Paul Polman led Unilever for a decade and now runs Imagine, which convenes chief executives sector by sector. His starting position is that arguing about whether purpose matters is the wrong argument, because no company sets out to cause the harm. Nobody, he says, wants more slave labor, child labor or air pollution in their premise. It happens because the systems were designed when resources looked abundant.
His image for what purpose is deflates the way the subject is usually discussed. White blood cells are needed to live, he says, but nobody lives for their white blood cells, and he borrows Colin Mayer’s definition instead: purpose is to profitably solve the problems of people and planet.
Key findings
- Polman refuses the caricature of the economist usually blamed for shareholder primacy. If Milton Friedman were born now, he says, Friedman would be one of the biggest supporters of ESG, because it is one of the best business opportunities available. What changed, in his account, was that too much money was pumped into the global economy and the banking world was given too much freedom.
- The sequence he describes at Unilever puts people before strategy. The company had shrunk from 55 billion to about 38 billion euros in turnover and was, in his phrase, shrinking to glory, so it hired from outside for the first time. He then spent a disproportionate amount of time in the first years on leadership development.
- Built with Bill George, the program ran over three years with a different task in each: the top 100 finding their own purpose, then using that purpose to influence others, then getting results. It was rolled out progressively through the organization.
- The outcome he treats as the strongest evidence is not financial. Employee engagement moved from the middle of a pack of 8,000 companies to the top tercile. Two million people started applying to Unilever, which became the employer brand in most of the markets it operated in.
- The portfolio split matters to his argument. The brands that had internalized the stronger purpose, about half the business, grew 50 or 60 percent faster than the rest, and they were also more profitable. That created what he calls a race to the top inside the company.
- He is unsentimental about his own record, and the regret runs in the opposite direction from the one people expect. In hindsight he wishes they had been more aggressive and done many more things, and he says he made more mistakes in his ten years than things he would celebrate.
The basics you do not get to skip
Polman calls strategy the easy part, and when Marc de Swaan Arons pushes back he lists what a brand manager owes anyway. Hold a quality against the competition, hold a price for that quality, get the brand in the right place at the right time, and make the value chain work. No word laid on top of that changes it, and many companies forget it.
So Unilever’s first move was a compass, worked on by many people, fixing those basics as things it would not compromise. Purpose sat on top of them, not instead of them, because a purpose alone does not pay you money if you cannot execute it. His warning is blunt: using the word sustainability and thinking you have a strategy is nonsense.
Four sectors, twelve trillion, and the reason to translate the goals
The published goals are not usable by a business. Polman commissioned a task force under Mark Malloch Brown to put them into business language, since 17 goals and 169 targets is confusing. In four areas alone, food and land use, mobility, cities and energy transition, it found a 12 trillion dollar opportunity to 2030 and 380 million jobs.
He sets that against the arithmetic of not acting. The world is about to spend 10 to 15 trillion dollars addressing problems that implementing the goals would have avoided, and implementing them costs two to three trillion. His practical sequence for a company is short: understand the goals, internalize them in the strategy, then take responsibility for the whole value chain.
The third step is where most companies stop. Too many still treat their responsibility as limited to their direct impact, which is essentially what CSR is, when a company in the world has to answer for its impact on the world. For Unilever that meant deforestation, food loss, obesity, stunting and the smallholder farmer who still cannot make a living.
What the CMO is actually the steward of
Polman’s account of the marketing leader is custodial. CMOs are stewards of brands, stewards of corporate cultures and stewards of history, and he objects to the accounting word used for what they hold. It is not intangible, he says, nor is it simply goodwill: it is the essence of an organization, its heart and soul, and as much culture as the brand values.
Against that he sets the department’s own appetite for novelty, the urge to show your mother that a new promotion or a new advertisement is out there. The brands that do well are the ones consistently connecting to people. The failure mode is companies talking to each other in offices, having smart people decide what consumers want, then spending heavily to force the purchase.
What replaced that at Unilever was physical and repeated. On every country visit, which Polman tried to make continuously, the day started with home visits and retail visits, and it set an example that became the norm. Bit by bit the brands brought back what they were created for, and it is the marketers who then have to pick that up.
The answer to nobody gives me the space
Asked how a leader creates the space to act, Polman rejects the premise outright. He says he never once felt in his career that he did not have the space, and he turns the question on the audience. The marketers listening are educated, more financially independent than most, made it past the age of five without stunting, and got free education from their governments.
Do not tell him they have limitations. They belong to the five percent of the world population that won the lottery ticket of life, and the conversation is about serving the other 95. If a boss or a chief executive genuinely will not have it, leave: companies that do not get it go out of business, and life is too short.
Rosa Parks was not given space on the bus and found it anyway, changing the face of racial segregation in the United States. Martin Luther King caught no space in society and Nelson Mandela was locked up, and none of them complained that a system would not let them. Gandhi, he points out, had the British as a boss.
He also refuses the word courageous for his own record. People told him stopping quarterly reporting was courageous; he says it was not, and that nothing is courageous with a company the size of Unilever behind you. He calls himself someone hiding behind a big company run well by very good people. The word itself, he notes, comes from the French for heart.
