Purpose. It has long been one of our foundational building blocks for developing a strong brand strategy. We are hearing the term more and more in corporate settings. But defining your story and finding your purpose is much easier than actually fulfilling it.
Roger Mader, former Global Chief Marketing Officer for Subway, and current Managing Partner at growth consultancy, Ampersand, spoke with us about this crucial element in a strong brand. He shares specific examples of how purpose is not just for philanthropic organizations, but why it is critical for corporate entities both internally and as a point of meaningful differentiation.
Topics covered in this podcast episode:
What is Purpose? — 2:40
Why it should matter to your company – 3:16
How Patagonia does it right – 4:35
Challenges for corporate entities – 10:07
How Subway re-defined and lived their Purpose – 13:14
Welcome to Expert Opinion, the BrandingBusiness forum where leaders share their views, insights, and experiences from the world of B2B branding, and now here’s your host.
Andrea Fabbri: Hello, everybody, and welcome to the Expert Opinion. I am Andrea Fabbri, managing director of BrandingBusiness here in New York City. Today, I have the pleasure of speaking with Roger Mader. Roger, who I’ve known for quite some time, serves as a managing partner for Ampersand, it’s a growth consultancy. Although he is also an educator with faculty positions at Rutgers and the School of Visual Arts in New York City, he has had an incredible professional experience with various positions at Accenture, SAP, and recently served at Subway, excuse me, as global chief marketing officer and was quite instrumental there for the company’s rethinking their strategy and how to use purpose to grow.
For many years, Roger has advised clients to focus on and declare a purpose to animate their business, to attract people, to galvanize them as well and also to attract and serve customers, and he’s with us today to discuss how organizations that declare and live by their purpose do better by doing good. As he told me the first time I met Roger, he works with business leaders to help big companies act small and small companies get and act big, and purpose is always a lot to do with it, so thanks for being with us Roger.
Roger Mader: It’s my pleasure, Andrea. Thank you so much for having me.
Andrea Fabbri: As I said, the topic today is purpose. I was struck by thinking of, as I was preparing for this podcast last night, by thinking how many companies that, even just the ones that I work with, are licking their wounds right now. They’re looking inwardly. They are rethinking about themselves and how to be relevant in the marketplace. They’re really looking for a way to reenergize and re-galvanize employees in spite of the fact that many of the businesses I deal with are furloughing people and so on, so it seems to me that purpose now more than ever is actually a very important hot topic, so I’m glad that I can discuss about purpose here and business purpose and the importance of it with you today and I’d like to start with the first probably fundamental question, and that is: What is purpose?
Roger Mader: A fair question. Let me say, to just define it clearly, it is the core reason is that the organization exists and it should be asked in a way that demonstrates a positive impact for the world. You should be able to answer the question why my enterprise matters to the world: If it were wiped off the face of the planet, would it matter only to your employees or to your immediate customers or would it actually have a negative implication?
That’s important because a couple of things. First, we’ve seen with this new generation of up-and-coming workers and now executives from the both millennial and now Gen Z generations, a growing angst around the purpose of their own work. They are no longer satisfied with something our forebears would have been happy with, which is earning a living simply to put food on the table. And owning an enterprise or owning just the career of an individual that has no merit other than financial return is necessary but insufficient, and we know this because there are so many companies that have done a great job, and some of the organizations that exist for a purpose in the world. In traditional sense, we see this in organizations like religious groups or philanthropies such as the Gates Foundation or UNICEF or the Red Cross, these are organizations that were established in order to make a difference in the world, to create some benefit to humankind. Corporate entities have that possibility as well.
Let me just give you a couple of examples. The traditional one that people are familiar with is Patagonia. Yvon Chouinard, who was the CEO there and founder in the ’60s and ’70s was a rock climber who started making his own equipment because he couldn’t find stuff that was purpose-built and good enough and sturdy enough, including clothing, and he started making sturdy canvas clothing based on some sporting gear he found in the UK. His friends all started buying it and pretty soon, he had an enterprise making sturdy outdoor clothing and equipment.
