The Foundation Forum, Thursday 26th November. Written up with the help of Simon Caulkin
An event that was a milestone, and not one that was caused by anything worthy of celebration. Our first ever entirely online Forum was held 14 years and 4 days after our first with an audience of 200 rather than 9, hosted from a smaller room than the original. As we have learned repeatedly of late, it turned out well in its own way, with useful learning for the future.
The reason we were getting so many people together was to explore the subject of business purpose, one that has become much discussed. It’s important, it’s fashionable and it seems to be widely misunderstood. Somehow answering a simple question – why IS your organisation here? – is tough.
For years the obvious and only widely accepted answer was ‘making money’. But the consequence of this convention has been increasing numbers of organisations behaving like out-of-control machines. They make money but let down or mistreat customers, are miserable places to work, they move countries to avoid paying tax and they create supply chains that do untold and unseen damage. In the long run they don’t always make money very well either, once the fines catch up with them.
Our belief at The Foundation is that organisations are here first for their customers, solving their problems, helping them (us in fact) solve problems and live better lives. Doing this earns a return that everyone else involved can benefit from and should share in equitably.
We have learned that people increasingly like the sound of this thinking but are nervous about whether it can really work out there in the real world. What’s missing is belief.
That’s why this Forum was constructed – to bring together three speakers with a cast iron grip on the subject; on what an organisation with a clear sense of purpose looks like, feels like and how it works for real. They have all been on journeys that weren’t easy (even easyJet’s) and one way or another they all still are. Hearing their stories should help more of us believe that this way of running organisations not only can work, but it can lead to exceptional success for all involved.
We had Dame Fiona Reynolds, former Director General of the National Trust where she led a transformation in the charity’s sense of who it was and why it mattered, leading to leaps forward in financial health and visitor numbers. It became a warmer, more human organisation that cared about loving people as much as places…
Peter Duffy, now CEO at Moneysupermarket.com, formerly CEO at Just Eat and Chief Commercial Officer at easyJet where he was one of the leaders of the business’s purple patch from 2010 to 2017. This was a turnaround that became a pioneering and purposeful customer-led success, leading the market in making discount airline travel easier and more affordable for us all…
And Sarah Gillard, Mission Director at the John Lewis Partnership and responsible for leading their work on rearticulating their Purpose at a pivotal time for the business. The strategy is being re-set under the first new Chair in 13 years while the business is under huge commercial pressure from the disruption of the UK’s retail sector. And that was before Covid came along.
So what did we learn? What does it mean to get a grip on why your organisation is really here? Then what do you do as a result that’s any different to what you did before? The evening’s discussion, summed up by Simon Caulkin, follows.
The power of purpose
‘Purpose’ is the new corporate miracle detergent, promising to remove unsightly stains and wash reputations whiter. A sign this is going mainstream came last year as the US Business Roundtable put out a call, signed by 181 CEOs, for companies to commit to a purpose beyond shareholder value. It was swiftly followed by publication of the British Academy’s ‘Principles for Purposeful Business’, one of that organisation’s ‘largest and most ambitious programmes’.
Much of the associated discussion has taken place at stratospheric levels of abstraction, making some wonder if it was all hot air (thus, under the question ‘More talk than action?’, the High Pay Centre noted in a recent report that FTSE CEO incentive pay is still overwhelmingly determined by shareholder returns). Inevitably, changing a whole system takes time.
Yet even the most cynical would have found reason for optimism in November’s attentively watched online Foundation Forum, in which leaders from three very different organisations recounted how, far from being an airy-fairy word cloud, a sense of purpose not only helped them recentre themselves and their organisations but also provided them with a clear guide to action. It may be too soon to speak of a movement. But it seems clear that organisations are discovering for themselves that, used well, a clear, true purpose is above all practical, generating belief and motivation and a guiderail for both what and what not to do.
Sometimes an organisation needs to rediscover a founding vision to trigger a necessary change of trajectory. This was the case at the venerable National Trust. When Dame Fiona Reynolds joined it as director general in 2001 she found herself in charge of an organisation that, although a ‘national treasure’ and undeniably a meticulous conserver of old houses, had become better known for its scolding signage (‘keep off the grass’, ‘no picnicking’, ‘keep your children under control’) than for the warmth of its welcome to visitors. How to resurrect its campaigning democratic origins from the 1890s?
Reynolds’ initial appeal to a bright new order modelled on the ‘open conservation’ principles of the exemplary US National Parks Service – ‘arms open conservation’ as she referred to it – was met with silence and a wall of arms closed. It took two ‘lucky’ accidents (although the second was traumatic), deftly exploited, to turn the tide.
