“why your organization exists and transforming through your purpose is the key to success in business in the 21st century”
An extraordinary thing has just happened. A strange and new belief has suddenly become mainstream; the belief that the pursuit of purpose before profit is the primary function of business.
Quite suddenly, ‘purpose-led’ has moved from the preserve of social enterprise to being the new business orthodoxy. This has the power to irrevocably change how we think about business – and how business is done.
Consider this comment: “why your organization exists and transforming through your purpose is the key to success in business in the 21st century”. This isn’t the view of some Palo Alto futurist. This is the settled view of Ernst & Young.
There are, inevitably, a host of reasons behind the new orthodoxy.
The march of the Millennial generation with their purpose-driven agenda into the labour market is certainly starting to have an impact. Within the next 8 years 75% of the working population is predicted to be from this generation. And business leadership is adapting rapidly to that challenge.
Yet, this is by no means the only factor at play here. The breakdown of trust between big business and wider society in the recent recession, particularly in western economies, has had a big impact. And even more compelling to forward-thinking Boards is the erosion of trust between many companies and their own employees.
And there’s one more factor that is sometimes overlooked. Companies where purpose is fully engaged at every level of the business are just better than profit-led ones: better to work for; better to buy from; faster growing and more profitable.
Here are just some of the facts. Employees in genuinely purpose-led companies are 12% more productive, 40% more engaged, 70% more satisfied and 300% more likely to stay in the company (Warwick University and The Energy Project). 87% of business leaders believe their company performs better if their purpose truly goes beyond profit and 89% of customers think purpose-led companies deliver better products & services. And in 2014, businesses with meaningful brands connected to purpose outperformed their stock-market peers by 120% (Havas Meaningful Brand Index 2014).
[pullquote]‘we have developed an inspiring Purpose. We are really proud of it. The Leadership team has bought into it. And we are getting absolutely zero traction across the organisation. Just why is that?’[/pullquote]
Sounds too good to be true? Well, regrettably it is. And the reason for that is that, whilst it’s fairly easy for enlightened Boards to develop and adopt Purpose, it is incredibly hard for organisations culturally and structurally inured in ‘shareholder value’ and profit-centric thinking to adapt to it.
To quote the Global Head of People of a large and well known global company ‘we have developed an inspiring Purpose. We are really proud of it. The Leadership team has bought into it. And we are getting absolutely zero traction across the organisation. Just why is that?’
There is an answer to that question and it lies in understanding the yawning gap in most organisations between Purpose and the reality experienced by people who work there. It lies in understanding why this doesn’t exist in the rare, usually entrepreneurially-founded, organisations that have fully engaged purpose. And in understanding that the beliefs and codes of behaviour found in these companies are not some strange alchemy. They can be replicated. And our next article (The PURPOSE GAP) explains how.