Walk the Talk on Purpose

Purpose Beyond Profit: How Luxury Brands Are Redefining Success

The luxury industry not only creates the finest objects and experiences, but its companies also excel at putting a higher purpose, beyond profit, at the heart of their business model. These companies have long been driven by a deep sense of their raison d'être, embodying their ideals centuries before the term 'purpose' became part of the HR and marketing lexicon. Or in the words of Coco Chanel, “Some people think luxury is the opposite of poverty. It is not. It is the opposite of vulgarity.” Her apt assertion is that luxury is not about the opulence of price but the appreciation of quality and excellence in craftsmanship, forming a fundamental ethos, giving birth to objects and experiences that embody the pinnacle of human creativity and skill.

Finding purpose in what people and organisations do is fundamental, perhaps most apparent in the luxury industry. It is an essential element that drives growth, connects people, shapes culture and inspires meaningful action. When understood and truly embraced, it can help companies create long-term, sustainable opportunities for competitive advantage. Outside of luxury this is even more important, especially at a time when the concept of a unique selling proposition is increasingly a model of the past, and when consumers and employees are looking for more than just money in what they buy and do. A strong purpose can create an emotional connection with customers and employees, building loyalty, advocacy for the brand and crucially, improve the bottom line.

“Luxury has a higher purpose: the achievement of real global value.”

Dr. Clotaire Rapaille

Luxury brands that live their purpose from the inside out include Frescobaldi, Steinway & Sons, Loro Piana, Brunello Cucinelli and Hermès, to name but a few. Brunello Cucinelli's overarching purpose of "humane capitalism" for example has helped pave the way to a $1.34 billion business. The founder's philosophical thinking is inspired by Aristotle, St Benedict, Medici humanism, Dostoyevsky and so on. The Brunello Cucinelli team is occasionally encouraged to nurture their minds at the brand's Forum of Arts and Accademia Neoumanistica. Another good example is, Hermès, with its purpose of "Keeping Craftsmanship Alive". It nicely demonstrates the tangibility of luxury goods, promoting values of quality and sustainability, with an underlying assumption that luxury and craftsmanship are inherently linked. For more depth on these fundamentals, have a look at Schein's work "Organizational Culture and Leadership ", providing an academic yet pragmatic a framework for understanding how luxury brands cultivate a culture that embodies their purpose.

 

From Rhetoric to Reality: The Critical Role of Purpose Beyond Luxury

I find it surprising that most industries are lagging behind in properly integrating purpose into their strategic foundation, given the positive impact it is having on business. There is plenty of evidence of this, from innovation to the creation of real competitive advantage, from improved margins to the development of cultures of excellence and beyond.

Unfortunately, there are plenty of examples where the concept of purpose has fallen flat. Take, for example WeWork's lofty purpose to “Elevate the world’s consciousness”. Say what? Let's remember that this was about developing co-working spaces. From a $47bn valuation to bankruptcy in record time (6 weeks, to be precise) , elevation certainly worked well for the magnetic and eccentric cofounder Adam Neumann. Never mind the “consciousness” part. Everyone else lost out.

When it comes to purpose, it is not enough to put some warm sounding words on a website. The concept of being purpose driven only works if you walk the talk. In this sense, the idea behind purpose has huge potential for decades to come.

However, there are great examples of how non-luxury brands are truly embracing and embedding the concept of purpose. Toms (Purpose: 'to use business to improve lives'), for example, translates its purpose into concrete action: for every pair of shoes purchased, the company donates a pair of shoes to a child in need. Similarly, Warby Parker ('to inspire and impact the world with vision, purpose and style'), a non-luxury eyewear brand, stands out with its 'Buy a Pair, Give a Pair' program, which appeals to customers who value making a positive social impact with their purchases. Again, putting purpose into action. Other solid non-luxury companies that are thoroughly purpose-driven include Danone ('to bring health to our planet and to generations of people') or Coursera ('to provide universal access to world-class education'). And while there are many more, there are still not enough.

Lux Purpose

An entire industry where being Purpose driven is clearly apparent is the asset management industry, particularly within Europe. Driven by a near complete loss of trust dating back to the financial crisis in 2008, this sector is experiencing a multi-faceted dynamic of tighter regulation, increased investor scrutiny and an increasing expectation that the lever of capital can be employed to create positive change for societal development and the world at large.

The Responsible Investment Brand Index (RIBI™) provides a comprehensive analysis of 600 global asset managers, assessing their commitment to responsible investment and the extent to which this is integrated into their identity. By examining factors such as the consistency of values-systems, the articulation and quality of a purpose, and the embedding of sustainability within the brand, the index seeks to determine whether these organisations are merely paying lip service to responsible investment or are truly walking the talk. It is encouraging to note the positive trends within the sector, with an increasing number of asset managers embracing a purpose-driven culture. These organisations are not only focused on generating financial returns for their investors but are also committed to allocating capital in a way that advances the environmental, social and governance (ESG) agenda. Further details of this sector and its development in relation to purpose can be found on the index website here.

