as an organiz ation p ractices. T rul y p urp ose-f ocused com p anies activ ate b ecom es that m uch m ore ef f ectiv e. p urp ose b y m ak ing it real f or decision-m ak ers, the w ork f orce, custom ers and al l rel ated stak ehol ders. D eriving value from purpose: understanding th e critical role of th e C M O 7

10 P urpose: an idea w h ose time h as come... A t Sev enth G eneration, f or ex am p l e, w e p ut our m oney w here our m outh is, say s B ergstein. Com p anies hav e to ask them sel v es: does our p urp ose real l y m atter to our p eop l e? At Seventh Generation, purpose figures prominently in the com p any s b onus sy stem, w ith 20% b ased on del iv ering on our sustainab il ity goal s. H ow important is purpose to y our company? Just 3 out of 10 companies say purpose is of primary importance to their companies... I n p ractice, som e com p anies are m ore p urp osef ul ( or p urp ose-driv en) than others. T hree out of ten 29% b el iev e that p urp ose is of p rim ary im p ortance ( a 7 on a 1 7 scal e w here 1 = no im p ortance and 7 = p rim ary im p ortance) to their organiz ations. A nother 41% rate p urp ose a 6 on the sam e scal e. So w hil e it m ay b e true that 92% of com p anies say that they hav e a p urp ose, onl y 29% indicate that p urp ose is of p rim ary im p ortance to their organiz ations, w ith another 41% j ust a step b ehind. N ote that CMOs and the l argest com p anies in the survey are significantly more likely to say purpose is of primary im p ortance ( see tab l e). Ov eral l CMO $ 5b + Prim ary im p ortance % 40% 39% N p 6 41% 34% 39% 5 20% 13% 9% 4 6% 6% 9% 3 4% 4% 2% 2 0% 0% 0% o im ortance 1 1% 2% 2% N ote al so that these 29% articul ate and activ ate their p urp ose to a significantly greater degree than others and are referred to as p rim ary com p anies at k ey p oints in the anal y sis. 8 D eriving value from purpose: understanding th e critical role of th e C M O

11 4 Why now? The drivers and returns Deriving value from purpose: understanding the critical role of the CMO 9

12 W W h y now? T h e drivers and returns Many of the f orces b ehind the surge in p urp ose-driv en b usiness m odel s are readil y ob serv ab l e. B ut at its m ost f undam ental l ev el, the l eading driv er of p urp ose today is the p erceiv ed need to p ursue continuous transf orm ation, cited b y 60% ov eral l and 77% of resp ondents w ho v iew p urp ose as a p rim ary f ocus ( see tab l e). Other issues, such as consum er desires f or greater p roduct p urity or corp orate citiz enship concerns surrounding gl ob al w ork f orce w ork ing conditions or com p ensation can al so p l ay a key role. No question, says Mondelēz International s McGrath, consum ers are engaged and w ant to see p rogress against these [ sorts] of ob j ectiv es. A G B f l ( k. l p p m f p l b p l B m b T m f p p t Sev enth eneration, ergstein cites the v al ues of the ounders and eadership around env ironm ental stew ardship as the initial catal y sts and indeed, the surv ey rates such issues as a ey driv er) Stil, the com any s urp ose continues ov ing rap idl y orw ard today, rop el ed y consum ers, em oy ees and other stak ehol ders w ho share the sam e v al ues, say s ergstein. Other driv ers req uire tak ing a ore in-dep th v iew w ithin usinesses them sel v es. Many, 55%, cite regul atory developments or risks as a motivation to find deeper purpose. he rise of social edia is al so on the radar or 44% of ex ecutiv es rising to 60% at rim ary com anies. W hen rev iew ing the driv ers, note that in ev ery instance, p rim ary com p anies those f or w hom p urp ose is of p rim ary im p ortance to their organizations rate each driver significantly higher than others. W hat cannot b e determ ined is the cause and ef f ect: are these com p anies m ore p urp ose-f ocused ow ing to these f orces driv ing their b usinesses harder than others? Or do they rate these driv ers m ore heav il y b ecause as a p urp ose driv en organiz ation, they are sim p l y m ore attuned to such f orces? R egardl ess, al l ex ecutiv es need to b e op en to the idea that they m ay b e ov erl ook ing risk s and op p ortunities. h ich of th e follow ing are driving y ou to 1 develop and activate purpose? Purpose is based in values, but ultimately driven by the need for continuous transformation N eed f or continuous transf orm ation l $ + Ov eral Prim ary CMO 5b 60% 77% 66% 66% R p L / m R m p / p l R m ising consum er ow er 58% 67% 51% 44% eadership anagem ent 56% 72% 64% 48% v al ues/ concerns egul atory 56% 75% 61% 59% dev el op ents/ risk s Sharehol der/ inv estor v al ues/ concerns 55% 73% 69% 55% Consum er attitudes: urity 52% 69% 60% 48% sourcing Em oy ee attitudes 51% 66% 59% 43% Env ironm ental aw areness/ sustainab il ity 47% 68% 59% 39% ise of social edia 44% 60% 51% 29% Consum er attitudes: social 42% 56% 62% 34% issues² 1 % = those indicating a 6 or 7 on a 7-point scale (where 7 = very significant driver) 2 e.g., workforce compensation, working conditions 1 0 D eriving value from purpose: understanding th e critical role of th e C M O

