Why purpose transformation matters as much as digital transformation - CEO learnings from Unilever and Salesforce

Profile picture for user slauchlan By Stuart Lauchlan January 9, 2020
Summary:
Salesforce has been a prime mover in corporate activism in the Fourth Industrial Revolution, but the importance of purpose can be seen at Unilever at the tail-end of the first.

Salesforce
Marc Benioff and Alan Jope

We picked values that eventually aligned with the future.

A simple, but telling observation from Salesforce co-CEO Marc Benioff at the Consumer Electronics Show (CES) in Las Vegas this week as he described the founding principles of the CRM firm back in 1999.

Benioff is a big fan of CES - his first visit was when he was 16 - from which he comes away with insights into tech innovations that end up running through Salesforce’s strategic presentations for the rest of the year. A few years back, it was the Smart Toothbrush that was a recurring theme; this year I suspect we might be hearing more about Audi’s connected cars, but that’s for another day.

But away from touring the show floor, Benioff took part in a discussion built around another regular theme, that of business being the greatest platform for change. While this particular debate covered some familiar topics, an angle that caught my attention was the idea of digital transformation as change enabler of purpose transformation.

Quizzed on Salesforce’s  now-regular status as one of the best companies to work at, Benioff observed that this was not always the case and when he’d asked pollsters why other firms did better in such rankings, the answer was less than high-minded:

They said, ‘Those companies provide free food and kitchens and 5 star chefs and you just don’t do that, you’re just not into that. You’re just into this whole volunteerism thing. You have this narrative of trust as your highest priority. And that’s great, but really if you could have a kitchen and restaurant then you could really get in there.' The world changed. I don’t know exactly when it changed. All of a sudden we started moving up those lists.

That rise up the rankings was down to the creation of a different sort of culture within Salesforce, he contended:

It’s the power of ‘and’. You don’t to have to make a decision that you’re going to be philanthropic or business-oriented. That’s a false choice. Businesses can be a platform for change. Business can be the greatest platform for change. You can orient your values in such a way that you can transform as your company scales. Companies today have an obligation to take care of the communities that they are in.

Critics and conflicts 

That mindset has grown from the early days of Salesforce, when the company’s famous 1/1/1 philanthropy model was hardwired into the corporate DNA, through to today when the company takes activist positions on everything from supporting public schools through to tackling the homeless crisis in San Francisco, the latter leading to Benioff running into opposition from peers in Silicon Valley and clashes with local politicians.

Then again, any form of corporate activism opens up a company and its leadership team to criticism, as was seen at the recent Dreamforce conference where protestors disrupted the keynote to accuse the firm of hypocrisy over a contract with US Customs and Border Protection, or the celebrated face-off with then Governor Mike Pence over LGBTQ rights in Indiana.

But it’s the duty of companies and of their CEOs to take a stand, insisted Benioff, even when it becomes a talking point at the annual shareholder meeting where, he observed, there will always be one person who’ll ask what right he thinks he has to oppose a law that’s been put in place. Benioff is unabashed in his conviction that as a CEO he has a duty to employees and customers and all stakeholders:

As the biggest tech company in San Francisco, we have to look back and say, ‘Yes, this is our responsibility. We have a responsibility to all of our stakeholders, not just our shareholders’. Our shareholders have done fine….Shareholder return, we have that; but we also have a stakeholder return. When I think about things like the NGOs and non-profits that we’re running, the kids in public schools, those have to be measured as the stakeholder return. The planet is a stakeholder. We are a net-zero company. We have to take care of the planet. The planet is on fire. We have to become carbon-neutral. We have to pay attention not just to emissions coming from a company, but also innovative ways to sequester carbon that has been emitted since the first Industrial Revolution. All stakeholders have to matter to us.

Setting an example 

While Salesforce has been a prime mover in the rise of the ‘Citizen CEO’ in recent years, a lot of what Benioff articulates for the age of the Fourth Industrial Revolution and beyond can be seen in the founding days of Unilever at the end of the first Industrial Revolution. Back in 1860, founder Viscount Leverhulme had his own ‘compassionate capitalism’ philosophy, noted today’s Unilever CEO Alan Jope.

The initial mission statement might raise a few ‘woke’ hackles today - “To make cleanliness commonplace and lessen the load for women” - but Leverhulme was a leader who put his beliefs into action:

When his workers were trying to find housing, he built them a model village. When WW1 broke out and his workers went off to fight, not only did he hold their jobs open for them, he paid their wages to their families through the whole time they were off fighting. So we have over 100 years of DNA that encourages us to do the right thing for multiple stakeholders, for the planet, for society. If there is one reason for the enduring success of Unilever, it’s the trust that we’ve built up with multiple stakeholders by having a [business] model that shows that we care about things that are more than just profit.

