Purposeful businesses make a difference
The corporate world and its values are changing. Until recently, maximizing profit was a legitimate business purpose. Those days are over. Today, consumers and investors alike are increasingly demanding a balance between profit and sustainability.
The introduction of ESG (Ecology, Social, Governance) guidelines means that responsible businesses cannot have maximum profits as single maxim. Instead, the focus has shifted to a corporate purpose that is sustainable in economic, ecological, and social terms; it is fair to say, that the corporate purpose of a company has gained in importance to a level where it increasingly determines the “license to operate” of a company. Companies should read the signs of the new era, in which Blackrock, the world’s largest private asset manager, has announced that it would be looking at companies’ sustainability and ecological performances for its future investments, as the FAZ reports.
Let’s be clear: a corporate purpose is not an added value for a company, but rather the prerequisite for remaining active on the market. Companies that want to survive in today’s business world need a permanent, meaningful motivation. A sense of existence, a guiding maxim for all entrepreneurial activity. The corporate purpose expresses why a company exists and what positive contribution it makes to society. It has a value in that it implies ethical action and thus a corporate purpose already contributes to the competitive advantage of a company.
What is Purpose?
“We are the technology pioneer in our industry,” or “We want to become the market leader in our industry” are corporate slogans that originate from the aging mission statements of yesterday’s companies. Such slogans have nothing to do with Purpose. Don’t get me wrong, a company should have its finances well under control, no doubt about it, but a corporate purpose goes deeper. It is rooted in the DNA of a company. It tells people what the company can do for them economically, environmentally, and socially to make their lives better. The purpose not only reflects the values and attitude of a company; with respect to the business purpose of a company, it conveys the company’s provable contribution to society and its responsibility for the common good.
What impact does a business activity have on society and the environment? Do services/products contribute to a better future? How does a company create a productive and inspiring (feel-good) climate for its employees? What are the proof points that show that a company Talks the Talk and Walks the Walk with regard to its Corporate Purpose and is also effectively communicating it, in all sincerity, to its stakeholders? These are the central questions for a company when developing a Corporate Purpose.
Instilling purpose in every decision of an organization is certainly not an easy task. It requires true commitment from its leadership, the kind that lasts far beyond a workshop or strategic offsite meeting. The consequences of ignoring purpose altogether could be catastrophic. It leads companies to emissions cheating scandals, accusations of fraud and negligence, and a loss of trust from employees, consumers, and investors.
What is the meaning of purpose?
Companies should not focus on their products and services as an end in themselves. Rather, they need to describe how their business activities make a positive contribution to society. Lighthouse examples are the mission statements of companies like Tesla (“To accelerate the world’s transition to sustainable energy”), Paypal (“To build the web’s most convenient, secure, cost-effective payment solution”), or Patagonia (“Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis”). Such statements clearly show that those companies have no egocentric worldview, but rather focus on the impact their company can have on the world.
These statements are also “visionary” and “big” in their thinking. They create space for expansion and (global) growth. Higher stock market value and good profits are merely results, not objectives, as a study by the EY Beacon Institute in the Harvard Business Review proves.
In another article of Harvard Business Review, the authors Sally Blount and Paul Leinwand describe how a precisely formulated corporate purpose also increases employee engagement and satisfaction. Instead of talking about their work experience, employees now talk about their purpose experience. A convincing Corporate Purpose is attractive, because people are looking for work that is not only about producing a great service or product, but one that is having an even greater impact on the world. Purposeful organizations are attractive to both consumers and investors and can easily attract and retain top talent. They are valued by society and gain the approval of the media. They can gather followers, who become trusted brand ambassadors.
Bringing purpose to life
To make a momentous entrepreneurial potential become economically relevant, a company must activate its corporate purpose and make it relevant / accessible to its stakeholders – employees, customers, business partners, and investors.
Corporate Purpose as the reason why a business exists and the purpose of a company cannot be compared to the mission statements of the past. Classical mission statements were developed for internal communication purposes; whereas Corporate Purpose addresses the entirety of a company’s stakeholders.
Communications play an important role in awakening and shaping Corporate Purpose – and in conveying it to the respective stakeholder groups. Authenticity is priority. Because – asides from organized communications – the age of social media makes every employee become a “press spokesman” who reports on what is happening behind the factory gates and in the conference rooms. Customer voices in social media and on evaluation platforms talk about how the company treats them and deals with their issues. There are no Potemkin villages in Corporate Purpose; those would be quickly exposed: corporate social responsibility fakes are exposed as whitewashing, dubious eco-seals as greenwashing, and manipulated product tests will give a company’s reputation a fatal blow. Communication can do a lot, but one thing it should not allow: lack in authenticity and falsehood.
Corporate Purpose is not an off-topic in communications, but is of highest significance for corporate strategy. Its importance (and influence) will continue to grow, because ecological and social aspects, an ethical attitude, and the creation of value and significance are relevant to most people.
Black Dolphin supports start-ups and SMEs in developing their corporate purpose, in creating touchpoints for communications – so called “moments of truth” or proof-points –, and establishing dialog with relevant stakeholders.
Purpose has become a fundamental factor that drives decision-making processes. This has tremendous implications for human resources.