The first was an unexpected opportunity to buy a grand untouched Victorian Gothic country house near Bristol. Against the established order’s better judgement, just ten weeks later it opened to the public, entirely unrestored and without loos, car park, shop or tea-room, just as it was, ‘in all its glory, showing people what we needed to do in a way that we couldn’t with our established properties. And people loved it. That was the start.’
The external accident was the foot-and-mouth crisis in 1997. All Trust properties shut overnight, and what was worse, people stopped buying their farmers’ meat. This time the Trust came to the rescue by setting up a completely new marketing system, including growing food again in its own kitchen gardens, to restore confidence and re-establish people’s lost connection with local produce.
There were other changes too, but Reynolds is perhaps proudest of a campaign, still running, to introduce today’s youngsters – just as deprived of nature as those of Victorian times, only for different reasons – to the joys of wild places and natural beauty. It’s called 50 things to do before you’re 11 ¾.and it’s outdoors, active, playful and warm. That, says Reynolds, was the point at which the cultural shift took hold and ‘we were able to really instil this sense of being back to our core purpose, of loving people as much as the places we looked after.’
For the John Lewis Partnership, the UK’s largest co-owned enterprise, it has rather been a case of drawing on a strong and long-standing sense of purpose to inform both a strategic reset and an immediate response to the coronavirus crisis. Sarah Gillard, mission director leading on renewing the Partnership’s purpose, notes that John Lewis and Waitrose have a deep well of stories and folklore to nourish the present. True to form, a strong thread of purpose has been ‘incredibly helpful’ in guiding its actions in this year’s permanent emergency.
Thus the Partnership’s factory in Northern England swiftly switched from making soft furnishings to turning out masks and gowns for the NHS, and when the department stores had to close, 12,000 John Lewis partners volunteered to work in the Waitrose food stores rather than take the furlough option. Head office staff working from home joined in. ‘Purpose helps people do incredible things, way beyond what you think is possible, because they’re clear on the ultimate goal and what they are trying to do it for,’ Gillard says.
A sense of purpose that’s true to the past also gives reassurance. If previous generations of partners could survive hard times (including the obliteration of the flagship Oxford Street store during the Blitz in 1940 – they were selling from makeshift trestle tables days later) and still leave the organisation stronger afterwards, so could this one. Again true to form, when as part of the strategic review partners were asked what made them proud to work for the John Lewis Partnership, they talked about working for a business that put people first and dealt honestly with customers and suppliers.
Suppliers said similar things, reinforcing the conviction that the group had an important role to play in society not just through what it sold but also by demonstrating a different way of doing business – and going public about it: while trust in UK business in general is perhaps understandably low, co-owned businesses are an exception – and, surprisingly, most people don’t know John Lewis is co-owned.
Interest in the work on purpose has been incredibly strong, Sarah was concerned that asking people to pause to have conversations about why the business exists in the middle of a crisis would at best be something they had little time for and at worst could be seen as having lost the plot. But the opposite was true. ‘It turns out that people don't need much persuasion’, she says. ‘People do want to do the right thing, and are really energised by it, and often just waiting for explicit organisational permission to do it. So we're seeing this really as day one of the next 100 years of the partnership's history, and I hope and expect momentum to continue to build as the clarity on the question of “why are we here?” begins to inform the what we do and the how we do it.’
Budget airline easyJet has always been about affordable travel. But when a new executive team at an early offsite in 2011 decreed that journeys should be ‘easy’ on passengers’ nerves as well as wallets, it triggered a chain reaction of change that became a case study in customer-led success. (The easyJet purpose was defined as ‘making travel easy and affordable’ – a sentence that sounds dull but the action that resulted, because it was taken seriously, was anything but).
Many of the earliest changes, even before the discussion, came under the heading of what chief commercial officer Peter Duffy terms taking away the negatives. One of these was that the previous regime had been so keen on cost control that it didn’t always have enough crew to fly the planes – ‘a bit fundamental if you’re an airline’ – leading to delays and cancellations that enraged customers and staff alike. That was easy to prioritise and investing to fix it started to give colleagues hope that Carolyn McCall, the new CEO, cared about people and not just the bottom line.
Less straightforward was what to tackle next. The team could see the things that made customers’ lives difficult – things that were often the cause of rage. But fixing them, while remaining just as affordable as in the purpose, would be a serious and maybe impossible challenge.