13 W h y now? T h e drivers and returns G auging the return on p urp ose Executives are measuring and finding value in purpose. Ov er hal f of surv ey resp ondents, 53%, say p urp ose del iv ers significant tangible value to their enterprises (see table). Meanwhile, the figure rises to 75% of those for whom p urp ose is of p rim ary v al ue. N ote that senior ex ecutiv es are p articul arl y attuned to the v al ue of p urp ose, w ith those at the top rungs most likely to see significant tangible returns. A t the sam e tim e, ov er hal f ( 51%) say p urp ose del iv ers significant intangible value to their enterprises. In this instance, the figure rises to 66% among CMOs, to 78% among p rim ary resp ondents and to 62% am ong com p anies w ith $ 5 b il l ion or m ore in sal es. Return on purpose is significant Asked to express specific areas in which an activated purpose delivers significant value, the five most frequently cited drivers of v al ue f rom p urp ose are p rim aril y intangib l e. T hese incl ude: b rand enhancem ent, p rom otion of trust in the com p any, a cl earer sense of shared p urp ose, and im p rov em ents in custom er satisf action and em p l oy ee satisf action. T he v al ue of p urp ose in driv ing sal es does not appear until seventh place among primary firms in term s of f req uency. ( See tab l e. ) I t is al so im p ortant to note those areas of greatest div ergence b etw een p rim ary com p anies and those f or w hom p urp ose is rel ativ el y l ess im p ortant ( not-p rim ary ) com p anies. F or ex am p l e, j ust ov er one in three p rim ary com p anies ( 36%) see v al ue f rom p urp ose in reducing risk s w ith sp ecial interest group s com p ared to j ust under one in six am ong not-p rim ary com p anies ( 16%) a nom inal dif f erence of 20%. Other areas w here p rim ary companies are significantly more likely than others to perceive v al ue incl ude em p ow ering em p l oy ee decision-m ak ing, turning custom ers into p rom oters and creating a b etter rel ationship w ith regul ators. Purpose delivers significant 1 T angib l e v al ue I ntangib l e v al ue Ov eral l 53% 60% Prim ary 75% 78% T angib l e v al ue I ntangib l e v al ue CEO 72% 49% CMO 59% 66% Other C-suite 51% 47% EVP, SVP, VP 40% 46% 1% = those indicating a 6 or a 7 on a scale from 1 7 where 1 = no value and 7 = significant value D eriving value from purpose: understanding th e critical role of th e C M O 1 1

14 W W h y now? T h e drivers and returns h ere does purpose contrib ute value? Primary companies are significantly more likely than others to find more sources of value Prim ary N otp rim ary ¹ Enhances the b rand 5 9 % 50% 9% Prom otes trust in com p any 5 3 % 47% 6% Creates cl earer sense of shared p urp ose Engenders custom er l oy al ty G uides/ em p ow ers em p l oy ee decision-m ak ing I m p rov es em p l oy ee satisf action 5 3 % 41% 12% 4 8 % 41% 7% 4 7 % 30% 17% 4 5 % 45% 0% Driv es sal es 4 5 % 37% 8% L ink s custom er and sharehol der v al ue Creates a cl oser b ond w ith the com m unity Serv es as a com p etitiv e dif f erentiator T urns custom ers into p rom oters Enhances em p l oy ee retention/ recruitm ent R educes risk s w ith sp ecial interest group s 4 2 % 31% 11% 4 2 % 29% 13% 4 2 % 28% 14% 4 2 % 25% 17% 3 9 % 39% 0% 3 6 % 16% 20% b Creates a etter 18% 15% rel ationship w ith regul ators % = those agreeing that purpose delivers each individually stated benefit 1 Overall, excluding primary respondents Dif f erence ( nom inal v ariance) 1 2 D eriving value from purpose: understanding th e critical role of th e C M O

15 M W ck esson: Q & A w i t h S V P C o r p o r a t e M a r k e t i n g a n C o m m u n i c a t i o n s A n d y B C ase study McKesson is an over-$100-billion provider of health care information systems and platforms, medical and pharmaceutical supplies. W h at does purpose mean to M ck esson? W hen I cam e here sev en y ears ago, a b ig p art of m y f ocus w as to assess the state of the state regarding p urp ose. So w e w entthrough detail ed discussions w ith stak ehol ders, custom ers and em p l oy ees. A nd as it turns out, though w e hadn t ex actl y p ut w ords to it, McK esson had b een op erating w ith a v ery cl ear sense of p urp ose f or 185 y ears. W e do it al l f or b etter heal th. W e v e b een l iv ing this v irtuous circl e w here if w e do the v ery b est w e can do, then w e im p rov e the ef f ectiv eness of a hosp ital, or an indep endent p harm acy or a p hy sician. T hat m ak es a dif f erence f or p atients and that l eads to a heal thier w orl d. N ow w e ow n our p urp ose and say it. H ow do y ou articulate purpose? Y ou hav e to m ak e it real f or ev ery one in the organiz ation. I t has to b e cl earl y com m unicated, w el l understood and m eaningf ul. W e think of our ov eral l cul tural f ab ric as a p y ram id. B etter heal th, our p urp ose, is at the top of the p y ram id, b ut f orm ing the b ase are tw o real l y im p ortant dim ensions. The first is our shared core principles and the acronym we use is ICARE. That stands for integrity, customer first, accountability, resp ect and ex cel l ence. T he second is our shared l eadership p rincip l es, I L EA D. T hat stands f or insp ire; l ev erage tak ing f ul l adv antage of al l sk il l s and cap ab il ities across the com p any ; execute get it done well and efficiently; advance with courage and resil iency ; then dev el op y oursel f and al l of those around y ou. h at s th e return on purpose? It can be difficult to measure, but one measure is employee engagem ent, w hich w e ap p roach w ith j ust as m uch science as w e do f or serv ices and p roducts. T here s a regression m odel that w e use in our em p l oy ee engagem ent surv ey that tests f actors contrib uting to engagem ent. W e re ab l e to use the anal y sis to categoriz e em p l oy ees into f our [ states] of engagem ent and to track m ov em ent f rom the [ l east engaged] to f ul l y engaged. I t s something we manage every bit as carefully as we do our profits and l osses. I f I l b l I f l I R p l p f f [ p p p T p m m p l recentl y saw a v ideo that cam e rom one of our distrib ution centers that thought real y rings it al together. t s a team getting ready to start their shif t, and they re in a circl e, chanting, not unl ik e a ootb al team in a huddl e, reciting our CA E rincip es to rep are or their day and w hat they re going to do or custom ers such as] hy sicians, harm acies, hosp ital s and atients. hey re getting connected to our urp ose, each orning, and it show s the com itm ent y ou can achiev e w hen urp ose gets deep y inf used. W h at is nex t in th is j ourney? Em p l oy ees in N orth A m erica are ex trem el y f am il iar w ith our com p any p urp ose and v al ues. T he nex t dim ension w il l b e tak ing this gl ob al l y. W e acq uired a Europ ean com p any tw o y ears ago, Cel esio, and w e are using our shared p urp ose to hel p unif y the organiz ation m ak e us b etter as a w hol e than tw o sep arate p arts. W hen w e think ab out M& A, w e consider al ignm ent of p urp ose and cul ture. A nd w hen l ook ing at Cel esio, al l of their p urp ose statem ents, though not articul ated in the sam e w ay, w ere v ery sim il ar to ours. So p urp ose w il l hel p us integrate the tw oorganiz ations. H ow do y ou activate purpose? W e hav e m any dif f erent m echanism s f or m ak ing I CA R E and I L EA D real. T hey are b oth w ov en into p erf orm ance ev al uations, l eadership ev al uations, custom er account rev iew s and em p l oy ee op inion surv ey s. T here are al so annual aw ards p rogram s in al m ost ev ery b usiness unit, w here em p l oy ees, of ten w ork ing b ehind the scenes, get recognition f or their great w ork. I CA R E and now I L EA D are b ak ed into ev ery thing w e do. D eriving value from purpose: understanding th e critical role of th e C M O 1 3

