What if you sell products that are legal, but cause harm?

 In Corporate Social Responsibility, Creating Shared Value, Designing Solutions, Leadership, Purpose-led Business

As a purpose-driven or purpose-curious leader, what would you do if your business sold a product line, such as tobacco, that is legal but proven to cause harm?

Let’s say you’re a supermarket executive and your stores sell cigarettes. It’s a small part of your overall turnover, so do you stand by your product choice because it is legal? Do you rationalise it’s presence because of its relatively low contribution to sales? Or do you agitate for change?

If you’re highly principled, maybe you’d never work for a company that sold these products in the first place?

On the other hand, if you have a young family, huge mortgage and opportunity for career advancement, it may be a choice you’re willing to make?

These choices are seldom black and white, they contain shades of grey, and they provide opportunities for purpose-driven leaders to thrive.

What lines of thinking can you apply?

 

When CVS ditched cigarettes

Ten years ago, CVS Health took a bold decision to eliminate tobacco products from it’s 2,800 stores, foregoing $2 billion of sales in the process.

Market analysts saw it as a folly that would only hurt them financially and achieve little else.

On the contrary, as Simon Sinek noted on the fifth anniversary of their decision, it turned into a social and financial win-win.

Tobacco sales declined across the country while nicotine patch sales went up, suggesting their actions helped encourage smokers to quit.

Three years after CVS’s watershed action, the American Journal of Public Health found that household- and population-level cigarette purchasing declined significantly.

On the financial front, their stock price fell one percent on the day after the announcement, recovered all of that loss the following day and was approximately 70 per cent higher a year and a half later.

If a product directly damages people or the planet, purpose-driven leaders focus on the alignment between the products in question and the purpose of their business, which is helping people live healthier lives in CVS’s case.

 

Taking a longer view

The decision to remove $2 billion of sales involved a good deal of short-term (financial) pain for CVS and I’m sure a lot of analysis and emotion fed into that decision.

If you accept that companies are only viable if they solve genuine problems for customers and society, then causing a material level of ‘damage’ undermines your viability, especially given that how we live, work and do business is changing due to the tensions that exist between profits, people and the planet.

The old model of making as much money as possible and then giving a bit back is past its use-by date; the new model that leading companies like CVS have embraced is to focus on delivering positive societal impacts in line with their purpose and, if they do that well, they know the financial returns will follow.

They still have to be good business operators to thrive in their market, and they do this by developing the mindsets and skills needed to deliver the non-financial value that fuels strong returns over the medium- to long-term.

Purpose-driven leaders have a willingness to see through short term pain and seek longer-term wins for their investors, their people, their customers and the communities they touch.

 

Impact is your guide

If you were the ‘hypothetical’ supermarket executive mentioned earlier with tobacco products in your store, the best course of action is to consider the impacts.

While those products might only account for a small percentage of sales, their impacts may be significant on the lives of customers.

Tobacco products impose tremendous financial costs on our public budgets and health systems, not to mention the household and family impacts of lung disease and terminal illness.

You need to assess your level of comfort with these impacts and how they align (or not) with your company’s purpose, which raises another set of questions:

  • Does your leadership group have a uniform understanding of purpose-driven approaches?
  • Is your business purpose statement meaningful and well crafted?
  • Is it taken seriously?
  • Is it embedded in everything you do?
  • Do your people feel a genuine connection between their everyday work and that purpose?

If you can answer ‘yes’ to all of these questions, you’d easily be in the top 10 percent of businesses … and therefore please contact me because I want to case study you!

 

Purpose-driven opportunity

Accenture’s Future of Work 2022 survey found that 52 percent of CEOs see purpose more as a talent branding tool than a real catalyst for change – a cynical approach that neglects a huge performance uplift opportunity.

They also found that only 30 percent of employees see a link between their work and their company’s broader purpose, which means the other 70 percent have a more transactional and less engaged relationship with their employer!

In my experience, many companies have good purpose statements but only a few manage to instil it in their people, strategy and operations.

Even fewer again can tell you what KPIs or metrics will demonstrate delivery of their purpose and how it fuels financial returns.

That is the opportunity that purpose-driven leaders are curious about and want to pursue.

 

Courage to lead

The strategy pursued by CVS was brave but not reckless because it aligns perfectly with their purpose of helping people on their path to better health.

It makes moral and business sense.

Furthermore, it takes courage to shift mindsets, break away from traditional ways of working and challenge market expectations.

As with any significant change or transformation program, leadership is paramount.

Purpose-driven leaders must paint a compelling vision of the future and inspire their people to willingly join them and support each other on that journey.

In my recent newsletter Insights From Three Purpose-Driven Leaders, one of the leaders highlighted how, as the head of sustainability, he isn’t just passionate about social and environmental issues and causes, he sees the crux of his role as being able to “turn the corporate machinery in the right direction“.

He has executive support in engaging with senior and other functional leaders across the group to co-create the purpose they aspire to, to set priorities based upon it and then translate it into strategic and operational actions.

This takes courage at the individual and executive level.

Purpose-driven leaders are able to move forward and find the right balance between commercial objectives and societal impacts.

 

Vapes

I was inspired to revisit CVS’s story when my Purpose Ignition business partner, Carolyn Butler-Madden brought attention to a similar issue playing out in Australia.

Blooms The Chemist took a stance on the recent legislative changes regarding the sale of vapes in pharmacies.

Their CEO, Emmanuel Vavoulas wrote to all Blooms store owners noting that vapes are potentially harmful products that do not have Therapeutic Goods Administration approval for sale, and this goes against their purpose of access to health and wellbeing.

While he conceded the decision is 100 percent in the hands of individual stores, he asked them to reflect on the brand’s purpose and made his preference known.

You can find out more about this story in Carolyn’s excellent LinkedIn post.

 

Your purpose-driven leadership skills?

Like CVS and Blooms, you may have your own difficult decisions to make either now or sometime in the future?

In considering the plight of our hypothetical supermarket executive and tobacco products, what did you find challenging or insightful about a purpose-driven leadership response?

I invite you to leave a comment and I’d love it if you could recommend this article (LinkedIn version) to others in your network who you think would get value from it.

 

Phil Preston

Phil Preston is an expert in purpose-driven leadership and business. He is a strategist, speaker, author and facilitator who can be contacted via LinkedIn message or hello@philpreston.com.au

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