 

Cultivating Purpose-Driven Cultures: A Comparative Perspective

The importance of culture, particularly in the financial sector, cannot be overstated. A strong, purpose-driven culture serves as the backbone of any organisation, guiding decision-making processes, shaping brand identity, and influencing how goals are pursued. In the context of the financial sector, a culture that prioritises responsible investment is critical for several reasons. First, it aligns the sector with the growing global emphasis on sustainability and social responsibility and meets the expectations of investors who are increasingly seeking to make a positive contribution to society through their investments. Second, it builds trust and credibility with stakeholders, as organisations that consistently demonstrate their commitment to responsible practices are perceived as more reliable and forward-looking. Finally, by integrating ESG considerations into their investment strategies, financial institutions play a key role in addressing some of the most pressing challenges facing our world today, from climate change to social inequality. Cultivating a strong, purpose-driven culture within the financial sector is therefore not only beneficial to the organisations themselves and their investors, but also essential to the wider pursuit of a sustainable and equitable future.

“In the real world of work, Purpose finding is what leaders do.”

Prof. Robert E. Quinn

Contrast this with luxury. These brands often serve niche markets, adopting extreme and polarizing positions to appeal to a select few. This deliberate strategy is evident in brands like Rolls-Royce, which epitomizes exclusivity and excellence. The brand's culture, deeply influenced by its founders' vision, is palpable across the organization, embodying the spirit of luxury and distinction. It establishes a clear the link between culture and positioning, where the brand's identity is a direct reflection of its foundational values and purpose. What goes for clients, segments and products must also go for culture. Luxury cultures are infused by the spirit of their founder, the luminaries are not the CEOs but the creators, the designers, engineers and craftsmen and women. This transcends into polarizing effects for culture, too and indeed can be observed in how the fabric of organisational structures is woven within luxury businesses. BMW owns Rolls-Royce, yet the group keeps the brands cultural codes distinct. LVMH, the behemoth of luxury conglomerates, retains the helm of the company firmly in the hands of the Arnault Family.

The cultural dynamics of luxury brands sometimes find echoes in non-luxury brands such as Apple under enigmatic and polarising leaders such as Steve Jobs and Tesla under Elon Musk. These companies, while not in the luxury sector, share a similar ethos where the founder's vision permeates the organisation, creating a culture that is both distinctive and purpose driven. Apple's commitment to innovation and Tesla's mission to accelerate the world's transition to sustainable energy are manifestations of how purpose and culture can drive progress across industries.

 

Authentic Purpose: The Key to Transformative Growth

In the quest for true transformation and sustainable growth, the journey from merely articulating a purpose to living it in every facet of organisational behaviour is critical. The difference between appearing to be a purpose-driven organisation and being one is profound. It is this authenticity in embracing and operationalising purpose that unlocks its true potential, driving culture, innovation and ensuring long-term success.

“It's not hard to make decisions once you know what your values are.”

Roy E. Disney

For companies in all sectors, the lessons of luxury brands and purpose-driven organisations offer a clear roadmap for achieving not only financial success, but also contributing to a fairer and more sustainable world. To truly harness the power of purpose, organisations must embed it deeply into their culture, decision-making processes and daily operations, ensuring that their actions reflect their stated ideals. This commitment to authenticity and action will set tomorrow's leaders apart and create lasting value for society and the business itself.

Here are five concrete tips that any company can take away from this discussion to authentically harness the power of purpose:

  1. Define your purpose: Engage in a deep, introspective process to discover your organisation's unique reason for being beyond profit. This purpose should resonate with your core values and the impact you want to make in the world.
  2. Communicate clearly and consistently: Once your purpose is defined, articulate it in a way that is clear, compelling and accessible to all stakeholders. Consistent communication will ensure that your purpose is understood and embraced throughout the organisation.
  3. Align actions with purpose: Ensure that every aspect of your business, from product development to customer service and beyond, is aligned with your stated purpose. This alignment demonstrates your commitment to living your purpose in a tangible way.
  4. Cultivate a Purpose-Driven Culture: Foster a culture that encourages employees to connect with and contribute to the organisation's purpose. This includes training, incentives and a supportive environment that empowers employees to act in alignment with the Purpose.
  5. Measure and report impact: Develop metrics to measure the impact of your purpose-driven initiatives and report these results transparently. This not only holds your organisation accountable, but also demonstrates your commitment to making a real difference.

By following these tips, companies can move beyond the rhetoric of purpose and truly embody it, making a positive impact on society, the environment and, of course, their bottom line.

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Sources:

Organizational Culture and Leadership 5th Edition, 2016, Edgar Schein

Research notes in The Guiding Purpose Strategy, a Navigational Code for Growth, Extended Eidtion, 2020

How WeWork went from a $47 billion valuation to a basket case in just 6 weeks, Business Insider

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