Executive Summary
Any organization can write a check or mobilize resources when confronted with a crisis such as the Covid-19 pandemic or a social movement such as Black Lives Matter. But corporate crisis response becomes much more meaningful when stakeholders know that the organization has been applying itself in similar ways and as part of its primary business over time for society’s benefit, and that it will continue to do so far into the future. Put simply, a well-defined organizational purpose should drive any actions you take. For example, PayPal has declared that it wants to democratize financial services and it was one of the first non-banks to offer Paycheck Protection Program loans. Mahindra Group, the Indian conglomerate, has a single-word purpose: “Rise.” It has devised many different ways to provide aid during the pandemic, from offering its resorts as healthcare facilities to using its IT infrastructure to monitor virus outbreaks.
Best Buy CEO Hubert Joly struck a note of optimism on this website earlier this year, crediting a number of companies for moving early to address the challenges of the Covid-19 pandemic and calling on others to “lead with purpose and humanity.” The compassionate response of the business community was indeed impressive at a critical moment of crisis. But, as time has passed, people are calling for more than just random acts of humanitarianism. They want a sustained, thoughtful, and authentic response on the part of business, one that can deliver broader, long-term impact.
Many purpose-driven companies, from Best Buy to Facebook, have opted to provide outright grants for humanitarian efforts or have repurposed their manufacturing lines to produce needed health supplies, like hand sanitizer and ventilators. These measures are laudably altruistic, and they undoubtedly benefit communities, customers, and other stakeholders. They also, we should note, carry important reputational and motivational benefits, helping companies cultivate loyal customers and highly motivated employees.
And yet, such measures are limited in their impact and unsustainable, not least because companies in challenging times have limited budgets they can allocate to them. They also tend to lack authenticity, disconnected as they frequently are from core operations. Any organization can write a check or mobilize other resources. Corporate crisis response becomes much more meaningful when stakeholders know that the organization has been applying itself in similar ways and as part of its primary business over time for society’s benefit, and that it will continue to do so far into the future.
When taken seriously, purpose provides a company with a concise and piercing definition of why it chooses to exist. It’s an efficient way to unify employees, customers, suppliers, communities and shareholders, creating an internal rallying cry and a framework to engage with the external world. It gives leaders the courage and conviction to navigate uncertainty and fear. The best way for a purpose-driven company to deliver aid during a crisis is to take inspiration and guidance directly from its reason for being. Make your efforts a clear extension not merely of what the company does, but who it is, and you can mobilize far more resources for impact while unifying stakeholders in the process.
During the pandemic, Microsoft has been living its purpose “to empower every person and every organization on the planet to achieve more” by partnering with UNICEF to create a remote learning platform to help the more than 1.5 billion students worldwide who have been affected by school closures. They’ve teamed up with Adaptive Biotechnologies to help analyze the virus’s effects on the immune system. And they’ve created an open source code that pandemic researchers in the academic community can use. “Your core business model must be aligned with the world around you doing well,” Microsoft chief executive, Satya Nadella, told Fortune. Never is that more important than during a crisis.
Mahindra Group, the Indian conglomerate, has long defined its purpose in a single word: “Rise.” The idea is to strive for change that improves lives. One key way the company’s financing arm, Mahindra Finance, has lived its purpose is by providing innovative financing to its core customers, residents of poverty-stricken rural areas of India. During the Covid-19 crisis, Mahindra, as a conglomerate, has devised many different ways to provide aid, from offering its resorts as healthcare facilities to using its IT infrastructure to monitor virus outbreaks in cities. But it has also remained true to its investments in rural India, creating a fund to keep the economic and social backbone of those areas—its small businesses—afloat.
PayPal, the frictionless online payment system, has stated that its purpose is to “democratize financial services.” In recent years, it has lived that purpose by providing business loans to entrepreneurs and small businesses, especially to those who don’t have access to other forms of capital. In response to the pandemic and its economic fallout, PayPal became one of the first non-banks to offer Paycheck Protection Program loans. Doing this, of course, benefits the company, which gets the guaranteed interest from the government. But it also delivers on PayPal’s purpose: the company has used its efficient platform to quickly get loans out to its customers (more than 10 million thus far), many of whom do not have access to bank financing. PayPal’s customers, like Mahindra’s, will likely remember these acts when the crisis has passed.
Rather than just doing good works in the name of purpose, let your purpose guide your response. Think deeply about what your company stands for, and how you might best use that to confront the present circumstances. Think through the differential impact on disparate interests that each course of action might entail and use your purpose as the compass to help guide you in choosing the right path. How might you best deliver on your reason for being, even if certain stakeholders don’t benefit as much as others in the short term? If your business must make painful cuts, how might your purpose guide those decisions? Do any new opportunities exist to deliver value to society, even if a commercial logic doesn’t yet exist? The best purpose-driven companies take a leap and pursue social benefits, having faith that they’ll figure out a sustainable business model. Periods of crisis, when customer needs are fast evolving, can be fertile times for such experiments.
When a company and its leaders frame a reaction carefully and deliberately in line with their purpose, they will come out on the other side stronger, with supportive and united stakeholders and having delivered more positive impact. They show that the organization, through its core reason for being, will adapt to changing circumstances in the most principled of ways and be a force for good in the world. As Starbucks CEO Kevin Johnson remarked recently, “If we’re not changed when we come out of this, we’ve missed an opportunity.”
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August 06, 2020 at 08:05PM
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Companies Must Go Beyond Random Acts of Humanitarianism - Harvard Business Review
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