What he did, though, was pivot from just being a clothing manufacturer to trying to fulfill a personal obligation he felt for the planet because he was watching the degradation of the natural wilderness where he would hike and climb and surf as a real outdoorsman based on decades of returning to the same sort of remote locales and finding the waste product of human beings scarring the planet. So he decided that he’s not just in the business of creating outdoor gear, he’s in the business of sustaining the viability of the planet and mostly protecting it from what he saw as a flagrant liberal, kind of consumer irreverence for the planet around us, that we would buy clothes and cast them off and think nothing of the waste that we were causing. Instead, he decided that he was going to create clothing so sturdy and resilient that you would retain it for a lifetime or recycle it when you were ready to.
You may have seen, it became kind of famous. He had an advertisement in 2011, I believe, that became one of the top five advertisements in the in history where he took over a full-page ad in The New York Times and the top, above the fold, it was a picture of one of Patagonia’s down jackets and it said “Don’t buy this coat,” and when you flip to the bottom half of the page, it explained that what he was promoting, what Patagonia was promoting, was a renew, reuse, and recycle program in order to ensure that the clothing that they sold was resilient, not just for the customer, but for the planet.
This was a man who was living his personal mission through the business mission, described his purpose, and we’ve seen numerous other businesses who not only galvanize their people and attract employees because of a declared purpose, they also attract customers differentially because people understand I’m not just engaging in a transaction for a shirt here, I am helping to save the planet along with Patagonia, and you will find customers of their fan base who advocate for ecological initiatives just as Patagonia does. They also are engaged in activities that are obviously benefiting the communities in which they operate or in which their customers live, and this differentiates them substantially from their market peers.
Now, I don’t think Chouinard particularly cared. He’s not using it particularly as a branding practice, but it just turns out that he happens to care about and organizes his business around something that others care about, and so it created a natural attraction. So, the question for you as a brand strategist and for me as an innovation strategist, you are helping companies to position themselves differently, I’m helping them to create differential offerings, I think we’ll often come back to asking our clients: Why does the world need you? Why does your business matter? If their answer is something like the stock answer from the 1980s, which was “To create a higher return on investment for stockholder capital,” they are failing to differentiate. That is a transactional necessity, that you’re going to produce value, that you’re going to be worthy of capital, but that is completely unsatisfactory as an end in and of itself.
Andrea Fabbri: Yeah, no, I certainly agree with that statement. Let me ask you this, though: If you think about this concept that you’ve just defined and demonstrated, a very well-known example, and there are many others that one could mention, what are the barriers, though, that stand in a way for a company to adopt that kind of vision, that kind of meaning of purpose? Because this is not purpose the way it is commonly interpreted, as a lofty statement that stays on a poster in some sort of gallery hall or conference room, this is something that pervades the entire business, it works as a lens to drive people’s actions, and oftentimes, purpose and profit can even be seen almost in contrast. So, can you explain to me, what are the barriers that you typically see when you work with companies in identifying and then articulating purpose throughout the company? What are the barriers and how do companies typically overcome them?
Roger Mader: It’s a great question, because if you think about it, the example I just gave you is a founder-led business still in its first generation of founder management, if you will. And so it’s really after you pass into the second and third generation of professional management, you’re beyond the founders, you now have managers who are literally being paid by a board of directors, typically, at least in a public company, to be maximizing return on investments, and this sense of purpose becomes lost very quickly. So those CEOs, CEO is the example for the moment, but it’s not exclusively the job where you can find a place for every employee in the business, chief executive, what we would ask is simply find the purpose of their legacy. We would go back to the origin story of the company and find evidence of the things that either the company does that benefits the world or can do, and ideally you would show how that’s done in a way that’s different for them than it might be for their competitive set, so it’s a strategic differentiator.
But of course, the most important thing is that they actually care about this. This has to be authentic. To your point, if you’re just putting it on a poster as almost a positioning exercise, but not fulfilling it, the lie is revealed very quickly and you’ll actually be called out faster if you say you’re about protecting the planet and then you’re a fast food company and you’ve got plastic straws, you’ve always had plastic straws, you’ve never even thought about plastic straws, and all of a sudden, there’s a hue and cry, not just from sustainability experts, but from your customers in general and your competitors maybe beating you to the punch of swapping out plastic straws for paper straws. So you’ve made this claim, but you haven’t really positioned the business to live it, and if you cared, you would, it would be central to your business and you’d be leading the pack in not only swapping out, I know it’s a simple example, but swapping out plastic for paper straws, but then also laying claim to that change, making it a leadership action that transforms an industry that makes all of your competitors play catch-up.
