1. The Way of the Purpose
Driven Company
LinkedIn: Love Lönnroth
Twitter: @lovelonnroth
Why purpose is essential. How to make
purpose a driving force of the company.

2. Why Purpose Matters
1. A company today is a node in a
network of stakeholders
2. Companies need to influence
regulators
3. People want to make a difference
in the world

3. Why # 1: A Network of Stakeholders
Companies today are increasingly part of global value
chains and are therefore corporate citizens of the world.
A chain cannot be stronger than its weakest link.
The company must lead with purpose in order to create
trust and make the chain strong.
Leading with purpose means to instill the purpose in the
network partners so that they work toward the same
purpose.

4. Why #1: Bad Cop, Good Cop
BP’s Deepwater Horizon disaster of 2010 involved not only BP, but
also its partners Transocean and Halliburton. The US oil spill
commission found that BP had prioritized cost cutting over safety, even
though BP stated in their annual report that “safety is BP’s number one
priority”.
The apparel company H&M has an extensive supply chain in countries
with lax labour laws and a track record of human rights violations. Since
the end of the 1990’s, H&M has worked to create a sustainable supply
chain and introduced management practices around core values that
are transmitted in the value chain, that now constitute best practice for
the entire industry.

5. Why # 2: Influence Regulators
In many industries, government regulation sets the
playing field.
Companies in these industries must fight against excessive
regulation by earning the government’s trust.
The solution is to self-regulate and to ensure that other
industry players don’t mess up.
For an industry leader, purpose is necessary to align the
entire industry behind common principles.

6. Why # 2: Bad Cop, Good Cop
Uber has been extremely successful with its ride sharing service that is rapidly
expanding globally. The company has attracted a lot of negative publicity
because of rapes taking place in Uber cars and unfair competition with taxi
companies. Uber has been slow to respond to these charges and has been
banned in France and is facing tough regulations in other countries.
Unilever is a global giant in consumer goods, with brands like Surf, Lipton,
Rexona and Lux. Unilever is one of the world’s biggest buyers of palm oil, the
production of which is a major cause for deforestation. Unilever helped create
the Roundtable on Sustainable Palm Oil in 2004 and has led an industry wide
initiative to make palm oil sustainable. In the EU there is now a legal
requirement to declare if palm oil is used in a product, but calls to more drastic
legal action have been avoided.

7. Winning alone is not enough it's about winning with purpose
Paul Polman, CEO Unilever

8. Why # 3: Make a Difference
Young professionals are increasingly looking at how their employer
strives to make a difference for themselves and for the world.
Customers look for brands that have a value proposition that is
greater than the product by itself.
Current employees will walk the extra mile when they are aligned with
the company’s purpose.
A company that is committed to making a difference will attract talent,
partners and customers that have higher aspirations and bring more
value in the long run.

9. Why # 3: Bad Cop, Good Cop
Ryanair is one of the most successful airlines, punctual and has never
been involved in a major accident. But it has an extremely weak
reputation because of its abusive behaviour towards its employees.
Several Danish municipalities are reportedly boycotting Ryanair
because of bad working conditions.
Natura is a leading Brazilian cosmetics company. The company
employs a direct sales model with home distribution that could have
been considered ethically challenging. But Natura is actively working
with the sales reps to develop their communities and to spread the
message about social and environmental responsibility. Natura is
considered to be a world leader in Corporate Social Responsibility.

10. How to Introduce Purpose
1. Find your spark
2. Set out to reach True North
3. Partner with your stakeholders

11. How # 1: Find Your Spark
Purpose requires personal commitment and leadership from the
senior executives. Purpose requires belief.
Some spark of purpose probably exists within the company since its
very conception, be it the entrepreneurial spirit, the passion for the
customers or the drive for excellence.
The purpose should be true to the foundation of the company. You
may have to excavate the purpose by having extensive dialogue within
the company and with your stakeholders.
Ask: “What can we aspire to, what difference can we make for our
customers, for our community and for the world?”

12. How # 1: Example
Securitas is an international security company that was founded in
Sweden in the 1930’s. In the 1980’s Securitas was the industry leader
in Sweden, but the numbers were in the red and leadership was
lacking. A group of middle managers started to work with rejuvenating
the company by asking what the customers really wanted and
simplifying work procedures. Eventually their efforts were picked up by
the new CEO who took the middle managers’ initiative into a company
wide change agenda. During the 1990’s Securitas rapidly became the
leading international security company leading the transformation of the
entire industry. And it started by a group of discontent middle managers
excavating the purpose of the company, reconnecting with customers.

13. How # 2: Set Out to Reach True North
Once you have excavated the spark and started to formulate your
purpose, you should develop a bold plan to take your purpose to the
world.
The plan should start with what you want to accomplish for your
customers, your employees and your community. What do you
want them to say about your company in ten years from now?
The plan should outline some core principles and some activities
that will lead toward your purpose. You should not start with developing
KPI’s and metrics. These will limit your purpose and should therefore
come at a later stage.

