Traditionally, the worth of a company has been measured through its financial results. Now businesses are being forced to rethink their role in society and how they can create benefits and value for all beyond the bottom line.
The Covid-19 pandemic is one of several global trends driving businesses to re-evaluate their purpose in society. These include:
- Consumers – Buying decisions are now being influenced by a company’s social and environmental impact.
- Investors – A surge in socially responsible investing in ESG funds has been sparked by conventional investors.
- Employees – An employers’ sense of purpose and values is becoming critical in attracting and retaining the best talent.
- Opportunities – Brands are being differentiated and strengthened by their actions, in turn opening up new markets, promoting innovation and supporting premium pricing.
Purpose is a company’s philosophical heartbeat and reason for existing, beyond financial gain. Purpose is more intangible than values, which are the core principles, ethics and behaviours a company and its employees will agree to abide by at all times. A company’s purpose engages the heart rather than the head, inspiring staff to do good work that impacts way beyond the lives of customers and into wider society.
Being a purpose-driven company isn’t just the right thing to do, it’s the right thing to do for business. According to Deloitte’s Purpose 2030 report, purpose-driven companies have been shown to outperform their peers over the long term. Purpose-driven companies witness higher market share gains and grow three times faster on average than their competitors. Hiring and retention numbers are higher in purpose-driven companies.
A powerful purpose is:
- Authentic – one that is lived through the actions of the business
- Real – about what you do as well as how you do it
- Practical – finds solutions to stakeholder challenges while understanding developing expectations throughopen dialogue and strong partnerships
- Consistent – the purpose should endure well into the future and transcend corporate changes.
- Sustainable – maintains balance between short term imperatives and longer-term external commitments, such as linking them to the UN’s Sustainable Development Goals.
Some examples of powerful company purposes are:
- To accelerate the world’s transition to sustainable energy – Tesla
- To inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time – Starbucks
- A computer on every desk on every home – Microsoft
Re-assessing your company purpose will ensure it is fit for the post-Covid-19 world. Stress-test them using the following questions:
- Why do we choose to exist, beyond financial gain?
- Is our purpose true for all employees, as well as the organisation as a whole?
- How is our purpose helping your business respond to the Covid-19 crisis?
- How is our purpose sustainable over the long term?
- What kind of business would we like to be once the Covid-19 crisis has passed?
Many businesses are responding to the immediate Covid-19 crisis through purposeful acts and pledges.
- Starts with the impact and cause, rather than themselves.
Purpose-driven companies can provide effective and appropriate support when they have a clear understanding the impact they can make. People want to see well thought-through action that makes a real difference, rather than a publicity stunt. Louis Vuitton reopened a number of its production sites in order to help manufacture up to 100,000 masks a week, as well as hospital gowns, for front-line medical staff.
- Sticks to its strengths.
Purpose-driven companies ask those who understand best what the need is, then use their expertise or products to provide it, rather than the other way round. Belgium-based brewer AB InBev produced 50,000 litres of ready-to-use disinfectant alcohol for European hospitals, using the surplus alcohol from its alcohol-free beers.
- Works in partnership
Purpose-driven companies working in collaborating across sectors brings together key strengths. Consumer goods giant Unilever committed €100m to curtail the spread of coronavirus through the donation of soap, sanitizer, bleach and food. Product donations were made to organisations on the frontline of the virus fight including the COVID Action Platform of the World Economic Forum as well as local donations, partnerships and education programmes.
Does your company need to re-examine its purpose? We can help. Contact Shehra at Shehra@106comms.com