Purpose Incorporated: A primer for brands in APAC
This article is part of a special series on how brands in APAC can go beyond profit to do good and do better for themselves and others. Read more.
Non-WARC subscribers can read this series in its entirety by accessing the articles via the landing page.
Why it matters
Identifying and articulating purpose as a meaningful challenge, taking the radical step to decentre and redefining business performance are three principles that distinguish a business seeking to be purpose-led.
- Many case studies teaching sustainability and purpose teach a “business case” that ironically undermines the whole purpose movement where purpose is a better way to make more profit.
- There is certainly a relationship between purpose and profit but the right application of it is only when profit is clearly seen as a means and byproduct of purpose, not the ends.
- Competition is not a threat but members of an ecosystem defined by purpose are in some way integral to both the sustainability and performance of a purpose-led company.
Through the previous two chapters (1 and 2), we have provided some key clarifications of terminology when it comes to the purpose conversation; outlined the opportunity and importance of being purpose-led for corporations; and provided a step-by-step method for how to put purpose into practice.
While we referred to some illustrative examples throughout, the “how to” and success factors likely still feel somewhat indistinct.
This third and final chapter will therefore provide three examples of businesses we see as having put purpose into practice effectively. The cases will be examined through a consistent structure that reflects the core components of the Economics of Mutuality approach, and will help surface the learnings and practical insights from each:
- A meaningful challenge purpose: What is the purpose that has been set? How does the purpose focus the company on an external stakeholder? What changes for them?
- Ecosystem focus: What is the ecosystem defined by the purpose? Have they sought to understand it fully? What have they learned through their analysis?
- Holistic performance: Is there evidence of the desired systemic change (addressing the meaningful challenge)? Are there measurable changes in the ecosystem? Is there a sustainable business model (ie profitable)?
It is worth pointing out that this does not mean we view these companies as the most purpose-led or even that the whole company is purposeful. The purpose transformation in corporations is a long, complex journey of change, where over time, the organisation becomes more purposeful at the core of its business. This is why it is important to identify, understand, share and scale what is working within companies with the goal of advancing the purpose-led agenda.
Our intent is to identify specific instances where purpose is being put into practice, to learn from them and share the insights. Underlying the selection of these case studies and what unites all of them is that they are illustrations of companies doing purpose in a way that genuinely reframes and reimagines the role of profit.
Many case studies used to teach sustainability and purpose today teach a “business case” that ironically undermines the whole purpose movement where purpose or sustainability is just a better way to make more profit. This is the half-truth that must be avoided at all costs. There is certainly a relationship between purpose and profit but the right application of it is only when profit is clearly seen as a means and byproduct of purpose, not the ends.
Novo Nordisk, Cities Changing Diabetes – Global framework, local executions
Novo Nordisk is a global leader in diabetes care (producing around 50% of the world’s insulin) headquartered in Denmark. The company has been involved in diabetes for more than 95 years. Their purpose is “Driving change to defeat diabetes”. Despite the concerted effort of large pharmaceutical companies, governments and healthcare institutions, diabetes (especially type 2) has grown steadily over the last decades and is projected to grow from 463 million people worldwide in 2019 to 700 million in 2045. It is a leading cause for a long list of very serious health conditions (blindness, kidney disease, heart disease, amputations, etc). Given the growth of diabetes prevalence and its concentration in cities (two-thirds of diabetics live in urban areas), Novo Nordisk launched an initiative called Cities Changing Diabetes (CCD) in 2014, aiming at curbing the unsustainable global rise of type 2 diabetes.
If Novo Nordisk were to limit its perspective to its company’s core historical business, ie making insulin, it would only need to focus on patients, prescribers (doctors) and payers (insurance institutions). Instead, by choosing to adopt a truly outside-in perspective and aiming at improving diabetes outcomes, it significantly widened the number of stakeholders it had to engage.
