Over the past decade, we have seen significant movement in the corporate world towards finding or reconnecting with the concept of purpose in business.
Purpose — the reason why a business exists in the very first place and why it is relevant to society in general — has become not only a basic requirement in communicating with all stakeholders but also, and primarily, a management instrument to keep the business focused on its true “North Star.”
Purpose in pandemic times
The COVID-19 outbreak and its dramatic consequences for societies across the globe have accelerated the need for new corporate commitments.
Unlike previous crises, we saw a substantial shift in companies’ behaviours in 2020. Many of them placed great emphasis on fulfilling their purpose rather than solely focusing on short-term financial performance. From helping to ensure employee safety and reconfiguring supply chains to be more sustainable, to offering more generous payment terms to customers or supporting communities with the right products and knowledge in the fight against the pandemic.
Though many companies have embraced solidarity and demonstrated a willingness to respond to society’s needs, others have found inspiration in consumers’ emergent feelings and habits. In the EY Future Consumer Index consumers stated that companies’ actions during the pandemic influenced their purchasing preference: 75% claimed to prefer buying from companies concerned about positively impacting society. The data also suggests that this new consumer mindset seems likely to continue: 50% of respondents will continue buying exclusively from brands with values aligned with their personal values.
Purpose at Unilever and its multiplier capacity
When Paul Polman became Unilever’s CEO in 2010, he brought a transformative leadership approach by making purpose the company’s top corporate priority. Purpose at Unilever materialised in the Unilever Sustainable Living Plan (USLP), which aims to improve the lives of millions of people and reduce the environmental impact of Unilever’s products across the value chain through a portfolio of purpose-led brands. Today, focusing on “making sustainable living commonplace” continues to be Unilever’s North Star. Alan Jope, the current CEO, recently doubled down on the successful strategy and reaffirmed that Unilever would be bold in continuing to reshape the portfolio around its Purpose: “We will dispose of brands that we feel are not able to stand for something more important than just making your hair shiny, your skin soft, your clothes whiter or your food tastier” (his own words during a Cannes Lions event).
The results of a purpose-driven strategy are visible: in 2018, Unilever’s 28 “Sustainable Living” brands — representing products that act to support positive change for people and the planet — grew 69% faster than the rest of the business, up from 46% in 2017 and representing 75% of the company’s overall growth.
Unilever not only understands the role it can play in improving the lives of many people but also understands the need to foster a wider ecosystem to improve the lives of entrepreneurs (small, medium and big), their businesses and their consumers’ experiences. Recently, Unilever Brazil kicked off a unique programme with EY-Parthenon to support Brazilian retailers in finding, clarifying or refreshing their purpose. This programme aims to positively impact thousands of entrepreneurs and professionals in the Brazilian retail ecosystem and significant number of consumers in the communities served by those retailers.
The retailer selected to kick off this programme was Grupo Muffato, one of Brazil’s most innovative and fastest-growing retailers.
Grupo Muffato, a history driven by strong values
Grupo Muffato is one of the largest retail chains in Brazil. It started in the 1970s with a small warehouse in the southern part of the country.
Guided by work and discipline, the founder’s three children eventually took over the company and continued to follow their father’s fundamental values: a) customers first — always building a special relationship with the customer; b) meritocracy first — recognising the value of everyone’s effort and sharing profits with the team; c) creating an exceptional place for employees to grow and improve their lives; and d) always surprising customers with a new experience.
Under this set of values, the three brothers accelerated growth and transformation in the three decades that followed, growing to 16,000 employees and becoming one of the most innovative companies in the Brazilian retail landscape. However, this accelerated growth created a new challenge for the company: how to transform its intrinsic values, leadership mindset and organisational DNA — Grupo Muffato’s “secret sauce” — into something explicit, scalable and easy to understand for Grupo Muffato’s stakeholders in any operations across Brazil.
Unilever’s programme to support retailers in finding, clarifying or refreshing their purpose helped address that challenge. A clear, well-defined and easy-to-communicate purpose could become Grupo Muffato’s growth strategy cornerstone moving forward — a way to expand the business sustainably and still stay connected with its original and deep-rooted values.
Unilever Brazil, supported by EY-Parthenon, launched an exercise to reassess Grupo Muffato’s “raison d’être,” its beliefs, values and stakeholder impact. This detailed assessment process captured the perceptions of different stakeholders inside and outside the company helping the company identify: a) an explicit set of values rooted in the organisation, b) unique behaviours that constitute the “Muffato way of being,” and c) future purpose key components.
EY-Parthenon methodology, mixing legacy and a future-back discussion, defined purpose for a new era and assured its relevance for the long term.
Working with EY-Parthenon, the Unilever Brazil program is an important example of how the business ecosystem needs to foster the right factors to enrich all companies. The Unilever purpose catalysing other companies’ purpose is a powerful initiative that brought unexpected value to the retail ecosystem in Brazil. While Grupo Muffato is just the first pilot, its ripples are shaping new relationships between the two companies and setting a new standard for Unilever’s relationships with other clients.
- The views expressed in this blog are those of the authors. They do not necessarily represent those of Ernst & Young LLP, other members of the global EY organisation, or the London School of Economics.
- Feature image by Denise Jans on Unsplash