16 5 There s work to be done 14 Deriving value from purpose: understanding the critical role of the CMO

17 T h ere s w ork to b e done Respondents indicate that deriving benefits from purpose req uires authenticity : that is, p urp ose m ust b e real. A chiev ing authenticity req uires cl ear articul ation and activ ation. B ut w hil e none of this is com p l icated in theory, in practice, purpose requires significant commitment in terms of organiz ational f ocus and resources. G auging articul ation and activ ation K ey goal s in term s of articul ation incl ude not onl y getting p urp ose right, b ut com m unicating p urp ose throughout the organiz ation and to custom ers and other stak ehol ders in w ay s that are m eaningf ul and actionab l e. K ey goal s in activ ation incl ude integrating p urp ose into strategy f orm ation as w el l as im p l em enting p rocesses that em b ed p urp ose in day -to-day op erations, decision-m ak ing and ongoing p erf orm ance ev al uation. H ere, the surv ey show s that com p anies indicating that p urp ose is of p rim ary im p ortance to their organiz ations consistentl y indicate greater f ocus, ef f ort and inv estm ent. Primary firms, in general, tend to report significantly greater p urp ose-rel ated articul ation and activ ation outcom es rel ativ e to the rest of the sam p l e. F or ex am p l e, 79% of com p anies ov eral l say they agree ( 66%) or strongl y agree ( 13%) that their organiz ations ap p l y p urp ose ideal s consistentl y in their interactions w ith custom ers. H ow ev er, am ong p rim ary com p anies, these figures rise to 89%: 64% who agree and 25% who strongly agree. A sim il ar p attern continues w ith other q uestions rel ating to l ev el s of articul ation and activ ation, incl uding the degree to w hich p urp ose driv es sup p l ier, p artner and other stak ehol der rel ations and the sel ection/ use of p urp ose-rel ated m etrics. I n each case, those com p anies that v iew p urp ose to b e of primary importance tend to score significantly higher in v arious m easures of articul ation and activ ation. I n doing so, primary companies report achieving significantly greater relative benefit driven by purpose (see table). Note also: CMOs are significantly more likely than the mean to confer high marks to their organizations (the final section of this rep ort highl ights the rol e of the CMO). G auging th e effectiveness of articulation and activation Primary companies outscore the rest on a range of objectives and outcomes that highlight the effectiveness of purpose activation and articulation Our organiz ation understands our p urp ose and ap p l ies these ideal s consistentl y in its interactions w ith custom ers Our organiz ation understands our p urp ose and ap p l ies these ideal s consistentl y in its interactions w ith sup p l iers/ p artners and other ex ternal stak ehol ders We are confident we are using the right m etrics to m easure and anal y z e the ef f ectiv eness of our p urp ose rel ated ef f orts Our p urp ose-rel ated ef f orts are hav ing a strongl y p ositiv e ef f ect on our p erf orm ance Strongl y A gree 1 21% of CMOs 2 34% of CMOs 3 36% of CMOs Ov eral l Prim ary A gree Mean Mean 13% 66% %¹ 63% %² 52% %² 60% Results are based on a scale from 1 7 where 1 = not at all significant and 7 = very significant. Very significant is a 7; significant is a 5 or 6. Means are provided to show differential. D eriving value from purpose: understanding th e critical role of th e C M O 1 5