Finding your origin story, determine where you can make a difference in the world that you care about, that your employees will care about, declare it, and then you have to build it into the fiber of the business. What are the mechanisms that will demonstrate that you are living that purpose, what are the sensors that you’ll have to ensure that you’re living and fulfilling that purpose, and then how will you promote that in an authentic way so you can lay claim to the efforts that you’re making and allow it to be a differentiator for you?
Andrea Fabbri: Yeah, I can see that, and from my own direct experience, I think actually one of the greatest barriers is normally change management.
Roger Mader: Yes. Totally.
Andrea Fabbri: When you require management first and then employees and various groups, regardless of their own personal beliefs, to suddenly embrace something different and you want to align the business around that new purpose, there is an incredible deal of change management and that, as you and I know very well, is very time-consuming, it’s lengthy, and it takes a long-term view, which often contrasts with the short-term need for quarterly results. I can see that being a moment of tension, which then leads me to another question that I have: How do you operationalize purpose? Is there some sort of methodology, if you will, a set of steps that in your experience companies should consider in order to build a purpose-driven culture first, which then obviously will result into a purpose-driven business?
Roger Mader: Yeah. Let me give you… It’s also a great question. As you say, the transformation of the many appendages of the organization is the hard part. Going and finding and declaring your purpose is a lot easier than actually fulfilling it. Let me give you a background story. You mentioned that I recently came from this assignment where I served as the global chief marketing officer for Subway, it’s the world’s largest restaurant franchise, which means it’s a very difficult place in order to institute anything, any kind of change because you have all these independent, local owner-operators, in Subway’s case, 40,000 of them around the world, and Subway has very liberal franchise relationships, so their franchisees may or may not adopt things as other edicts from an employer, and so they represent a very significant challenge.
Five, six years ago, I was called in as an outside consultant to help Subway to determine why they were no longer growing, particularly in the US, this was being offset by rapid growth outside the US, but their biggest market had gone flat. I don’t think it would be a surprise to you that if you walked into a Subway today versus 30 years ago, they’re facing a much more diverse competitive set, their food isn’t as interesting, their restaurants are older and not as well maintained, different reasons why they wouldn’t be considered the pinnacle of fresh and healthy the way that they had described it in the past.
When I met with the founder to ask Fred DeLuca about his customers, because this was before going out into the field to learn from customers directly what mattered to them, I was surprised when he said, “Oh, I don’t have customers. I have franchises and they have customers,” and that stopped me in my tracks for a second, but I thought, “Look, I’m talking to a self-made billionaire who started this company when he was 17 years old, so he probably merits a listen here.” But then I realized, “Fred, aren’t you collecting revenues from every franchisee in order to have one of the largest advertising budgets in the industry and you don’t know who the customer is that you’re talking to?” so that stopped him in his tracks and he said, “Well, yeah, maybe there’s something to learn here.” But his point was that he deployed his business through his franchisees, that’s who he cared about, that’s who he was serving, which was noble in a sense, because these were literally local owner-entrepreneurs who were really scraping by in many cases because Subway was the least expensive point of entry, often turning new immigrants into this business model.
When I dug into it later, I’ve come back now, I’ve been called back in, Fred has passed away prematurely from cancer, it was really a Steve Jobs moment for their business where the beloved CEO founder who grew this business passes away on short notice and people are grieving and the new interim CEO calls me back and says, “This thing that you told us to do five years ago, things that we need to change about our operations, about our services, et cetera, could you help us bring that about? Just come be the chief marketing officer and be on my executive team and help me do this,” so I spent the past year doing that and that was mostly around modernizing the marketing function.