14. How # 2: Example
Scandic Hotels is a Scandinavian hotel chain that once started as
Esso Motor Hotels in Sweden. In 1993, a new CEO was brought to
Scandic to turn the company around, since at the time it performed
badly and did not have a clear strategic direction. The new CEO
formulated the purpose “Care for customers and Care for the
environment”. The purpose was disseminated to all leaders through
inspirational seminars and through a short strategy document outlining
the direction and setting some core activities. Scandic became very
successful in the 1990’s by engaging all its employees in the purpose
and to involve its customers in its environmental efforts.

15. A company has two choices, to become production oriented or
to become customer centric. To be customer centric is the
hardest route and the one we opted to follow.
Roland Nilsson, former CEO Scandic Hotels

16. How # 3: Partner With Stakeholders
Your stakeholders are your customers, employees, shareholders, local
community, political leaders, your suppliers and other parties that you impact
through your operations and your products.
The importance of your purpose is judged by the extent that it makes life
better for your stakeholders.
To bring your purpose to life, you need to partner with your stakeholders,
beginning with your employees. Work with your employees to address the
major issues concerning customers and other stakeholders.
Once you are aligned with your employees, you must work with other
stakeholders like key customers and representatives of the local community to
find common ground, enrolling them into helping you fulfil your purpose.

17. How # 3: Example
Once Scandic Hotels had crafted their strategy, they developed a
comprehensive project to enroll all employees. Using “Dialogue Mats”
they involved all employees into coming up with ideas for working with
the purpose and to develop action plans for each hotel. They partnered
with an environmental NGO to deliver environmental training. Several
hotel directors were invited to Rotary meetings and to participate in
municipal activities for developing the environmental work at other local
businesses. This communication had a tangible impact on the hotels’
business since they reached many prospective customers and
developed a solid reputation for being a great corporate citizen.

18. Tools for Purpose Driven Companies
1. Strategy document
2. Dialogue Mats
3. KPI’s
4. Strategic projects
5. Leadership training

19. Tool # 1: Strategy Document
There are some important aspects of a strategy that is crafted for a purpose
driven company:
It must be crafted by the logic of the heart as much as the logic of the mind.
The purpose is transcending the realm of here and now into the realm of what
could be possible if we let our imagination run free. The strategy should convey
the transcendent nature of purpose.
The strategy is as much a basis for communication as a basis for setting
priorities. It should contain a formulation of the purpose and of the strategic
priorities given by the purpose. It should also give some direction towards True
North by stating strategic long term objectives and possibly some strategic
actions. But it must not contain detailed KPI’s or short term goals since this will
diminish the purpose. The details should be left to local action plans.

20. Tool # 2: Dialogue Mats
A dialogue mat is a simple and surprisingly efficient tool to have a
company-wide dialogue on your purpose where everyone can
participate. The tool consists of a poster with questions printed along
the borders and is designed for having a group of 4 - 6 people sitting
around a table and discuss around the questions in a preset order.
The questions are open and typically starts with “Why is this purpose
relevant for us?” and narrows down to actionable things like “Name
three things we can start doing for our customers tomorrow”. A number
of successive Dialogue Mats can be used to reach all the way to
actionable goals that are set and executed by the employees.

21. Tool # 3: KPI’s
A trap that can be experienced by some companies that try to become
purpose-driven is that they end up with a bunch of words and little
action. To really become a purpose-driven company requires
action and action will eventually require KPI’s.
The local action plan is a great tool that is used to collect local actions
that are proposed by the employees in the Learning Mat sessions.
Each action is ticked off when it’s done and this is a basis for
measuring the activity level in the organization.
Some key metrics should be used to track the progress on the 3 - 5
most important strategic objectives. These should be transparently
communicated to all stakeholders on a regular basis.

22. Tool # 4: Strategic Projects
Strategic projects are important vehicles for reaching strategic
objectives. Especially in large organizations the inertia and the layers of
decision making call for some top down strategic initiatives to drive
change.
It is important that the strategic projects are carefully selected and
designed with the purpose in mind.
Strategic projects create opportunities to collaborate with
stakeholders such as suppliers, customers and NGO’s.
Strategic projects should be measured on both the basis of business
results and how they contribute to fulfilling the purpose. One is never
enough, there must always be both business and purpose.

23. Tool # 5: Leadership Training
Purpose driven companies require extraordinary leadership. A
hero-CEO or an entire heroic leadership team will never make it by
themselves. Leadership must be present at all levels of the
organization.
Purpose must be integrated in all leadership training. HR,
leadership coaches and training partners must be completely aligned
with the purpose. If they are not, leadership will not be effective.
Using train-the-trainer concepts where employees can become
champions for change is an excellent way to foster leaders at all levels.
Seminars around Dialogue Mats should be led by internal trainers.

24. Some Purpose Driven Companies
Unilever
Natura
Patagonia
IKEA
H&M
Toyota
Max Hamburgare
Skandia
Handelsbanken
Google
Novo Nordisk
Atlas Copco

25. Contact information
Please feel free to contact me, I would love to get
your comments on this presentation. I am available
for consulting assignments and hold presentations on
the topics of Strategy, Sustainability and Change
leadership.
LinkedIn: Love Lönnroth
Email: Love@Lonnroth.com
Twitter: @lovelonnroth
Web: www.karlofconsulting.se