18 m T h ere s w ork to b e done Senior ex ecutiv es m overconfident ay b e A particularly noteworthy finding evident throughout the statistics is that the m ore senior the ex ecutiv e, the m ore op tim istic the outl ook on a com p any s p erf orm ance against p urp ose. F or ex am p l e, one q uestion ask s how cap ab l y the com p any has articul ated and com m unicated its p urp ose. Ov eral l, 74% agree. But the figure rises to 98% for CEOs before falling to 65% for p resident/ m anaging director resp ondents and then 50% f or m ore m id-l ev el m anagers w ith the titl es EVP, SVP or VP. Sim il arl y, the surv ey ask s w hether or not p urp ose is b etter understood b y som e p arts of the organiz ation than others. H ere, onl y 2% of CEOs see p urp ose as any thing other than w el l understood, w hereas 50% of EVP/ SVP/ VP titl es see l ess consistency ( see tab l es). The more senior the executive, the more optimistic the view of articulation I n a sim il ar v ein, the nex t q uestion ask s how m any agree w ith the statem ent: Our p urp ose inf orm s al l of our strategic and op erational decision-m ak ing and activ ities? T his is f ol l ow ed b y another q uestion tests w hether or not p urp ose is a consideration in strategic and op erational decision-m ak ing in onl y som e cases. B oth p rov ide indication of the degree to w hich ex ecutiv es b el iev e purpose is activated within their organizations. In the first instance, in the case of those w ho b el iev e p urp ose is central to the organiz ation and w el l understood b y al l, w hil e the ov eral l m ean is 77%, the figure rises to 96% for CEOs before falling to 65% for p resident/ m anaging director and then 60% f or EVP/ SVP/ VP. I n the second instance, onl y 4% of CEOs see p urp ose as a f ocal p oint of decision-m ak ing in onl y som e areas of the b usiness, w hereas the figure climbs to 38% among mid-level managers. The more senior the executive, the more optimistic the view of activation A rticulation of purpose A rticulation of purpose Our purpose is central to our organiz ation and is w ell understood b y all CEO CMO Other C-suite President or Managing Director EVP, SVP, VP 50% 74% 73% 65% Our purpose is understood b y some parts of th e organiz ation b etter th an oth ers CEO CMO Other C-suite President or Managing Director EVP, SVP, VP 2% 26% 27% 35% 50% 98% Our purpose informs all our strategic and operational decision-making and activities CEO CMO Other C-suite President or Managing Director EVP, SVP, VP 60% 79% 77% 65% 96% Our purpose is consideration in our strategic and operational decision-making in some areas CEO CMO Other C-suite President or Managing Director EVP, SVP, VP 4% 15% 23% These findings suggest that the most senior ex ecutiv es w ithin any organiz ations are l ik el y ov erstating the degree of activ ation. T hose cl oser to actual op erations are l ess l ik el y to p erceiv e com p l ete success, w hich raises the q uestion: how cap ab l e, in real ity, is the articul ation and activ ation at m ost com p anies? 35% 38% 1 6 D eriving value from purpose: understanding th e critical role of th e C M O

19 T h ere s w ork to b e done I m p rov em ent req uires f ocus L eading com p anies use p urp ose to hel p guide strategy and f rom there, turn p urp ose-driv en ob j ectiv es and insights into m eaningf ul b usiness action. F or ex am p l e, ov er three q uarters of ex ecutiv es, 78%, say their com p anies tak e m eaningf ul step s to ev al uate the degree to which purpose is reflected in managerial and employee b ehav iors. A m ong com p anies w here p urp ose is a p rim ary focus, the figure climbs to 89% and to 100% among tel ecom m unications com p anies. T m p b b b p f l p ( l. T p l f p m b p p f l p q l f p p U l l l p b m. he ost successf ul com anies tak e a range of step s to uil d organiz ational uy -in, change ehav iors and in general, hel to cl earl y articul ate and ul y activ ate their urp ose see tab e) he end gam e resul ts in em oy ees w ho eel em ow ered to ak e decisions ased on urp ose and training rogram s that ul y incorp orate urp osedriv en ideal s. Custom ers and other stak ehol ders uick y real iz e that or this com any, urp ose is genuine. tim atel y, internal y and ex ternal y, urp ose ecom es eaningf ul T o w h at degree do y ou pursue th e follow ing steps? Primary companies take more actions to drive purpose Ex tensiv el y T o som e degree Share p urp ose-driv en b usiness insights across the enterp rise Ev al uate the degree to w hich l ine em p l oy ees f eel em p ow ered to engage p urp ose in decisionm ak ing Ev al uate the degree to w hich m anagers tak e actions in al ignm ent w ith p urp ose Ev al uate the degree to w hich p urp ose is rep resented in p erf orm ance m etrics T urn p urp ose-driv en insights into specific b usiness action Ev al uate the ef f ectiv eness of training f or p urp ose S e a r c h e n t e r p r i s e d a t a f o r g a u g e q u a l i t y / f r e q u e n c y o f m e n t i o n s, l a n g u a g e, e t c. S e a r c h e n t e r p r i s e d a t a t o g a u g e c o n s i s t e n c y / c o m p l i a n c e w i t h s t a t e d p u r p o s e Overall mean 26% 61% % 60% % 62% % 69% % 62% % 60% % 59% % 64% P rimary mean Results are based on responses to a scale from 1 7 where 1 = not at all significant and 7 = very significant. Very significant is a 7; significant is a 5 or 6. Means are provided as an added gauge of intensity of degree. D eriving value from purpose: understanding th e critical role of th e C M O 1 7