Why one company cannot get there alone
Polman puts numbers on the ceilings. A company acting alone reaches only 30 to 40 percent of what the world’s citizens expect of it. Taking responsibility for its own value chain, as Unilever did, might get it to 50 or 55, and beyond that the obstacles stop being operational and turn competitive.
He names them as they actually appear: if Adidas has an idea, why should Nike join, and if Procter does something, why should Unilever be part of it. So Imagine works sector by sector across the whole value chain and brings the decision makers themselves into the room. With 25 to 30 percent of a value chain present, he says, you can drive tipping points.
The effect he describes is social rather than logical. Other companies want to join because they do not want to miss the boat, NGOs stop treating the group as an enemy and start seeing a force for good, and governments begin to listen.
Agriculture, and the two weeks in Kenya
Imagine brought together 27 chief executives from the food industry around one reframing. Agriculture is now 20 percent of the climate change problem and could be 30 percent of the solution, and a profitable market too if carbon credits can be sold. No company can move to regenerative agriculture alone, so they agreed to do it together and to improve smallholder farmers’ lives.
Then the pandemic interrupted the food chain, with Africa the biggest victim on top of locusts, climate change and no money. The group turned to the food system in Kenya. The obstacles each executive named were different and real: one could not fight the bureaucracy in every country, another could do its own piece but needed the rest of the value chain to do theirs.
Because the whole value chain was in the room, and NGOs such as AGRA and government institutions were part of it, the group could get President Kenyatta and the minister of agriculture on the line. In two weeks, Polman says, they did more than in the previous 12 months. He insists Imagine belongs to nobody and is a movement.
Governments do not wake up with the idea
Policy does not move because politicians think about it in a vacuum or wake up one morning with a bright idea. It moves, Polman says, when groups of people get together at critical mass and give politicians the confidence to make the change. He gives two live examples from the recovery packages then being written.
Ninety companies in Germany told their government that rescue packages had to be conditional on moving to a greener society. Three hundred US companies, organized through Ceres, told Congress and the Senate they needed green recovery packages, and the European Green Deal got the same treatment. His challenge is to find two or three areas where collective strength counts, and he names climate change and inequality.
Do not rebuild what you had
Polman reads the crisis as an argument that nature, health, climate change and the economy are one closely linked system. It also showed a social contract that fails the people the economy needs most. Science counts too: the countries that took the health science did better than those denying it, and the virus proved that people are first of all citizens of planet earth.
His warning is drawn from the last recovery. The social cohesion issues left unaddressed after the financial crisis, and in his view made worse, produced populism and nationalism at the polls. So he asks marketers not to make the same mistake twice by reaching for the easy shovel ready projects and assuming that where they came from was better than where they are now.
The case he makes for the alternative is economic rather than moral. Retrofitting buildings and moving to wind and solar create more jobs, better jobs and more secure jobs, because they are the jobs of the future. In most cases they also cost less than the investments some governments still favor. Marketing’s role is to change the global narrative, because the narrative drives the behavior.
Marketers were ahead once, and are now behind
Polman’s charge against the profession is not that it lacks influence but that it stopped using it. CMOs were once able to move consumers toward behavior that resulted in a better society, then became complacent and missed the responsibility of continuing to be ahead. Marketers surprised by what is happening now, he says, are marketers who have lost the plot.
The public moved first. Consumers are ahead of most companies on plastics in the ocean, and ahead of them on climate change. Ninety percent of consumers in Britain now say they do not want to go back to where they came from, and want the cleaner air and the more inclusive society.
His example of the discipline correcting itself is Unilever’s own advertising. It was as guilty as anybody of showing the man on the couch, feet on the table, waiting for a woman to serve the tea. He argues the job is now different rather than easier: five years of data, ESG funds performing well, governments moving that way, a younger workforce already purpose driven.
Defining moments, and what he expects to be remembered for
Asked how he arrived at his own conviction, Polman refuses the premise: do not mimic anybody, because everyone is unique. What he offers instead is a list of crucibles rather than a method. Second generation unemployment in Newcastle after the steel, the coal and the shipbuilding went; being inside the Taj Mahal when it was attacked by terrorists; climbing Kilimanjaro with eight blind people.
The instruction is to use those defining moments to think about what is important in life. He accepts that a level of material security is needed to provide for a family, but says it should not drive anyone, and that study after study shows it does not motivate. The formula he wants dropped is the idea that self-worth is measured by net worth.
He is explicit about which part of his record he expects to survive and which part will not. He says he will never be remembered for a 300 percent shareholder return, or for profitability or growth, because people forget that. What lasts is having touched over a billion more lives, and having shown that multi stakeholder, longer term business models beat the narrow shareholder focus.
Scope and limitations
This is a retrospective by the chief executive who led the program, recorded in 2020, and the figures he gives for engagement, brand growth and market opportunity are his own recollection rather than presented research. He says himself that some of Unilever’s objectives were achieved, some were not and some had to be adjusted, and that the results depended on the quality of the people. Parts of the conversation are political commentary on named heads of government, which is his own view and is not covered here.
Source
This page summarises HGS #20: Paul Polman (Co-founder, Imagine) about how business can thrive today and win in the future, by Marc de Swaan Arons, 2020-10-06.