As we slowly emerge from the pandemic, people are traveling again, heading back to the office, and enjoying many of the frills of pre-pandemic life. This return to “normalcy” is also giving the economy a much-needed bounce. Life feels better and brighter…perhaps because we have a new understanding and appreciation for what’s really important.
The pandemic forced us to realize that many of the things we were doing before or how we were doing them weren’t valuable or even necessary. So, as we start re-assembling our lives and schedules once again, many of us are evaluating what makes the cut and what gets left behind against the critical question of, “Why?” Why do I invest my time in this activity, this event, this partnership, or this company? What purpose does it ultimately serve? Why is this important?
In the business world, all too often the focus is to make money or profit. And yes, of course businesses need to make money, but that shouldn’t be the organization’s primary driver. There has to be more behind it all. There has to be a purpose, a way that the organization contributes to the greater good.
American philosopher and University of Virginia Darden School of Business professor R. Edward Freeman has frequently stated that a new story about business is being created, and we have the opportunity to be the generation that makes business better by putting purpose at the center.
Freeman states that “Business is about purpose and creating value together,” and we can make that happen by doing three things. First, we must get involved in changing the story of business. We can make ethics, value, and people the most important drivers instead of money.
Second, we need to see challenge, conflict, and critique as important in what we do. Freeman argues that we should see these things as sources of value creation rather than things that should be avoided. These are the ways in which we are pushed to be and do better.
Finally, we need to raise the bar and expect more from our companies and co-workers. “We are on the verge of a revolution in which we use the right story about capitalism, literally to remake our world,” he said. “We can be the generation that does that.”
Putting purpose at the center of business isn’t only morally and ethically the right choice, it also makes strong business sense. Research shows that purpose-driven companies simply perform better. They:
Attract and retain better talent
Increase productivity
Realize more growth opportunities
Enough said – those points should be enough evidence for every company to adopt purpose-driven approaches immediately. Sadly they don’t, so let’s dig in to a few more facts.
According to a recent article from Deloitte Insights titled, “Purpose is everything,” purpose-driven companies witness higher market share gains, grow three times faster on average than their competitors, all while achieving higher workforce and customer satisfaction.
Some more interesting stats:
When a brand has a strong purpose, consumers are 4 times more likely to purchase from the brand, 6 times more likely to protect that brand in a challenging moment, 4.5 times more likely to champion the brand to friends and family, and 4.1 times more likely to trust the brand.
Globally, 94 percent of consumers said it is important that the companies they engage with have a strong purpose, and 83 percent said companies should only earn a profit if they also deliver a positive impact. (Source: Forbes Magazine – “Strength of Purpose” study)
86 percent of millennials would consider taking a pay cut to work at a company whose mission and values align with their own. (Source: CNBC)
Millennials who have a strong connection to the purpose of their organization are 5.3 times more likely to stay. (Source: PwC)
If employees don’t know what their organization stands for and what makes it different, 70 percent will leave within one year. (Source: Gallup)
It takes 2.25 “satisfied” employees to generate the same output as one “inspired” employee. (Source: Harvard Business Review)
Strategy-focused research also supports the idea that businesses can create unique competitive advantages through the assembly and unique combinations of otherwise ordinary resources. In other words, the superior organization or delivery of products or services can set an otherwise ordinary company up for success.
In our view, this includes those that create ordinary products or deliver ordinary services with an extraordinary purpose. This Composition-Based View theory postulates that businesses can thrive and develop competitive advantages just by their ability to assemble readily available resources in a unique, superior, and purpose-driven way.
This is a really important strategic concept. It suggests we don’t have to dump millions into R&D or innovation, but rather just be really good leaders to organize available resources, even the same resources available to our competitors, into combinations that are unique and deliver unique outcomes. The speed and insight into why these are combined is the key.
The bottom line? No matter the market, from Chicago to Charlottesville to Ho Chi Min City, businesses are more successful when they are aligned to purpose. And, ultimately, more purpose-driven companies build a stronger, more dynamic, more resilient economy.
So, what is your business’s real purpose?