20 W T h ere s w ork to b e done Com p anies that are al ready p urp ose-driv en, that are tak ing step s such as those j ust m entioned, recogniz e their goal is a never-ending pursuit. As such, they constantly review and refine v irtual l y al l asp ects of strategy, p eop l e and p rocess f rom a p urp ose p ersp ectiv e. F or these com p anies and f or others j ust finding their way inhibitors are everywhere (see table). h ich of th e follow ing are inh ib iting th e pursuit of greater value from purpose? A range of issues can inhibit purpose Changing em p l oy ee/ organiz ation b ehav iors A chiev ing al ignm ent across al l b usiness f unctions A chiev ing b uy -in across the enterp rise Applying appropriate/sufficient staf f / resources l Ov eral CMO Prim ary 39% 45% 44% 36% 23% 41% 34% 34% 42% 33% 30% 38% A p p b p / m f p m p f chiev ing consistency w ith urp ose 33% 28% 31% in custom er ex erience Em edding urp ose into 31% 26% 33% op erational strategic decision- ak ing Prov iding ef ectiv e training 29% 30% 33% Determ ining ap rop riate etrics 29% 21% 25% Ob taining ap rop riate data rom 26% 32% 34% enterp rise sy stem s % = those executives saying the given challenge is significant 1 8 D eriving value from purpose: understanding th e critical role of th e C M O

21 W W W Mondelēz international: Q & A w i t h C h r i s t i n e M V P W e l l - B e i n g C ase study c G r a Mondelēz International is a $30 billion global snacking company featuring iconic household brands such as Oreo cookies, Cadbury chocolate and Trident gum. What does purpose mean for Mondelēz I nternational? Purp ose is w hat w e use to driv e b usiness strategy and f rom there, al l rel ated decision-m ak ing and actions. W e re a f airl y new com p any, l aunched j ust three y ear ago f ol l ow ing the sp in-of f of our N orth A m erican grocery op erations. hen w e started this j ourney, w e saw an op p ortunity to cl earl y define our ambition: what should our purpose be? And after considerab l e [ soul searching], w hat w e determ ined is that our p urp ose, our dream w e cal l it, w as creating del icious m om ents of j oy. [ T hat s] som ething w e can use to b uil d a b right f uture f or our custom ers, our com p any and other stak ehol ders. F rom our dream, w e dev el op ed our m anif esto, w hich b uil t up on our sev en core v al ues. Such as insp ire trust. A ct l ik e ow ners. K eep it sim p l e. T el l it l ik e it is. L ead f rom the head and heart. T hese are v al ues that del iv er v al ue f or the com p any, its p eop l e, custom ers and other stak ehol ders. Our five core strategies, [including unleashing the power of our p eop l e, transf orm ing snack ing ( into som ething heal thf ul ), revolutionizing selling, driving efficiency and growth] and the area w here I f ocus, p rotecting the w el l -b eing of the p l anet, are b uil t on our v al ues and w il l hel p us achiev e our dream. W e re b asical l y b ringing a b usiness m indset to sol v ing som e of the w orl d s b iggest chal l enges. So p urp ose hel p s guide our strategies, w el l -b eing b eing one. h at are y ou doing in w ell-b eing? W b b l l B l f b p b f b W l l p ( N G p l e v e done a trem endous am ount of w ork to understand our usiness through oth a sustainab il ity and heal th-and-w el ness ens. asical y, w e re try ing to ocus on w here w e can hav e the iggest im act, oth or our usiness and the w orl d. e al so recogniz e that w e don t hav e al the answ ers or the resources to address these chal enges on our ow n, so w e artner w ith nongov ernm ental organiz ations Os), gov ernm ents and our sup iers, am ong others. reducing def orestation w hil e al so b uil ding sm al l hol der f arm ers p roductiv ity and com m unity l iv el ihoods to ensure the f uture v iab il ity of the env ironm ent and the sup p l y chain. What s the return on purpose for Mondelēz I nternational? e are al l ab out grow th. So w e are al w ay s l ook ing ahead to see w here consum ers are going. W hat w e v e noticed is that consum ers are increasingl y interested in heal th and that s not j ust in the dev el op ed b ut al so in the dev el op ing w orl d. H eal thy al ternativ es are grow ing at tw ice the rate of b asic snack s. A nd b y 2020, w e w ant hal f of our rev enue to com e f rom snack s that contrib ute to w el l -b eing. So w e re giv ing consum ers w hat they w ant, w e re contrib uting to the w el l -b eing of the planet, and we re all benefiting as a result. H ow do y ou activate make purpose real? T here a v ariety of w ay s w e can m ak e it m ore real. One thing w e do is share the stories of our p rogress, show casing the w ork in the sustainab il ity and w el l -b eing areas. I t insp ires our em p l oy ees and b uil ds our credib il ity w ith ex ternal stak ehol ders. A nd w e p ush p erf orm ance against m etrics. L ik e f or the w el l - being strategy, we have specific goals that we track: Where are we today? Where does the nutrition profile of our portfolio need to b e in 2016? [ T he com p any p ub l ishes an annual rep ort on its p rogress tow ard w el l -b eing goal s. ] A nother thing w e do is track how our v al ues and p urp ose are w ov en into the f ab ric of the organiz ation. Our em p l oy ee surv ey has a section on our v al ues: Do y ou f eel em p ow ered? Does m anagem ent l iv e b y our v al ues? A nd w e use this honest f eedb ack to im p rov e f urther. F inal l y, w e hav e tw ice-a-y ear p erf orm ance ev al uations f or each of our goal s, and how w e are l iv ing our v al ues is p art of the conv ersation. A re w e tel l ing it l ik e it is? A re w e k eep ing things sim p l e? I s ev ery one al igned to our strategy and goal s? A s ev idence that our p urp ose is real, w e recentl y announced that w e intend to b e the gl ob al l eader in w el l -b eing snack s. W e set a b usiness goal that 50 p ercent of our gl ob al rev enue w oul d com e F or ex am p l e, w hen w e l ook at our env ironm ental f ootp rint l and, f rom w el l -b eing snack s b y 2020, up f rom ab out a third today. w ater, cl im ate our b iggest im p act is in grow ing raw m aterial s, l ik e cocoa or p al m [ f or p al m oil ]. So our f ocus is in areas l ik e D eriving value from purpose: understanding th e critical role of th e C M O 1 9

