This month, a survey published by the British Academy examined business leaders’ attitudes to taking a more responsible approach to capitalism.
If you’re concerned about the idea of prioritising purpose over profit, you don’t need to worry. Social and financial goals can go hand in hand.
Yet it can still be difficult to commit to becoming a business with purpose when commercial demands are pressing. There may still be a sense that it’s a ‘good to have’, rather than a commercial and societal imperative.
Here are five reasons why business leaders need to get on board with purpose.
Purpose is no longer on the periphery. An organisation with a centrally embedded north star, aligned with its core business can use its purpose as a guiding beacon. It can help a company deliver value to its customers, invest in its employees, deal fairly and ethically with its suppliers, support the communities in which it operates, and generate sustainable long term value for shareholders, who provide capital that allows companies to invest, grow and innovate.
There is mounting evidence that businesses that stand for solving societal challenges are performing well – in terms of market growth, meeting changing customer needs and getting the most of out their employees.
Being a purpose-focused business leads to commercial success. A Deloitte statistic demonstrates that purposeful businesses grow three times faster than their competitors and are more likely to perform better. Purposeful businesses outperform the stock market by 1 33%
In Corporate Culture and Performance, Harvard professors John Kotter and James Heskett state that purposeful values-driven companies outperformed their counterparts in stock price by a factor of 121. The exact cause of this financial prowess is unclear but shows a correlation between companies that stand for something bigger and improved business performance.
A clear, succinct purpose can help shape decision making across an organisation. It provides focus and gives a sense of priority, driving your reason for being to help decision making and understand why you’re taking action.
A quote from Bob Swan, CEO, Intel earlier this year:
“When the s— hits the fan—whether it is COVID or social injustice—we look to our purpose to figure out what to do. Our purpose is to create world-changing technologies that enrich the lives of every person on earth. That simple line helped us define fairly quickly what to do.”
A report by Deloitte found that 73% of people working in a purpose-driven business are engaged.
Patagonia’s former CEO Rose Marcario stated: “When you do work that’s good for the world, people want to be part of it.” This is borne out by Patagonia’s value-led recruiting, receiving around 9,000 applications for every single open internship and full-time position.
Millennials and Gen Z, in particular, want to work for companies that stand for something and have a purpose, as they see business as being an integral part to making positive changes in the world. The businesses who can engage and inspire employees, as well as customers, with their purpose can grow people and teams that are happier, more productive and innovative, and who can become powerful advocates for brands.
Looking ahead, Andy Briggs, CEO at insurance provider Phoenix Group, predicts: “there will be a shift in the way success is measured, with employees and job candidates likely to judge a business based on its contribution to society, the environment or the satisfaction of their people, rather than its profitability”.
Purpose helps a brand extend their storytelling, enabling far deeper interaction and thoughtful conversations.
When you talk about your genuine position and the action you’re taking on purpose, you’re not pushing products or services, or transactionally offering discounts on price.
Instead, your purpose gives you the opportunity to show empathy and understanding of the important social issues of our time that are also integral to your core business; To connect with everyone in a more meaningful and human way, on the things that matter to people the most, especially when people are isolated, stressed and with the world facing huge challenges.
