The commercial case for purpose-driven business is now fairly concrete. Few would argue against commercial success being increasingly linked to businesses having an established sense of purpose. As one Harvard Business Review study points out, “companies with an established sense of purpose outperformed the S&P 500 by 10 times between 1996 and 2011”. Equally, the continued, almost meteoric rise of businesses pursuing B-Corp certification (a certification requiring they meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose) highlights the increasing value businesses are placing on purpose.
So the logical conclusion then, if your business can’t yet lay claim to a higher purpose, a just cause, or grand ‘why’, is to start work immediately establishing one. Yet companies that choose to do so often find themselves in a worse position than when they started. Why? Because they underestimate the magnitude of the task.
The trap, or the ‘gap’ lies in the words ‘established sense’. I want to offer some thoughts around the nature of this gap. Not to discourage organisations from going there, but rather for them to go there with eyes wide open. I work with businesses to facilitate the development of purpose, mission, vision and values. However, I do so with caution because the work and the expectations around it are rife with misunderstanding. The words are bandied around with alacrity, but the complexities that lie beneath purpose, mission and vision are all too often glossed over.
Establishing purpose is not a copy-writing exercise or a short term project, but rather the beginning of all-pervading doctrine that must then embed into every aspect of the business in order to secure the desired outcome. Indeed, often it’s the very commercial nature of the initially stated desire that thwarts any chance of the subsequent work having sustainable value (and being fulfilling for me personally). Commercial success is of course a necessary and highly desirable outcome, but an established higher sense of purpose needs to rest above it in order for the endeavour to result in anything more than tokenism.
Establishing purpose is not a copy-writing exercise or a short term project, but rather the beginning of all-pervading doctrine
So, what should you expect to see in a business that has an established sense of purpose? What are the indicators of a business with an established sense of purpose and how can you tell if your business, or the business you're considering joining, has gone beyond just words? I see it broken down into four areas, permanently on loop; reflection, discussion, action, and metrics.
Living an established sense of purpose should be uncomfortable. Tensions are rife and it should be a deeply emotional process. Such discomfort surely then necessitates considerable reflection. When you consider your company’s purpose, you should get a sense that doing so constantly challenges business as usual, throwing up tensions between commercial and societal gains. Ethical conundrums, if you will, should be front of mind for the leadership team and beyond. If those tensions aren’t palpable, then it’s highly likely the organisation’s purpose is lacking in authenticity.
When you look in on your business, do you get a sense that there are structures and processes that drive that reflection on a daily basis? It is only once the development work is done, rather than during, that team reflection becomes critical, creating the necessary time and space for everyone to consider purpose within their everyday decisions. Are people routinely reflecting on the purpose? Are the purpose-specific functions (such as philanthropy, sustainability or inclusion) self-contained silos, or are they connected with the core of the business? An established sense of purpose should see ongoing reflection permeate every crevice of the organisation.
Businesses with an established sense of purpose almost always start developing that sense through vast amounts of discussion, seeking out the thoughts and minds of a wide range of audiences. Peoples’ understanding of the same words differ from person to person, which is exactly why purpose-driven work is so hard and so often underestimated. The bolder the purpose, the larger the potential for a gap to exist between what’s stated and what’s experienced, (or not as the case may be) across the organisation’s varying audiences. From employees to customers, to investors, suppliers and the local community, and indeed the global community from a climate perspective; all stakeholders will have a different appreciation of what the words mean. Understanding how perceptions differ, and then driving deep discussion around those differences, gradually attempting to resolve the tensions as much as they can be (whilst accepting they can often never be fully resolved) takes time, but is an absolute necessity if your organisation is to land on and maintain a sense of purpose to stand the test of time. Do you get the sense that leadership in your organisation really does understand what employees care about? Do they appreciate the sources of meaning, aspirations, and anxieties employees have around social issues and how these differ? Offering a framework, do they have a solid appreciation of the 17 united nations sustainability goals, and hold a strong position around those they consider to be fundamental to their purpose. The different stakeholder groups will have different perspectives, so what we’re looking for here is not unanimity, but evidence of deep discussion, and acknowledgement of the tensions from group to group.
Do they appreciate the sources of meaning, aspirations, and anxieties employees have around social issues and how these differ?
A powerful appreciation of purpose illuminates the enormity of that purpose, as well as the reality that it can’t be achieved by a single entity. Do you get the sense that the organisation not only understands its own unique and powerful role in pursuing its purpose, but also the role of others it should work with and support? For a truly purpose-driven organisation, you can expect to see collaboration with allies - suppliers and competitors alike - because it recognises that it cannot realise its purpose alone. Such collaboration inevitably leads to turbulent discussions across the value chain, but hopefully productively so. Authentic purpose leads to tensions, which inevitably lead to conflict, and a purpose-driven organisation drives such discussions, embracing and managing the conflict productively. To do so, within the organisation and beyond, you’re likely to find platforms and opportunities specifically created, yet not siloed, to drive dialogue.
Of course, accepting adequate and ongoing reflection and discussion, there is no change without action, and no sustainable change without a clear appreciation of the metrics for success behind it. Not only must there be action, but there needs to be an understanding of whether that action is driving the change you want to see in the world - whether it’s having an impact. When we consider the role of ‘Purpose’, it comes down to uniting and motivating people, shaping a way of being that drives change, ongoing. Fundamental to a motivated state is feedback on how we’re doing, so metrics around purpose are not just nice to have - they’re a must.
The purpose of a company should lead directly to tough strategic choices that in turn build on cultural strengths to drive impact. Can you see purpose threaded throughout your strategy, capital investment decisions and budgeting? Can you trace the thread of purpose through top level strategy to tactics and consequential actions? Organisational structure and governance should empower employees to make tradeoffs that prioritise purpose. Do you see teams extolling the autonomy they have to do their work with purpose? Indeed, are there formal incentives to do so? Are tradeoffs by middle management (those driving the doing) truly being made on the basis of the purpose? Longer term, do the purpose-related endeavours hold true in economically challenging times? Do you see the business exiting existing markets, or not entering new markets, despite short-term loss in revenue, specifically because it doesn’t reinforce the purpose? Do you see positive changes being made to products that don’t drive revenue short term, but do reinforce purpose? These are all powerful identifiers of purpose in action.
Organisational structure and governance should empower employees to make tradeoffs that prioritise purpose.
Every good business is adroit at measuring but the best businesses are able to make leaps of faith alongside such measures, in accordance with a higher purpose. It’s fairly typical, and indeed a matter of compliance for public companies, to publish corporate social responsibility measures in annual reports or similar external statements of performance. However, for the truly purpose-driven organisation, those same measures and more hold pride of place in weekly team meetings, monthly board meetings and so on. They stand side by side with financial measures in the internal meetings that keep the business moving forward. Metrics around purpose should permeate the entire organisation. There should be a rich and growing appreciation of the data and evidence critical to understanding your organisation’s total social, environmental, and financial impact. This will include evidence of the business applying hard-to-develop financial metrics (which will not be an exact science, hence the leap of faith) around external purpose-related factors; a sign that the business is doing all it can to give such metrics equal standing within corporate governance. In short, the purpose-driven business puts its money where its mission is.
Taking the time to reflect on these elements and then establish a platform for discussion should lead you to get a measure of where you are now. Then you can go on to act, measure, reflect, discuss, act and then measure some more. Wherever you are on this journey, there’s always room to keep moving forward.
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