In recent years, “Purpose” has been attracting attention mainly in the advertising world and is becoming a movement. Although it is the essence of corporate management, “why do we exist?” there are few companies that cannot fully understand its original meaning and give an answer as to how to utilize it.
Mikiko Saito, CEO of SMO Inc., who has been working on “Purpose” in Japan from early on, explains Purpose Branding as the following; “Rather than solving problems by individual events, we find the basis of a company or organization; Purpose (reason for existence), and ultimately make decisions and take actions on their own to solve problems.” This column is based on Saito’s book “Purpose Branding” (Senden Kaigi Publishing), which was released on July 9th 2021 and it will unravel “Purpose”.
I read an article that the number of middle-aged and older men addicted to Korean dramas with their families is increasing because of the pandemic. I am also one of those people that have been recently addicted to Korean dramas.
Originally, I loved American movies and dramas (I still like them), so people around me said “I don’t think you will definitely fit in watching Korean Dramas.” and felt distant. Looking for the reason why I became obsessed, I found that the modern business scene is condensed in the first Korean drama I watched, “Itaewon Class,”, and the case study we were working on about “Purpose Branding”.
In “Itaewon Class”, the main character Park Sae Ro Yim, played by Park Seo-Joon, has a strong sense of justice, and because of that, he has a feud with Korea’s largest restaurant company, Jangga, and grows as a person after a series of reckless battles.
From a business point of view, it is a battle between “economically prioritized Jangga” and “ideal management ic(an acronym for Itaewon class)
Originally, Jangga was a company that started with the philosophy of “filling hungry stomachs with delicious food anywhere, any time,” and led the industry with its high-quality stores and products. However, when they start to prioritize shareholders and numbers in sales due to faction conflicts and business negotiations, the means and purposes are switched and the corporate base is shaken.
Park Sae Ro Yim‘s ic (which is an acronym for Itaewon class) also starts from a small Korean Style pub, just like when Jangga started. Along with a culture that values stakeholders and team members, they continued their management philosophy, and though many complications, grew rapidly within the industry.
Park Sae Ro Yim does not think that only his own store should grow but hopes to revitalize the local community, and by improving the area with those who do business there would lead to the success of everyone. . Based on that idea, he offered consulting and support free of charge to his neighboring stores. The importance of this local community really reflects the background of the times in recent years.
As a major event in this trend, the 2019 American Business Roundtable (a figure like Keidanren in Japan) announced a new policy on “the purpose of a corporation” and revised the thought of “shareholder supremacy” that’s been emphasized for more than 20 years, and instead switch to “focusing on all stakeholders such as customers, employees, suppliers, local communities, and shareholders” in the future. In other words, they will shift to a “policy that emphasizes people and society.”
In the end, there was a scene where one of the shareholders who has supported Jangga since its founding asked the CEO of Jangga, “Why do you do this business?”, similar to asking the concept of “Purpose” (reason for existence). The CEO replies after sharing the information on prioritizing the economy, “If you do so, it will be a profit-only relationship, and if it fails, it will be until then.”
Larry Fink, CEO of BlackRock, the world’s largest asset management company, sends a letter to the CEO of the investee every year, but from 2018, he stated that “Without ‘Purpose’, companies cannot grow in the long term,” and over the next three years, he repeatedly communicated the importance of “Purpose”.
In 2021, he set the main themes as “Efforts for Net Zero (Eliminating Greenhouse Gas Emissions)” and “Importance of Data Disclosure”, and in order to achieve them, he emphasized the importance of a deeper connection with his stakeholders and ‘Purpose’, and enclosed with the following sentence: “The more a company emphasizes their ‘Purpose’, the more competitive it will be and the more it will be able to provide its shareholders with long-term and sustainable benefits.”
Business can be good or bad. Without Purpose, which is the answer to the question “Why does it exist”, it will be swayed by numbers, and long-term, sustainable growth will be difficult. Of course, numbers are important, but if we manage with a consistent purpose, we believe that the results will follow.
There is a scene where Park Sae Ro Yim gives a speech to shareholders. Here he says, “There is business (working) for our freedom.”
I’m not sure if this was intended, but it’s similar to the speech given by Facebook’s Mark Zuckerberg to the graduates of 2017 at Harvard University. Zuckerberg said, “Purpose is the norm, and … Purpose is the feeling that you want to be involved in something bigger than you, being needed, and work for a better future. It creates true happiness. “
For millennials and Gen Z, who will lead the future, not only is economic prosperity important, but also a sense of fulfillment that contributes to the world for a better future.
The growth of ic is exactly the same way of management and branding centered on “Purpose”, and it can be said that it matches the modern sense. The rival, Jangga, which originally had “Purpose”, had forgotten it over time. In fact, many companies seem to be struggling in a similar way, especially in recent years.
Most companies would have had a concept of a will when they were founded, even if they didn’t know the word “Purpose”. “Purpose” is not something that you make, but something that you find. Finding “Purpose” within ourselves, making decisions based on it, and taking action will surely lead to the creation of a strong brand.