One of the first to be tackled were a series of pricing ‘gotchas’ – Duffy’s name for sneaky traps for customers hidden in the airline’s billing process: administration, baggage and alteration fees that were both unfair and misleading, since they made it impossible to buy a ticket at the advertised price. The trouble was, as Duffy admits, that the ‘gotchas’ are pure profit – ‘they actually make quite a lot of money. So you have to find other ways to generate revenue to replace it, and it took time to do it’. The replacements were all genuine choices for customers, where spending more would give more value in return and where not spending was still a perfectly good option.
Another in the initial set of challenges, and perhaps the most dramatic, was to abolish the seating free-for-all in favour of seat allocation. Not allocating seats is much more convenient for airlines because it minimises administration and makes boarding easier – for them. Customers hate it. Making seat allocation work within tight aircraft turnaround times – crucial to being able to offer flights at low prices – was complicated and needed many attempts over 18 months of struggle.
When finally they got to an answer – boarding the plane from both ends at once, not using air bridges – Peter was immensely proud. On the first day of operation he recalled asking a passenger what they thought. ‘Well, you’re just doing the same as other airlines, aren’t you?’. It was a great reminder that as customers we don’t need to appreciate what it takes to make something work better, but none-the-less, people respond in numbers to the removal of pain and in the first year, says Duffy, it added £100m to the bottom line.
Then followed an easyJet app and mobile boarding cards, an automated baggage drop-off at Luton, and other upgrades. The company set up an advisory group headed by former home secretary David Blunkett to improve on its previous neglect of disabled customers. Finally, improvements were extended to wider systems involving other organisations: for example, connecting easyJet flights with long-haul airlines, enabling it to sell tickets to exotic distant locations.
Did all this customer-led work pay off? Yes, says Duffy. EasyJet’s share price more than quadrupled between 2010 and 2016, the period Carolyn was in charge. ‘The whole customer response to easyJet just soared from where it was in 2011,’ says Duffy. ‘So, yes, I'd argue that purpose-driven customer initiatives can really make a difference to very commercial businesses.’
When the history of the pandemic is written, one of the revelations will be the power of purpose – think of the development of vaccines in less than a year, unprecedented cooperation throughout the NHS, John Lewis’s manufacturing switch, for example. There is a simple reason for this. For an organisation with a purpose, what to do in an emergency – doing the right thing – becomes perfectly obvious.
What follows from that is that unlike less purposeful rivals, its people don’t have to wait to be told what to do. Just doing it then becomes a ‘moment of belief’ (as The Foundation likes to refer to it) that in turn reinforces the purpose and becomes part of the organisation’s folklore. ‘Purpose is a participatory sport,’ as someone said, and as with a muscle the more it’s used, the stronger it becomes. Provided it is genuine, there is (for once) just no downside.
The Foundation’s view
We are doing more and more work in this field, helping organisations find a true sense of purpose that gives them deep-held belief that they are here first to serve others. As Peter and Fiona describe, and as John Lewis has shown for many years until the current market disruption and need for reinvention, this is a useful orientation. If people are seriously determined to keep on working at improving the ways they serve others, their organisation does well too. They make money without explicitly trying.
As John Kay observed in his wonderful book Obliquity (https://www.johnkay.com/2004/01/17/obliquity/), there are goals such as being profitable that, counterintuitively, respond badly to a direct approach – aiming to grow profits as an explicit, widely shared goal. EasyJet was trying directly to make a profit when it made all the cuts that led to its awful on-time performance at the start of Carolyn’s tenure. The best way to make a good profit is, he says, to be a good business. And a business that is clear about and committed to why it is here, the role it plays for others, is simply, in our view, a more precise description of one that is good.
The three further big points that stood out to us from the evening are these:
1. Even in the middle of operational pressure and massive financial worries, people want to believe that their work matters. Sarah’s year has largely been spent leading part of a fundamental review of the John Lewis Partnership’s strategy, direction and most central beliefs. The new Chair initiated it with a backdrop of battles against internet-only business models reducing the Partners’ bonus from double digit percentages of the annual salary to 2% in 2019. The business had a strategic crisis. Then Covid arrived and the business had an even more immediate operational and financial crisis too with every one of John Lewis’s stores closed for weeks. Sarah described her trepidation at going round asking people, in the middle of all this, ‘what’s it all for…?’, fearing perhaps that it would seem like fiddling while Rome burned. But she had the opposite response. People wanted to talk, to explore and to reflect on the way the Partnership does business, energised by the idea that business, their business, could be a force for good.
