Using purpose to pivot in a time of change
For years, we’ve seen how the application of modern technology and automation can kill a traditional business model overnight. With low overheads and minimal physical assets to manage, combined with deep customer insight and personalisation, these businesses have been successful in disrupting the status quo so much so that our own behaviours and habits now look starkly different to how they looked just ten years ago.
We know all the classic examples: the taxi industry thwarted by the arrival of Uber and its ride sharing contemporaries, network television and movie theatres out-smarted by Netflix and video streaming services, bricks and mortar retail decimated by Amazon and online shopping, and of course, the hotel industry usurped by Airbnb and the business model of home sharing.
So what would happen when the largest pandemic in modern times swept through the globe in a matter of weeks? How would the disruptors in the hardest hit industries manage being disrupted themselves?
When a Masters of Scale podcast interview of Brian Chesky, CEO and Co-Founder of Airbnb popped up in our feeds, the Werkling community became immediately curious. This is a brief summary of the conversation.
In the podcast episode, Chesky described how the pandemic had completely flipped their growth plans upside down. He described the need to get back to ‘scrappy’, the attitude that had seen the founding team manage ups and downs in the early days of the company. But most insightfully, Chesky shared how this crisis forced him to centre himself and the company back onto its core purpose: to connect people.
“When we started Airbnb it was about connecting with people. That was the roots of Airbnb and that's what we're meant to do. And if it took a crisis for us to get back to basics, back to our roots, then a new, better Airbnb will emerge and we'll be back and this mission is going to live on.” - Brian Chesky, CEO and Co-Founder, Airbnb
Purpose is, at its simplest, the reason why something exists. An authentic purpose grounds an organisation and provides an emotional anchor for employees and customers alike. A purpose shapes the decisions and experiences that influence the culture and brand of a business, and provides both constraints and opportunities for growth, strategy, and innovation.
Overall, our review of Airbnb’s approach to this challenge was positive; we saw how purpose shaped their company’s difficult decisions and respected Chesky’s admission that perhaps Airbnb had begun moving in directions that were not fully aligned to their core mission.
Airbnb and Brian Chesky’s leadership through this pandemic have, mostly, been a masterclass in purpose-led decision making. Recently, Airbnb announced that 25% of their workforce would be leaving due to the severe impacts of the pandemic on their business model. In this announcement, Chesky demonstrated empathy and care for the whole team, and explained clearly the actions that the business would take to back up that care with meaningful support. He explained that the business would need to pivot, aligned with purpose, to ensure its survival into the future.
We discussed the notion of founder-led companies versus legacy organisations led by management teams, and the extent to which purpose is as deeply held in both. It was apparent through our shared experiences that leaders need to connect to their own purpose in order to define and connect to organisational purpose.
It was also shared that those leaders working in frontline, customer facing roles, often feel a deep connection to purpose through experiencing meaning in their work. Often, leaders in corporate roles struggle to connect to purpose through sheer separation from the customer; and that it would serve organisations well to ensure that employees at all levels and in all functions have an opportunity to remain connected to everyday interactions with customers.
We also discussed the extent to which companies have taken purpose-led pivots during this crisis versus more cynical cash grabs. It appeared that companies who have demonstrated consistency of purpose over time and who have built trust with customers have been able to more effectively pivot to less obvious product or service offerings. Such trust does not exist for all companies, and therefore leaders in organisations that struggle reputationally would be wise to make very careful moves with relation to product pivots; they risk being seen as preying on vulnerability.
Our conversation concluded with the reflection that an enduring organisational purpose will be an enabler for businesses to pivot during social and economic upheaval. For this to be true, purpose must be owned by the Board and CEO, and believed in by the workforce.
To what extent has your organisation re-committed to its purpose during this time, and what has that resulted in for your business model?