22 6 The CMO plays a critical role in purpose 20 Deriving value from purpose: understanding the critical role of the CMO

23 T h e C M O play s a critical role in purpose Most organiz ations say their organiz ations hav e a p urp ose, b ut onl y a m inority dem onstrate, consistentl y, the needed com m itm ent in term s or articul ation and activ ation to deriv e b reak through resul ts f rom p urp ose. F or l eaders those w ho hav e cl ear articul ation and activ ation of p urp ose continued attention to detail and continuous ev ol ution and im p rov em ent is essential. F or ev ery one el se, p urp ose rep resents an op p ortunity for significant improvement if not organizational transformation. Shared resp onsib il ity W hether the p rogram is ongoing, increm ental or transformational, one of the key findings is that the CEO and the CMO m ust w ork cl osel y together on p urp ose. Ov eral l, the CEO is most frequently identified as being the key driver/decision-maker in term s of the dev el op m ent/ articul ation of p urp ose cited b y 79% of resp ondents. T he CMO, how ev er, rank s second ( 53%), w ith the CF O at a m ore distant third ( 37%). Purp ose initiativ es nonethel ess req uire engagem ent across a w ide sp ectrum of f unctions/ ex ecutiv es. F or ex am p l e, in term s of influencing purpose development/articulation, companies in general indicate that they engage a w ide range of f unctions. H R is the group most frequently cited as having strong influence ( 50%) f ol l ow ed b y gov ernm ent rel ations ( 42%), the CF O ( 42%) and R & D ( 41% see tab l e). N ote: p rim ary com p anies conf er significantly more power to each group nearly across-the-board ( dem onstrating deep er com m itm ent to p urp ose throughout the enterp rise). In terms of composite decision-making/influence scores (adding the role of key decision-maker to strong influencer), the CMO is second onl y to the CEO. I n other w ords, the CMO is the secondhighest authority on p urp ose in m ost organiz ations. Relative influence of executives relating to development/articulation of purpose I CEO CMO CF O nv estor rel ations R & I T L p l D egal Sup y chain H R G Production ov ernm ent rel ations K ey decision-m ak ers 7 9 % 53% 37% 28% 25% 26% 21% 20% 20% 18% 20% Strong influencer 15% 36% 42% 38% 41% 41% 39% 39% 38% 5 0 % 42% Com p osite 94% 8 9 % 79% 66% 66% 66% 60% 59% 58% 68% 62% % = those companies indicating this is the role for each given executive Coup l e this w ith the f act nearl y hal f of ex ecutiv es ( 45%) say they believe purpose is the top priority for their CMO a figure rising to 60% at p rim ary com p anies ( see tab l e). Ev en w hen considered al ongside such activ ities as p roduct dev el op m ent, p ricing and m ark eting, 42% of CMOs them sel v es say p urp ose is the top p riority. Moreov er, it is a top -tw o or top -three p riority f or 36% and 16% of CMOs, resp ectiv el y. o f t h e t o p t h r e e p r i o r i t i e s f o r ( see 9 4 tab % ol e) f. C M O s P u t a n o t h e r w a y, p u r p o s e i s o n e E x ecutives b elieve: purpose is a key priority for th eir C M O 94% of CMOs say purpose is top 1, 2 or 3 priority l p 4 2 % p 3 6 % p 1 6 % T 9 4 % CMO Ov eral Prim ary Purp ose is the top riority 45% 60% Purp ose is a top -tw o riority 34% 24% Purp ose is a top -three riority 11% 13% otal D eriving value from purpose: understanding th e critical role of th e C M O 2 1

24 T h e C M O play s a critical role in purpose F or the CMO a m rol e ul tif aceted I t b oil s dow n to this: articul ating and activ ating p urp ose is now a critical com p onent of the CMO s resp onsib il ities. Moreov er, since p urp ose p erm eates the entire organiz ation, this w il l req uire a f ocus b ey ond p urel y m ark eting-oriented activ ities. F or ex am p l e, as the surv ey show s, k ey task s f or the CMO incl ude m aintaining consistency in ex ternal com m unications. H ere, the CMO w il l need to either l ead ( the case f or 68% of resp ondents) or cl osel y col l ab orate ( 27%) w ith group s such as inv estor rel ations or corp orate com m unications. Ov er hal f of com p anies, 55%, al so suggest the CMO needs to tak e the l ead rol e ( 37% say col l ab orate) in driv ing consistency across the w hol e of the custom er ex p erience. A gain, this is a m ul tif unctional task that can incl ude intim ate interaction w ith a w ide sp an of f unctions ranging f rom l ogistics and returns to cal l centers, w eb and m ob il e team s to p hy sical storef ronts. T h e purpose-driven roles of th e C M Defining and activating purpose throughout the enterprise is an essential element of the new job description of the CMO. m ( / p T ( l f G p m m f T p p ( f m m p p p Maintaining consistency in ex t. com unications PR sharehol ders) Driv ing consistency across custom er ex erience raining across al unctions, e. g., production, finance) oal setting/ erf orm ance etrics/ rew ard sy stem s Prom oting/ com unicating to w ork orce rack ing the im act of urp ose e. g., ocus group s, social edia) Ongoing easurem ent of the v al ue of urp ose Continuous ev al uation and im rov em ent of urp ose group -w ide O L l ead Col ab orate 68% 27% 55% 37% 38% 51% 36% 54% 45% 47% 45% 45% 39% 52% 29% 60% % = those choosing lead or collaborate for each given activity 2 2 D eriving value from purpose: understanding th e critical role of th e C M O