2. The search for purpose sometimes becomes a search for a sentence under the heading ‘purpose’. It is more useful to find an idea, not words, and to bring it to life with action so people believe, because believing it’s true is the scarcest quality in this field of work. Fiona had a wonderful example of what this looks like for real. She described arriving at the National Trust and finding an organisation great at conservation but not very good with people. She did a lot of listening and exploring. One trip to the US introduced her to the idea of ‘arms open conservation’. She realised this was it – the Trust had somehow become arms closed with signs not to touch or to keep off the grass, requests to keep kids under control and not make too much noise. Arms open was about loving people as much as the special places the Trust looked after. She shared her epiphany with the senior folk at the Trust and had an arms closed response! Luckily, it turned out, there were very swiftly opportunities to do something. One was the chance to purchase a stately home, Tyntesfield near Bristol, It was not just stately, it was in a state. And Fiona realised here was a chance to do arms open conservation for real. 10 weeks after buying it, it was open to the public with no café, no barriers and with lots of work being done as people watched on. The visitors and members loved it! THIS is what grew belief – something we call a Moment of Belief, like a moment of truth, the only thing that will change people’s shared beliefs across a large organisation. Genius, simple, but it takes boldness and confidence to pull it off.
3. Belief in a clear, simple purpose can lead to groundbreaking innovation far beyond what might be achieved in the normal run of things. Peter told the story of the easyJet senior team going away for two days and agreeing their cause – they would make travel easy and affordable. On the surface this is such a dull sentence, bordering on obvious. But behind it was an ambition – the team saw that discount airline travel was indeed affordable but it was also, for most, an awful experience. The team set out not to make travel easy and a bit more expensive, but easy AND affordable together. That is what an innovation challenge looks like. And innovate they did. First they tackled the sharp practice around pricing that tricked customers into paying extra for nothing they valued – booking fees added at the last minute, fines for getting complex details wrong, paying for a second bag but not having an extra weight allowance so getting fined for that too, and so on. These made easyJet a lot of money – they were not easy to stop doing, and innovation was applied to find things that people would be happy to pay for instead, at their discretion. Extra weight not extra bags, genuinely nice food and drink on board, more legroom. Which leads to the second big innovation, or Moment of Belief, allocated seating. The industry view was you couldn’t give passengers specific seats and also turn planes round fast enough to make the economics work. The easyJet team said maybe you could, and after 18 months of development that took real conviction to keep pursuing, they got there. They knew that it mattered – they weren’t just trying something to make some money they were trying to do something that would make a difference to millions of people. And it turned out to make money too adding around £100m revenue and 7% to customer satisfaction in its first year. Success, but with the end and the means the right way round.
About The Foundation
We are a 21 year old management consultancy working with all kinds of organisations to achieve customer-led success. This means tackling big organic growth challenges; growing faster, growing into new markets or fending off threats to growth by starting with what matters to customers and then making it work for the business as well. The aim is to influence customer behaviour, but this is inherently tough. Why? Because people in any organisation naturally see the world from the inside-out, with colleagues close and customers distant, and lots of assumptions about how things work that aren't challenged We help clients look from the outside-in, re-connecting them with what customers really value (the problem they want to solve, not usually what the client sells), then finding new and better ways to create this value This means working both as expert advisors and facilitators. The issue with simply gathering outside-in information is that it lacks impact to get senior teams to tackle inconvenient truths in what customers want, and to believe their own organisation can be different By using ‘Immersion’, personal conversations with customers and leaders of organisations in other sectors who have tackled parts of their challenge, we help teams get around the natural and limiting inside-out beliefs that stand in their way. This helps them develop better answers for customers and new ways of achieving lasting success We answer three sizes of question:
Small – a new proposition or an improved customer experience
Medium-size – growing value per customer or improving retention (a sub-set of the former)
Large – creating customer-led business success, often by uncovering a true outward-looking purpose and the genuine belief needed for it to be acted on
Our clients include HSBC, the John Lewis Partnership, Sky, Vitality and AstraZeneca, with achievements including helping create Plan A at M&S, adding £100m of value to a Travelex travel money proposition, and giving Morrisons a competitive direction contributing to their return to growth Behind our work our most distinctive characteristic is our team and their outlook. Each individual is motivated to and experienced in crossing the border between the worlds of customers and business which often resist mixing well
Charlie Dawson (Founding Partner):
firstname.lastname@example.org / +44 7785 268 859
Anna Miley (Partner)
email@example.com / +44 7816 261 987
John Sills (Partner)
firstname.lastname@example.org / +44 7990 943 402
Charlie Sim (Partner)
email@example.com / +44 7958 574 917