In essence, adopting the purpose of defeating diabetes redefined the perceived boundaries of the firm from being drawn according to its existing business model, to being drawn by the purpose itself.
As a result, it created public–private partnerships focused on the idea of bringing different stakeholders and expertise together to find common solutions and address this complex public health issue.
It adopted a principle of a “global framework with a local execution”. The global framework, based on peer-reviewed study protocols, provides the capabilities and toolkits to create a city-level diagnosis of both the size of the diabetes challenge and the key factors of vulnerability of the local population. It started with six local partnerships (up to 24 in 2020), presided by local authorities and involving local universities, healthcare institutions, urban planning, community leaders, actors of the food environment, transportation, sport, education, etc.
The platform thus coordinated various interventions targeted towards the local factors of vulnerability, which were very different from city to city, ranging from home visit programs for early diagnosis or specialised diabetes centres in Mexico City, to peer-to-peer and community programs to help vulnerable populations manage their health and rejoin the labour market in Copenhagen.
University College London conducted a review of the program between 2014 and 2016 that showed the wide variety of new initiatives stemming from the CCD platform, with significant impacts on many variables, including incremental access to diagnosis and care.
The rigour of the approach, the quality of the insights from local ecosystem mapping and the collective nature of the local partnerships all contributed to build strong (and deserved) credibility and trust towards Novo Nordisk. The program has also raised the profile and priority of the diabetes problem in these geographies. Both these elements justifiably put Novo Nordisk in a better position to grow its business in these countries, thus delivering both purpose and economic performance simultaneously.
It will be very interesting to follow this initiative and Novo Nordisk’s broader action in the face of the concerning diabetes epidemic, in particular how they may be able to orchestrate improvement in all the factors of vulnerability, including but not limited to the affordability of medication, the effectiveness of healthcare systems, the challenges of improving lifestyle risk factors at scale, etc. In the journey of defeating diabetes, there is still a long way to go.
Mahindra First Choice – Growth comes from addressing emerging or unmet needs in the ecosystem
Mahindra is an Indian multinational company founded in 1945 that has expanded from steel manufacturing to 20 different industries, including automobile manufacturing. Its stated values include challenging conventional thinking and enabling positive change for its stakeholders.
In 2008, Mahindra ventured into the used car space, with Mahindra First Choice (MFC) aiming to improve the mobility of lower-middle-class Indians. The understanding was that by growing the used car industry, it would be able to positively impact the livelihoods of the lower-middle-class, for whom physical mobility was a significant obstacle to their economic mobility.
As described in detail in this online case study from 2016, Mahindra adopted a very powerful ecosystem orchestration approach by identifying the key stakeholders, researching and analysing their key challenges (or pain points), then designing solutions that would:
- address these pain points
- remove barriers to the growth of the used car market
- do it in a profitable, scalable way
Having identified the trust deficit between buyer and seller as the main breakdown that needed to be addressed in order to remove the barriers to the growth of this ecosystem, Mahindra:
- professionalised the fragmented used car dealership ecosystem through a well-designed franchise system
- used this network of dealers to deploy car inspection and warranty services
- leveraged this scale to gather transaction data from its partners and create a used car price benchmarking website, available for free, and extremely useful to buyers, sellers and banks – alleviating the trust deficit between these three stakeholders was the key to unlocking the used car market
When you solve the truly important pain points of other stakeholders, they can be brought to voluntarily participate in your business growth, even if they do not share in your purpose.
In this case, car manufacturers, used car dealerships and banks did not start using MFC’s platforms because they wanted to improve the mobility of lower-middle-class citizens; they just found that MFC’s offerings alleviated some of their major pain points.
While the MFC business is very successful overall, it is thoughtful in its monetisation mechanisms. Its used car price benchmarking website is available for free, profits from its warranty products are shared with the dealers, etc. Its main monetisation, through the dealership franchise royalties, aligns its financial incentives with those of its franchisees.