25 T h e C M O play s a critical role in purpose B ey ond outright l eadership or col l ab oration, the CMO s p urp oserel ated rol e ex tends f ar b ey ond traditional b oundaries. T he survey shows that CMOs have significant influence in purpose issues outside of m ark eting, ranging f rom core corp orate strategy to choices m ade in sup p l y / p rocurem ent, p roduct dev el op m ent and training. T h e C M O s role ex tends b ey ond marketing How much purpose-driven influence does the CMO exert in: Directing b usiness on al ignm ent of p urp ose w ith custom er ex p erience? Directing core b usiness strategy as it rel ates to p urp ose? A dv ising b usiness on core choices ( e. g., div ersity, I ngredients/ sourcing)? Ev al uating new and ex isting p roducts ( f or fit with purpose)? A l igning group p erf orm ance m etrics w ith p urp ose? Em p l oy ee orientation and training? Significant Som e Mean influence influence 21% 66% % 1 62% % 58% % 65% % 66% % 60% 4. 8 T o accom p l ish the ab ov e l eadership - and col l ab orativ e-oriented task s, a CMO m ust interact f req uentl y / intensiv el y w ith a range of other ex ecutiv es. T he f our m ost f req uentl y cited ov eral l are the CEO (82%), the CFO or the finance function (54%), investor rel ations ( 34%) and H R ( 25%). N ote, how ev er, that the surv ey resul ts directl y f rom CMOs v ary significantly from the larger sample. In particular, significantly greater numbers of CMOs say they interact closely with finance/ the CF O than the ov eral l sam p l e ( 64% f or CMOs; 54% ov eral l ). Meanw hil e, CMOs say they interact w ith m ost other ex ecutiv es significantly less frequently than as believed/indicated by the ov eral l sam p l e ( see tab l e). So the im p ression/ ex p ectation b y non-cmos is that CMOs are m ore activ e in this regard than they real l y are. With whom does the CMO interact frequently/ intensively relating to purpose? Ov eral l CMO CEO 82% 75% CFO/finance 54% 64% I nv estor rel ations 34% 25% H R 32% 25% I T 31% 23% Production/ m f g. 31% 16% R & D 29% 34% % = those indicating frequent/intensive CMO interaction with the given executive 1 CMOs indicate 38% or a 5.7 mean Results are based on a scale from 1 7 where 1 = not at all significant and 7 = very significant. Very significant is a 7; significant is a 5 or 6. Means are provided as an added gauge of degree of influence. D eriving value from purpose: understanding th e critical role of th e C M O 2 3

26 W m S eventh G eneration: Q & A w i t hj o e y B e r g s t e i n, G e n e r a l M a n a g e r a n d C M O C ase study Seventh Generation, established in 1988, is a private company focusing on personal care, cleaning and paper products and well-known for its pioneering work in sustainability/corporate social responsibility. h at is purpose to S eventh G eneration? W [ I m b p f b f l p p. I N A [ l. I p A p l A b p A m b T p l b W p p l p m p b l. I p b e w ant to] insp ire a consum er rev ol ution that nurtures the heal th of the nex t sev en generations. t ay hav e een ex ressed dif erentl y ov er our 27 y ears, ut undam ental y, that s the core recep t driv ing the com any t s our guiding orth Star. nd it s inescap ab e] t starts on day one w ith the interv iew rocess. s w e re recruiting, w e ask eop e ab out their v al ues. out their ow n urp ose. nd w e ensure they are al ready al igned w ith the ission of the usiness. hen throughout em oy ee orientation, it s one of the iggest conv ersations. e hel them understand how our urp ose com es to if e in the roducts w e create, the ark eting and activ ism rogram s w e uil d, and the strategies w e dep oy t erm eates the usiness. So w e m ade the hard choice. B y ev ery m etric, this p roduct p erf orm s w el l and shoul d b e saf e. W e coul d announce an im p rov ed p roduct and [ sim p l y ] add a p roduct w arning on the p ack aging. B ut I m ade the cal l : no. [ T he com p any is now ref orm ul ating the p roduct. ] S o all of y our products are safe for th e environment? Ov eral l, w e v e nev er p rof essed that w e re p erf ect. N ot ev ery thing can achiev e 100% of our goal s. W e real iz e this is an ev er-im p rov ing j ourney w here w e re try ing to b e b etter and b etter. Som etim es w e re ab l e to tak e b ol d step s. W e l ed the w ay f or the industry, rem ov ing p hosp hates and b oric acid f rom our p roducts. A nd though each y ear, f urther p rogress gets harder and harder to achiev e, w e stil l m ak e m eaningf ul p rogress. F or ex am p l e, w e use recy cl ed content in our b ottl es. B ut f or v arious reasons, l ik e stab il ity, som etim es w e can t reach 100% recy cl ed content b ut p erhap s onl y 80%. B ut our team s constantl y striv ing f or m ore. A nd that s our m ission. H ow do y ou activate purpose? Y ou hav e to ask : does this real l y p ow er the b usiness? Does it sp eak to custom ers? I s it a Pow erpoint sl ide or does it real l y transl ate into the decisions y ou m ak e? I s it discrim inating and m eaningf ul? T hink ab out the p roducts w e create. I n p ack aged goods, m ost com p anies think in tw o dim ensions: consum er needs/ b enef its and cost. I f y ou can address consum er needs at an af f ordab l e cost, that l eads to m argin. W e do that too b ut add tw o com p onents: heal th and p l anet. W e m ak e it tangib l e. W e think ab out the unintended conseq uences. W e create onl y p roducts that are saf e, f or p eop l e and the p l anet. I f not, w e w on t tak e it to m ark et. A nd then w e m ak e it real. Peop l e are insp ired b y a great m ission and they w ant to del iv er against that. D o y ou h ave any ex amples of w h ere purpose is making a difference? D oes purpose h ave to b e altruistic? W m b l b l l p l p B b f f m p p l b b b l T f p W m m l f m [. m p b [ p ] p I p p l T p l [ m f k f f l p l T [ p p m m p l [ m? m e v ery uch el iev e in the trip e ottom ine: Peop e, anet, rof its. usiness can e a orce or good, and so uch of the rogress on the anet is eing driv en y usiness eaders tak ing a stronger stance. hat said, ab sol utel y, there are signif icant returns rom urp ose. e ran a ark eting ix study in the sp ring of 2015 to get a cl oser ook at the returns rom each el em ent in our ark eting sp end] Our strongest ark eting rogram ov er the course of tw o y ears w asn t a traditional ad ut rather a ol itical statem ent w e took out in The New York Times in sup ort of tox ic chem ical ref orm s. t w as a rov ocativ e ad, getting eop e to raise their v oices. hen, ov er a 30-day rogram, w e col ected 120,000 signatures com encing] w ith hal a doz en ids dressed as tox in reedom ighters, ittl e sup erheroes, del iv ering the etition to the hal s of Congress. hat singl e cam aign] rov ided ore return, ore im act, than al of the coup oning activ ity ov er those sam e] tw o y ears. So w e ask, w here shoul d y ou sp end y our oney Discounting? Or sp eak ing to y our ission? [ R ecentl y,] our m ission l ed us to m ak ing a tough cal l. I n som e 33,000 A nother thing, our f orensic p erson did som e real l y nice w ork try ing to instances rep orted to the Centers f or Disease Control ( CDC), k ids hav e understand how m uch our m ission driv es trust and ul tim atel y, p urchases. ingested l aundry p ods, som e w ith disastrous conseq uences. So our R & D W hat she f ound is that the b etter that p eop l e understand our m ission, the team did som e trem endous w ork dev el op ing a non-tox ic l iq uid p od. Ev ery ore l oy al they are to our b rand. T here s a direct correl ation; there s a ingredient they used w as non-tox ic. B ut then w hen w e reached out to the cl ear return on p urp ose. CDC al ong w ith a third-p arty ex p ert, w e w ere tol d there w as a chance that in concentrated l iq uid f orm, there m ight stil l b e som e risk. A nd since the onl y w ay to f ind out w oul d b e anim al or p eop l e testing that s a road w e j ust w oul d not go dow n. 2 4 D eriving value from purpose: understanding th e critical role of th e C M O

