The power of purpose
This article is based on my ‘Power of Purpose’ talk from October Business Month 2021.
““You have enemies? Why, it is the story of every man who has done a great deed or created a new idea. It is the cloud which thunders around everything that shines. ”
Purpose-led businesses create the change they seek in the world and measure their success through their impact on their people and our planet, as well as their profit. In our cynical world four major global shifts will see purpose-led businesses becoming more mainstream:
A lack of trust
People have lost faith and trust in institutions. Royal Commissions, corruption scandals, fake news, fat cat cultures, the Pandora Papers, systematic racism and the ravages of COVID have seen societies trust in institutions (bank, church, government, media) exploded and eroded.
The Edelman Trust Barometer measures trust across four institutions - government, media, NGO’s and business. In 2021 it states that “the world is clouded by mistrust and misinformation.” However, there is a glimmer of hope - business. Business, particularly in Australia, is seen as the most trusted of the four institutions and the only institution that is seen as both ethical and competent. More and more people believe that business can be the change agents they seek and affect real changes on major global issues.
People seek meaning
Younger generations want more purpose in their work - they seek meaning and engagement. Into the future businesses will need to engage young talent with more than a good salary - they will need to demonstrate they stand for something and work continuously to engage staff in their higher vision.
This search for meaning is reflected in consumer behaviours; consumer seek brands they can believe in with 2 out of 3 consumers now being ‘belief consumers’ who will choose, switch, void or boycott a brand based on its stand on societal issues. Consumers are also highly informed about the provenance of a product. They actively seek to understand the impact of the whole production journey from source to shelf and expect transparency and accountability from their brands.
The power shift for employer to employee
The US is in the middle of the ‘Great Resignation’ and Australia is tipped to be on the brink as COVID restrictions are scaled back and people are expected to return to their offices. A record 4.27m Americans quit their job in August 2021 and research suggests that 40% of the global workforce is considering giving up their job in the next 12 months.
COVID has made people re-evaluate what they value in their work and they are redefining what career success means to them. Research suggests employees value work/life balance more than power and status - with one study showing employees valued working remotely as much, or more, than a 5% pay rise.
Fundamentally the balance of power has shifted from the employer to the employee and businesses are going to have to work harder to engage, motivate and retain their staff by reimagining what their employee value proposition is.
We demand good corporate citizens
Corporate Social Responsibility (CSR) is a major contemporary governance issue for all organisations. Society is holding big business and large corporations to higher and higher standards and wants accountability and transparency on their impact on the communities and environments that they work in. It is not enough these days for businesses to say they are doing the right thing - they need to demonstrate they are doing the right thing; a case of ‘don't tell us, show us.”
Donut Economics
There is a growing global movement calling for our entire global economic model to shift towards a purpose-led model based on the Donut Economic model of economist Kate Raworth. The model essentially says that we need to change because there are too many people without enough; there are too few people with too much power and our planet is at its limits.
So in the context of failing institutions; purpose seeking generations; disengaged staff; corporate social responsibility; and calls for a new global economic system the power of purpose-led businesses is rising. So what is a purpose-led business?
Fundamentally leaders of purpose-led businesses understands they can use their business a force for good. They understand their responsibility to be a good corporate citizen. They do this by measuring not only their economic impact, but their impact on their people and our planet. They have a triple bottom line - profit, people and planet.
What is a purpose-led business?
Purpose-led businesses still understand the need to be financially stable - profit isn’t a dirty word. The difference is that purpose-led businesses see money as a means to an end, not the end itself. Money is seen as a tool to be used for good, not a statement of success. They are not driven by money, but they keenly understand how money can drive change.
Purpose-led businesses strive to provide benefit for all - not just the select powerful few at the top of the food chain. They truly value all their people - not just their clients, consumers or customers. The measure their impact on all the people they work with - the community they work in, their supply chains, their partners and most importantly their staff. Purpose-led businesses put humans at the heart of their decision making.
Purpose-led businesses measure their impact on the planet - this is their third triple line. They don’t see the natural world as an inexhaustible resource to be extracted indefinitely. They value the planet for what it is - a finely balanced system that is finite and in need of protection. These businesses look for sustainability in their products and practices; they assess and actively work to reduce their impact and seek to have a positive impact on the environment.