But I realized that there wasn’t a galvanizing message for any of us around why it mattered that Subway succeeds. If Subway had disappeared off the planet, what I knew was Subway was populated with an incredible number of very passionate families, small families, business people who had put their life savings into opening these restaurants in order to do what Fred had done 50 years earlier, which was transform the future for their families by creating financial independence, and these were, there was a whole generation of Indian immigrants, for example, who were now jokingly by themselves referred to as the “Indian Mafia” within Subway because they were this generation of entrepreneurs who had now gone into the second generation of ownership, and some of them with many stores and were now self-made millionaires.
That’s why Fred cared about the franchisees. He was transforming their lives the same way his life had been transformed. At the age of 17, he couldn’t afford to go to college. He borrowed a thousand dollars from a family doctor who was a friend because he wanted to go to med school in emulation of Dr. Peter Buck. For that thousand dollars, Peter Buck today still owns 50% of Subway; probably the best singular investment I’ve ever seen. They created that business and Fred always went back and said, “This commercial machine, this very simple restaurant concept allowed me to transform the lives of my entire family and their future and I started franchising because I realized I could extend that American dream to more and more people,” and he really viewed it that way. He was creating financial independence for generations of people and thousands of families.
But he wasn’t thinking about the customer other than fresh and healthy. He wasn’t monitoring the marketplace. See, he didn’t see Chipotle as a competitor because he established the business to compete against McDonald’s and burgers and fried foods and so it wasn’t tracking what was going on around him and what happened then was he was losing the ability to perpetuate his mission of allowing financial freedom or the transformation of the American dream for more and more families.
When we went in and looked at the purpose, what we found was it wasn’t just transformative for their customers. We also found that because they were local business operators, they were transforming the communities that they were in. There was this great story about during the hurricanes in Puerto Rico, the Subway owners banded together and bought generators and Subway worked with them to basically take boats over with Honda generators, simple little generators that you might use for a roadside bodega, and put them in every Subway; so the Subways, this was mostly so that they could preserve their food, but they also became the only place for electricity in whole neighborhoods. It was one place with lights on it, and so it became the center of the town, it was where kids would go to do their homework.
Then they noticed that the workers in these Subways didn’t have a way to wash their clothes because they didn’t have any of the electricity in their homes, so they then put washers and dryers and all the Subways, and not only did their staff use them, the whole community came and used Subway as their local laundromat. This is the kind of thing that happens all the time. In the simplest ways, it’s the local sponsor for the kids’ soccer team and their jerseys are with Subway, that you see time and time again because these businesses are truly locally owned, locally operated by people who are in these communities. They’re really deeply engaged in a way that you might not be if you own 400 McDonald’s franchises across multiple states. These are really small business owners, so you can find the way that they were being transformative in their communities. You could see how they’re being transformative for these entrepreneurs, for the owners, if you will.
What we were failing at was being transformative for customers, so most of my work became focused on how do we create the fresh, healthy, alternative foods that we’ve always promised to our customers and bring that back to life. So, we came up with a purpose that was about creating better choices for families, meaning better, healthier food choices; better opportunities for our people, this is about better financial opportunities for franchisees in order to liberate their families; and better lives in our communities. So, you need to find the stories that already made this true, that were already being celebrated within Subway, but not actually communicated externally. I mean, the world didn’t know this about Subway. They might know what about their local Subway, but they really didn’t see what a dramatic impact it has and it is everywhere.
Andrea Fabbri: Yeah. Yeah, it’s an incredible story and I think it highlights the interesting truth here, and that is it really is about heart. It’s about humanity when it boils down to it. I wonder how this notion of purpose will function in the coming years as people lose their jobs, as people lose their ability to, to use your language, put food on the table. I think there is an opportunity to really use purpose as a way of embedding businesses, not just as cold machines in the society, but as more living, meaningful, relevant entities that can add value, not just monetary value, but history will tell and the future ahead of us in the coming years, for sure, we will see all of that.
Well, we are at the end of our time here, and I wanted to thank you, Roger, for sharing your insights and for sharing this-
Roger Mader: A pleasure, Andrea. Thank you.
Andrea Fabbri: … really nice story about Subway, but also some of the key core concepts that you have just touched on and highlighted for our listeners, so I want to thank you for your time, and thanks again for participating and I’ll talk to you soon. Thanks, Roger.
Roger Mader: An honor and a pleasure. Thank you, Andrea.