Unilever uses Salesforce tech for almost every element of its customer platform and the decision to select the CRM firm was taken in the first instance based upon technology assessment.  But since the two have worked together, shared values have been uncovered and the nature of the relationship between the firms has evolved. Jope cited the problem of food waste - food that’s produced, but never bought or consumed - as an exemplar:

If food waste was a country, it would have the CO2 emissions of the third biggest country in the world, after the US and China. We, as a food business, take that seriously. We were trying to figure out, how do we connect wasted food with the fantastic food banks that exist around the world? Marc and his team stepped up and said, ‘We can help with that’. They threw resource at it. There was no commercial case for either of us. It’s turned into a very successful project and we’re helping solve a little bit of food waste. So, originally we started working with Salesforce as a great tech company, but the depth of the relationship has become more based on values.

One challenge that both firms have had in common is that of equality and representation of diverse groups across their organizations. Salesforce famously embarked on a commitment to pay men and women equal pay for equal work, a work-in-progress that continues every time the company makes an acquisition - “You also buy the pay scales”. Jope admitted to an interesting spin on the pay challenge at Unilever:

I happen to know from the data that in the UK, we have a gender pay gap where women earn 3% more, so we’ve got tackle that one right away!

There’s been a lot of work put in to get to the current position where Unilever can boast of being “exactly gender-balanced” with 50% of management around the world is male, 50% female. But there’s still a lot of work to do to be a truly representative organization, added Jope:

We continue of course to have areas [of the business] where we need to work on better representation in senior roles. The next area we’re looking at is people with disabilities. We’ve said we want to become the number one employer of choice for people with disabilities and we want 5% of our workforce to be self-declared as having a disability. The biggest two drivers for bringing in people with disabilities are going to be a culture of feeling included and inclusion in the form of technology.

When you talk about accessibility for people with disabilities, it’s not about wheelchair ramps and lifts with low-down buttons, it’s about technology that allows people who are visually-impaired or hearing-impaired or who have dextrous issues to have full access. Technology is going play a huge role.

We’ve brought in 52 people in our Egyptian business who are visually-impaired into the telesales department. It turns out that they dramatically outperform their able-bodied counterparts. If you’re blind, I guess you become a good listener and highly empathetic to your customers. Once again, like all valuable initiatives around purpose and sustainability, this is enlightened self-interest, because it is sustainable and good for our business.

That last point plays back to Benioff’s comments about the interests of both shareholders and stakeholders. Jope recalled:

One of the misconceptions I had coming in as a rookie CEO was that shareholders, the City of London, Wall Street would just be saying show me the next quarter. And of course they want to see that. But each and every one of our quality investors has said, 'Take the long term view. Run the business for long term success'.

You will become irrelevant as a company unless you conduct yourselves properly. It’s that simple.  People will vote with their dollars. As we look at tech firms we want to work with, we look at three levels of responsibility. We look at responsible platforms, responsible content and responsible infrastructure. If we see a company that doesn’t seem to give a damn about the content on their platform, that doesn’t seem to police the content and isn’t worried about view-ability, verification, measurability and impact, we’ll move our dollars somewhere else.

And if that’s not enough to convince skeptics of the importance of purpose transformation, Jope had a blunt conclusion to come to:

Behaving in a responsible fashion is a matter of business survival.

My take

Benioff made the point that as a CEO, as in life as a human being, there will be choices that have to be made. He said that when he’s mentoring younger CEOs and entrepreneurs, his first question to them is the same:

You need to ask yourself - what is your highest value? What is the most important thing to you?

There will be those who will cynically roll their eyes at that. The unedifying spectacle last year of a number of high-profile tech billionaires in San Francisco getting into a panic at the thought of having to pay a bit more tax to help alleviate homelessness shows that there’s a long way to go in this debate.

But the history of Unilever - and its successes around diversity and equality - is a timely reminder that this is not just the ‘woke’ posturing that some cheap shots attest. Within the context of the times, the founding management there had the idea of business as a change enabler for societal good from the company’s earliest days.

At diginomica, we’ve devoted a lot of effort to coverage of equality, diversity and values-based issues. That’s not about to change in 2020. This CES discussion was a welcome and thought-provoking start to the year.