The most ethical of companies are Cert B Corporations. These corporations “meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose”. About 3,500 companies from over 150 industries in 74 countries are Cert B Corporations, dedicated to purpose over profit - including Patagonia, Ben&Jerrys and our home-grown Who Gives A Crap.
“At Patagonia we appreciate that life on earth is under threat of extinction. We aim to use the resources we have - our business, our investments, our voice and our imaginations to do something about it.”
Patagonia state that “the criteria for the best product rests on function, repairability and foremost durability - goods that last for generations.” - what a shining light in a world where large corporations design in product obsolescence and mobile phones are seen as disposable.
Ben & Jerry’s are pioneers of the socially responsible business movement. Their social mission is to make the world a better place based on the idea of ‘linked prosperity’ that defines their success. They understand the power of their business to support positive change and have the courage to take a stand.
“We are not shy about speaking up, making a case, taking a stand, creating a campaign - or even a new flavour - to build awareness about issues we feel strongly about.”
Who Gives A Crap was started after the founders learnt 2.4bn people don't have access to a toilet. They created a business based on the idea that by creating one small change in where people buy their loo roll, they can change the world. 50% of their profits are donated to water, sanitation and hygiene not-for-profits because they want “to ensure everyone has access to clean water and a toilet in their lifetime.”
The benefits of being purpose-led
Purpose-led business are highly successful - the pioneers have been around for over 40 years - because there are some key benefits to being led by ethics, not profits.
More profitable - It is a paradox that when businesses focus on purpose, they are more profitable. Cert B Corporations in the UK have grown 28 times faster than the national economic growth rate. Research demonstrates that purpose-driven brands outperformed the stock market by 120%; attract more investment; have larger market share; and grow three times fast.
More effective and efficient decision-making - Purpose-led businesses know what they stand for which makes decision-making more efficient and effective. They know what they stand for and what they will and won’t accept which enables them to focus their work on what is important.
More innovative - Being purpose-led moves an organisation from being linear to transformative in thinking - they focus on the why not the what - which opens up new opportunities and drives innovation. They have more positive cultures that nurture and encourage innovation and highly engaged staff who understand how their work connects to the bigger vision.
Higher loyalty - Purpose-led businesses actively look to create benefit for all the people they work with, which creates more engagement and loyalty. Purpose-led businesses understand the most important long-term relationships they have are with their staff.
Moving towards being purpose-led
Becoming more purpose-led is a mindset change, it is about making the choice to see your business as more than just a way to make money. It is about seeing your business as a force for change that can make the world better - however you define that. Moving to being more purpose-led is an opportunity for you to redefine how you measure business success - beyond the profit and loss statement. It takes leadership, commitment and the courage to be disliked because when you stand for something you don’t stand for everyone.
Define the change you want to see in the world - what are you passionate about? what makes you see red? what causes or issues are you already helping? gender equality, diversity, food waste, indigenous rights, youth justice, pollution, human rights, renewable energy, water management, poverty, climate change, biodiversity, deforestation, corporate greed.…unfortunately the list goes on.
Assess and examine your products, practices and services to see how you can positively impact your people and our planet.
products - environmentally friendly materials and production methods; energy usage; off-shore workers rights; water usage; transport impact.
practices - consciously engage your staff; implement contemporary working practices; how do you promote equality and diversity; are you accountable and transparent.
profit - how do you spend your profit for good - donations, sponsorships; can you use more costly ethical services and product.
Define your triple bottom line - how will you measure success for your profit, people and planet.
profit - % ethical investments; % donations to community programs; staff donating their time to community organisations.
people - engagement levels of staff; developing a positive culture; longevity of supplier relationships; fair trade and anti-slavery policies.
planet - more sustainable practices; more environmentally friendly equipment and supplies; reducing waste and energy usage.
The world needs businesses to be more purpose-led because business has the power and skills to do this, and is the most trusted institution to drive change. Into the future being purpose-led won’t be a choice, its will be a necessity. As business owners we are privileged to be in a position to be the change we seek, and most importantly, to be trusted to do it - so what are you waiting for?