It was careful to nurture and help the most fragile players in its designed ecosystem (dealers, workshops), so they could support the growth of the whole ecosystem.
MFC has seen double-digit growth for multiple consecutive years. Beyond that, its impact can be seen in the increase of total used car transactions in the cities where it is present and where it offers its used car price benchmarking. This might not be your traditional impact metric but it is hugely meaningful because it shows the benefits created across the whole ecosystem. By creating the systems and connections, and ultimately the trust required for used car transactions to take place, it has materially improved the lives of all those in the industry.
The purpose mindset MFC showed when thinking about performance is further evidenced in how it approached potential competition. When ride-hailing apps started growing in India, it created a potentially competing service that could lower the value of buying a used car for some people. However, instead of treating it as simple competition, MFC saw it as another opportunity for the industry and its purpose.
Ride-hailing does improve mobility (though we acknowledge it can create other negative consequences), so it contributes to the purpose. In this case, the most fragile stakeholder is the driver, who needs to not only acquire a car that meets the standards of ride-hailing apps but also pay back the same car loan while earning a potentially unsteady income.
MFC can then propose ride-hailing compatible cars and adapted financing options for drivers, and turn this new mobility business from a competitor to a booster of its own business.
Sabka Dentist – Profit as a means to scale impact
With a dentist-to-population ratio of 1:10,000 in urban areas and 1:150,000 in rural areas, Indians’ access to dental care is both low and very heterogenous. With low availability and high cost, it is akin to a luxury service in India. There are rare charity clinics that will treat people for free, and there are also illegal but tolerated tooth pullers operating in markets.
The story of Sabka Dentist starts with a businessman in the dental equipment industry, who decided to do something about this worrisome state of affairs. With the few charity clinics unlikely to be able to provide access to proper dental care at scale, he decided to create his own startup with the purpose of “affordable quality dental care for all”. The premise was that only a for-profit organisation could scale to the level where it could actually make a difference to non-affluent Indians. Today, Sabka Dentist is the largest chain of dental clinics in India, with 100 clinics in five cities.
As outlined in this case study, the founder of Sabka Dentist, Vikram Vora, had a deep understanding of the dental care ecosystem players. He summarised the key overall challenges as:
- high costs
- poor quality of dental services
- poor standards
- hassle with dentist availability and appointments
- gap between patient expectations and actual experience
- opacity of pricing
- low awareness of the importance of oral hygiene
- very low dentist-to-population ratio
He designed his dental care clinic chain and partner services to address these challenges:
- Sabka Dentist offers free check-ups with the objective of catching dental issues early enough for the treatment to be simpler and cheaper
- Inspired by large chains like McDonald’s and Starbucks, he designed highly efficient small clinics, with rigorous, detailed and standardised operational procedures. The service also focused on streamlining the five most frequent pain-relieving interventions. All of these features combined allowed these clinics to offer treatment at a 40% lower price than the competition.
- But 40% was not enough. It was still out of reach for what lower-class patients could afford, especially in one transaction. He teamed up with a credit institution to offer payment in 12 interest-free instalments. Sabka Dentist pays the interest so its patients would not have to. While some of the financial partners were initially worried about credit default rates, they turned out to be extremely low as grateful patients made it a point not to disappoint their doctors.
- As Sabka’s reputation grew, more affluent patients started coming to them for the attractive combination of quality and affordability. That allowed the clinic to add a few premium services (eg ceramic crown instead of metal or resin) and subsidise the cheaper option for the less affluent patients, pushing down prices further.
- As for the shortage of dentists, one of the causes is that a majority of university graduates are female and their careers tend to be shorter than men’s. They face many cultural and practical hurdles in their career and often end up leaving the profession. Sabka Dentist worked hard to recruit and retain female dentists, designing the jobs and the workplace around their preference for flexibility. As a result, 95% of their dentists are women, which is a particularly positive achievement in an environment where female inclusion is sometimes a challenge. This is one way that Sabka Dentist is contributing to the increase in the number of practising dentists in India.
