The new business agenda is multi-dimensional – Profit, Planet and People – and coalesces around a relevant Purpose.
By now most, if not all, responsible businesses have realised that the pursuit of profits as their only focus is no longer acceptable and is a sure recipe for the alienation of investors, customers, and talent. There is acknowledgment that, in addition to delivering financial returns, heed must be paid to environmental and community obligations. The new business agenda is multi-dimensional – Profit, Planet and People – and coalesces around a relevant Purpose.
There is a growing belief that the successful business of the future (and, in fact, the present) is the one that has a purpose at its core. It is the ‘purpose’, closely aligned with one or other of the sustainability components, that will give the organisation its identity and which will serve to attract responsible investors, talented staff and loyal customers.
Giving credence to the value of this multi-faceted agenda is Rosabeth Moss Kanter, who wrote in the Harvard Business Review of November 2011, ‘Great companies work to make money of course, but in their choices of how they do so, they think about building enduring institutions. They invest in the future while being aware of the need to build people and society.’
What, then, is this thing called ‘Purpose’?
One of the strongest proponents of purpose-based businesses is Simon Sinek who speaks and writes about the importance of knowing one’s ‘Why’. This, he defines as, ‘our reason for existence, the reason that we get out of bed in the morning, and why anyone cares’.
Jim Stengel refers to purpose as an ‘Ideal’ which he describes as, ‘the essential reason for being, the higher order benefit it brings to the world’.
And the authors of ‘Conscious Capitalism’ articulate an organisation’s purpose as, ‘the glue that holds the organization together, the amniotic fluid that nourishes the life forces of the organization. The magnet that attracts the right people – the right team members, customers, suppliers and investors – to the business and aligns them.’
Purpose is connected with a cause or a belief that its leaders have, and which all stakeholders can connect to, be passionate about and give effect to.
For me, within the context of business, a Purpose is connected with a cause or a belief that its leaders have, and which all stakeholders can connect to, be passionate about and give effect to.
It is perhaps obvious that there are altruistic benefits to pursuing a purpose-based strategy. But you may be asking if there are REAL business benefits, given that unless a business is profitable it will soon cease to exist. How can one convince die-hard capitalists to put Purpose at the centre and not on the periphery; a must-have, not a nice-to-have?
The most successful companies don’t target profit directly; instead they are driven by purpose – the desire to serve a societal need and contribute to human betterment
I would suggest that a good place to start is to remind the sceptics of the advice of Alex Edmans in his book, ‘Grow the Pie’. Based on extensive research, he suggests that the most successful companies don’t target profit directly; instead they are driven by purpose – the desire to serve a societal need and contribute to human betterment. Get the focus right and profits will result.
In addition to being a driver of profitability, there are other very good reasons to put purpose at the centre of a business.
The following that are highlighted in the 2019 HBR article, Put Purpose at the Centre of Your Business Strategy, are especially relevant to the sustainability agenda.
Purpose will help employees understand the reasons and rationale for change and get them on board with the new direction.
The first is that a relevant and clearly-articulated purpose is a unifying factor within the organization. This is particularly important when companies pursue dramatic change. Purpose will help employees understand the reasons and rationale for it and get them on board with the new direction.
Second, a societally relevant purpose will be a motivating force for stakeholders. According to the Edelman trust barometer, distrust of government, businesses, the media, and NGOs is now pervasive. At the same time, more than ever, employees, especially Millennials, want to work for organizations that can be trusted to contribute to a higher cause. And when customers, suppliers, and other stakeholders see that a company has a strong higher purpose, they are more likely to trust it and more motivated to interact with it.
Third, it will help broaden the business’ impact. Strategy involves exploring some fundamental questions. Why are we in this business? What value can we bring? What role does my unit play within the bigger portfolio? Purpose creates a basis for answering those questions and defining how each unit will contribute to the organization and to society as a whole. This focus on collective objectives, in turn, opens up many more opportunities to improve growth and profitability today and in the future.
Purpose is the catalyst for meaningful engagement.
A further benefit of purpose is that it can be a catalyst for deeper emotional connection between the employee and the enterprise. By enabling their people to connect their individual need to want to make a difference in their world to the organisation’s purpose, leadership will tap into a hitherto untapped well of pride, passion, energy and creativity. Purpose is the catalyst for meaningful engagement.
So, you have been convinced that Purpose is important. How, then does one identify and define your organisation’s purpose?
Leaders and companies that have effectively defined corporate purpose typically have done so using one of two approaches: retrospective or prospective.
The retrospective approach builds on a firm’s existing reason for being.
It requires that you look back, codify organizational and cultural DNA, and make sense of the firm’s past. The focus of the discovery process is internal and requires questions such as:
- Where have we come from?
- How did we get here?
- What makes us unique to all stakeholders?
- Where does our DNA open up future opportunities we believe in?
The prospective approach, on the other hand, reshapes your reason for being.
It requires you to look forward, take stock of the broader ecosystem in which you want to work, and assess your potential for impact in it. The idea is to make sense of the future and then start gearing your organization for it. The focus is external, and leaders have to ask a different set of questions:
- Where can we go?
- Which trends affect our business?
- What new needs, opportunities, and challenges lie ahead?
- What role can we play that will open up future opportunities for ourselves that we believe in?
And whether you use a retrospective or prospective approach, the following must be asked:
- How is the world a better place because we are here?
- Would we be missed if we disappeared?
In a final attempt to convince you that Purpose in business is essential, let me refer to the afore-mentioned Harvard Business Review article.
In response to the question, ‘What do great companies do differently?’, it was argued that they see themselves as an intrinsic part of society, and that in addition to the imperative of making money, they invest in the future and are aware of the needs of people and society.
Purpose was seen to serve as a buffer against uncertainty and change; stimulate intrinsic motivation, enable innovation, and promote stakeholder partnerships.
And the benefits? Purpose was seen to serve as a buffer against uncertainty and change; stimulate intrinsic motivation, enable innovation, and promote stakeholder partnerships.
Is it not time that you put Purpose at the centre of your business model?
HOW GMM CAN HELP YOU
With experience gained from over 20 years of facilitating crucial conversations with senior leaders and their teams, we can help you:
- Question and clarify the Purpose of your organisation – Why does it exist? What contribution does it make to society?
- Consider your contribution to the Sustainability Agenda?
- Build your strategy on the three elements of Sustainability.
- Balance the demand for growth/profitability and responsibility – doing well and doing good.
- Create mechanisms for meaningful engagement with your people.
- Develop mutually-beneficial relationships with your customers