Purpose revolution and the future of business
How do you balance the competing demands of purpose and profit? I think the more pertinent question is, should you have to?
With CSR, ESG, EDI, B-Corps and more, the purpose landscape is getting busier every day. But it shouldn't be a distraction from profitability. With insight and ambition, committed businesses can deliver world-changing social impact and formidable commercial benefits.
First, let's agree that business is principally about making a profit. Staff need to get paid, shareholders need their value, and senior management and customers need confidence in your organisation's future. Even Patagonia, who moved to channel all their money to combat climate change and protect land last year, recognise they're in the profit-making business. As long as we live in capitalist market economies, our companies must be designed to make money. And that's no bad thing.
What's more, most likely, your business is already doing something positive for society. From insurance to pensions, groceries to entertainment, and cars to construction, your products and services are making people's lives better. But this is no longer enough.
Our generation's challenges are many. Climate, poverty, hunger, housing, mental health, discrimination. They affect people everywhere – including your staff, customers, investors and communities where you operate. And business is under more pressure than ever to play its part in creating change. Some even suggest that profit should play second fiddle to delivering on purpose, while report upon report shows that customers are more likely to buy from brands with strong ethics and values.
But woe betide companies who can't walk the talk. Sticking a polar bear on the cover of your annual report won’t cut it. Regulations around ESG and EDI are tightening, and the general public is becoming more knowledgeable and sceptical. Such is the fear of being perceived as greenwashing (other washings are available), the latest silent trend among businesses is green hushing, which sees companies hiding their sustainability policies to avoid scrutiny.
It doesn't have to be this way.
Social and environmental impact are not awkward-but-unavoidable impediments to growth; they can be precisely what you need to future-proof your business. There's strong evidence to show profit and purpose isn't an either-or choice; they're two sides of the same coin (or two halves of a growing pie). Being purpose-led improves your brand reputation and increases market share. It delivers shareholder value and attracts the best talent. For successful businesses, being purpose-led matters.
So, how to navigate the purpose landscape? In the big legacy brands I work with, I tend to see three mindsets.
The purpose of business is business. We’re here to make a profit and this is going to hamper our ability to do that.
I believe business can and should be a force for good. It’s not a trade off between purpose and profit, they go hand in hand.
The world's on fire! Society is collapsing! We need to do so much more and no-one is taking this seriously.
The thing is, whichever mindset you're in, the answer is the same: purpose revolution. Just as it was with digital 15 or 20 years ago, business is on the brink of something truly transformative. Business needs a healthy planet and society to thrive, and a healthy planet and society needs business to support it.
From digital transformation to purpose revolution
You would be hard-pressed to find a successful company in 2023 that hasn't undergone or is undergoing a process of digital transformation. As technology has advanced at pace, business has recognised that 'digital' is more than a department, workstream or customer service; it's something that underpins everything we do. And the quickest adopters of a 'digital-first' mindset across their business models, processes and operations and customer experiences have usually been the most successful.
Today, purpose is where digital was in the mid-2000s. It's on most organisations' radars, but relatively few have adopted it wholeheartedly. And many companies see it as a nice-to-have rather than core to their business. But, also as in the mid-2000s with digital transformation, the opportunities for those willing to embrace purpose revolution today are immense. In fact, they're world-changing. Back in the mid 2000’s there were companies with the foresight to see the potential of digital and fully embrace the change required to realise that opportunity. And there were the sceptics that waited for the proof that it was worth doing, and they got left behind. By the time the proof came, it was too late.
The imperative to adopt a digital-first mindset was – and is – fast moving technological change. As more and more of your customers and competitors adopted digital lives, it simply became no longer feasible not to join them. Or, better still, to help show them the way.
With purpose, the imperative is social and environmental. It used to fall to governments and civil society organisations to tackle these issues. But today, it's the responsibility of business too. Companies have the resources and the influence. Consumers increasingly think they should trust businesses more than non-profits, governments or the media to address social and environmental issues. And COP28, the leading international climate summit, is seeking a business mindset to address the world's greatest environmental challenge.
Innovation is your guiding light
Just as digital transformation means embedding a new way of operating into all aspects of your business, so too does purpose revolution. CSR, sustainability, or purpose departments can do a good job of finding purpose-led partners and implementing social impact projects and campaigns. But they're no longer enough to meet the challenges business and society face today. To truly deliver on purpose, it must infuse the way people think, feel and act across your organisation.
Purpose revolution is hard, it requires change, and it takes time. But think about where your business was digitally 5, 10, 15 years ago: change is possible. Just as with digital transformation, there is a logical roadmap to follow. To borrow another core principle from digital processes: innovation is your guiding light.
At Good Innovation, we know that Innovation is the best driver of transformative change when it comes to purpose. Innovation turns strategies into action and ideas into impact. Innovation enables organisations to find new and unique solutions to meet our society's greatest challenges, and deliver business benefits at the same time. It finds actionable ideas that work in harmony with your business and provide you with a competitive advantage.
For big legacy brands transitioning to become more purposeful companies, the innovation journey to purpose revolution should follow some core principles:
Get your own house in order. Attract and keep the best talent by having an active equality, diversity and inclusion plan, paying staff fairly and embedding a happy, healthy workplace culture. Think about your purpose, ambition and be prepared to invest in it.
Involve staff in setting the purpose agenda. Get everyone, including the leadership team, enthusiastic and inspired by making them part of defining and delivering the social or environmental impact you want to achieve. Your workforce and best talent will be happier and more productive, stick around longer, and your impact results will be greater.
Focus on what you know. To ensure that your purpose innovation brings you a competitive advantage, align it with what you do best. Identify your company's unique assets and capabilities and ask which social and environmental problems they could give you an unfair advantage in helping solve.
Make it (commercially) sustainable. Aligning purpose with profit is key. One way to do this is by improving customer acquisition and retention by creating new products with impact at their core. Empower your customers (B2C or B2B) to be part of your purpose journey. Excite them about the impact their relationship with you will deliver. And track both the impact and commercial metrics.
Redesign your employee experience. Make every employee a proud ambassador for your organisation by embedding purpose in day-to-day working life – not leaving it to a single department. Discover creative ways to immerse and inspire your teams.
Collaborate. These social and environmental challenges are too big for any organisation to solve on their own. To truly deliver on the scale of your purpose ambition, you must partner with other organisations with complementary assets. Collaboration takes purpose to the next level and introduces you to new groups of customers.
Your business already positively impacts society in some way. And the chances are, you've already taken your first steps towards becoming more purposeful. But the most successful businesses of the next 10 or 20 years will be the innovators in business and purpose. They'll know that for our generation, commercial gain and social impact are in lockstep. They'll be at the forefront of a purpose revolution. Will you be one of them?
Ryan Bromley is a partner at Good Innovation.