- To address the heterogenous quality of care issue, Sabka Dentist organises massive continuous training programs for their dentists, with a “plus 1” feature where each trainee is invited to bring an external colleague, hence contributing to raising the bar both for Sabka Dentist’s employees and other dentists in the neighbourhood.
Sabka Dentist has had an undeniable impact on the availability of affordable dental care in the five cities it operates in. It also enjoyed steady rapid growth for over a decade. Its way of measuring performance reflects its areas of focus. The KPIs, in decreasing order of importance, are:
- Number of patients treated (Purpose)
- Internal audit score (Quality, inside-out)
- Patient satisfaction score (Quality, outside-in)
- Average revenue per patient (Economic sustainability)
Sabka Dentist sees economic performance genuinely as a sustainability metric and as a way to maximise impact by allocating the resources to the clinics that are able to properly serve the highest number of patients profitably. This can be seen, for example, in the choice to address the shortage of dentists, using its business model design to contribute to the increase in the number of practising doctors (for example by designing organisations and careers more adapted to female dentists who would otherwise leave the profession after a few years of practice) and similar to MFC, in its collaborative approach with the rest of the ecosystem.
Sabka Dentist shares its clinic design, processes and price lists publicly online, encouraging anyone to start a similar dental chain business. It sees potential imitators not as competitors but as additional contributors to its purpose of affordable dental care for all, so it does what it can to help them.
As Sabka Dentist keeps driving its impact, it will likely become increasingly useful to expand the business metrics from the current “outputs”, tied to the operations of the company, to include “outcomes”, measured from the perspective of the target population: eg accessibility of care, prevalence of key oral care conditions, or even levels of trust between the population and the healthcare system.
Sabka Dentist’s case remains one of the most striking examples of consistency between the purpose, the business model and the performance metrics we have seen so far.
In each of these cases, there are powerful specific and contextual insights to be gleaned, as well as some important principles for building purpose-led businesses. We want to highlight these principles as they are key distinguishing features of businesses seeking to be purpose-led and can provide a helpful framework to see where your own company might improve.
1. Identify and articulate your purpose as a meaningful challenge.
In every instance, a purpose-led business ought to be designed to address a meaningful challenge. Whether diabetes, the mobility of lower classes or access to dental care, each represents a specific issue adjacent, but still external, to the remit of the company. Purpose should have this effect on a company – to challenge the status quo, to trigger an honest and deep reflection on what more the company can do for people and planet.
2. Make sure you are decentred.
For the companies taking the radical step of decentering themselves, rather than being the centre of the ecosystem, they were another stakeholder among many relevant to a bigger purpose. You will struggle with implementing the first principle without the second and when it comes to designing purpose-led business models, there isn’t a way around these.
The only way to see the root causes of the problems in the ecosystem and really understand the perspective of the various stakeholders is to actively seek to see things from their perspective. Novo Nordisk, in particular, is a powerful example of how the same problem (diabetes) can have widely varied manifestations and contexts depending on local ecosystems, and therefore required very different interventions. Taking the time to understand local contexts and the nuances is absolutely essential to the ecosystem mapping aspect of EoM and ultimately to identifying the right systemic issue to address.
3. Business performance is redefined.
Profit is genuinely a means to wider and deeper impact on their purpose. Profit remains essential but inasmuch as it is key for company sustainability and viability, while the real performance of the firm is found in achieving its purpose. In a similar vein, competition is not simply a constant threat that requires beating. Instead, they too are members of an ecosystem defined by purpose and therefore in some way integral to both the sustainability and performance of a purpose-led company.
It is these three principles that much of our work hangs on, admittedly, not rocket science, but deceptively difficult to deliver. Yet, if they are implemented to a high standard and understood robustly by colleagues and senior leaders, then purpose will be put into practice, eventually.