27 m 7 i n f u s e d r o l e F o r t h e C M O a n e w p u r p o s I t s not enough to cl aim : w e h ave a purpose. T o ob tain genuine v al ue, p urp ose m ust b e cl earl y articul ated a p rocess that b egins w ith engaging a w ide range of stak ehol ders to determ ine the true essence of the com p any s raison d etre. F rom there, p urp ose m ust b e rigorousl y activ ated. T his req uires instal l ing tangib l e m echanism s f or m ak ing p urp ose an irresistib l e f ocus in al l asp ects of the b usiness. G ood ex am p l es of activ ation of ten b egin w ith the dev el op m ent of tool s l ik e stated v al ues and codes of conduct. B ut m ore im p ortantl y, the tenets of p urp ose m ust b e sup p orted b y p erf orm ance ev al uation, com p ensation and other rew ard sy stem s. Cap ab l y im p l em ented, p urp ose can b e harnessed to generate a wide range of tangible and intangible benefits. Proponents p rov ide ev idence w here p urp ose can b e show n to generate sal es as w el l as engender custom er l oy al ty and em p l oy ee engagem ent to nam e j ust a f ew. I p l p p B p p f l f b T p m / m f l f A p b p p f n ractical term s, CEO eadership is essential to the ursuit of urp ose. ut in no uncertain term s, the surv ey and the interv iew s show that urp ose is now a riority or an al ready arge and ast-grow ing num er of CMOs. his CMO/ CEO artnership is dem anding, req uiring a ul tif unctional ul tifaceted combination of leadership and influence-building with ex ecutiv es rom al unctions across the enterp rise. s the v al ue in urp ose ecom es cl earer, it aints a new set of riorities and in any cases a new rol e or the CMO. D eriving value from purpose: understanding th e critical role of th e C M O 2 5

28 26 Deriving value from purpose Understanding the critical role of the CMO

29 A c k n o w l e d g m e The EY Beacon Institute recognizes the following people in the preparation of this report: F orb es I nsigh ts B r u c e R o g, Chief e r s Insights Officer E Y K r i s P e d e, r A s m o ericas n H ead of Strategy and Custom er E r i k a M E ditorial a g, udirector i r e of Program s E Y B eacon I nstitute V a l e r i e K, e G ll lob e al r L eader K a s i a W a n d y c z M, Director o r e n o P a t r i c k D a w, T shought n L eadership L ead H ugo S. Moreno, Director B il l Mil l ar, R ep ort A uthor E Y A dvisory J e f f S t, iex e recutiv e Director, Strategy R esearch B r i a n G o o, nprincip a n al, Custom er R oss G agnon, Director S y l v a i n M a, qsenior u e t Manager, Strategy K im b erl y K urata, R esearch A nal y st M a y a N a r a y, a Manager, n a n Custom er S ales North America B r i a n M c L, ecomo d m ercial Director M a t t h e w M u s, Manager z a l a W i l l i a m T h o m, Manager p s o n EMEA T i b o r F u c, hmanager s e l APAC S e r e n e L, Ex e eecutiv e Director D eriving value from purpose: understanding th e critical role of th e C M O 2 7

30 Notes 28 Deriving value from purpose: understanding the critical role of the CMO

31