What's the purpose of purpose-driven business declarations?
Leaders on purpose
A new coalition of global leaders including the CEOs of Danone, Interface, L'Oréal, Mastercard, Natura, Philips and eight other companies — representing a combined annual revenue of over US$100 billion and a combined global workforce of over 500,000 — endorsed a post-COVID roadmap to "build the economic system better". In an open letter, the group of fourteen CEOs — which have formed a for-benefit organisation called Leaders on Purpose — called on governments to accelerate such a transition by recognising and supporting purpose-first business as an emerging fourth sector of the economy.
Is 'purpose' is a buzzword?
'Purpose' is a buzzword in business today, but what exactly does it mean to have a 'purpose-driven' business? Does it mean sacrificing profits? Does it only apply to industries where a purpose other than making money is pretty straightforward—like healthcare?
Purpose-driven companies outperform
The majority of employees believe the primary purpose of the organisation is to make money. Although, organisations driven by a purpose bigger than money outperform their competition in terms of customer loyalty and employee engagement, which ultimately lead to more significant long-term revenue.
You don't need to save the world
Purpose doesn't always mean saving the world. When Sam Walton from Wal-Mart was asked about the legacy he hoped to leave with Wal-Mart, he said, 'well, at the end of the day, I hope I could save people a little money so they could live a little better.' That's a pretty good purpose! To save people money so they can live better.
It's not what you sell: it's what you stand
A strategy is about making choices. When your purpose is clear, you know what to say yes to and when to say no. Purpose sits at the centre of a commercial model. It creates organisational alignment providing common ground, and preventing organisational silos.
Sales versus purpose
Clarity of purpose can keep your strategy alive in the face of competitive threats and changing market conditions. Corporate strategy, conceived in the boardroom, most often dies when handed over to a sales team on the front lines.
How to make a purpose statement?
A purpose must be both aspirational and specific. To be effective, a purpose must:
Describe the impact you have (and wish to have) on customers
Provide a lens for decision-making
Promote product and service innovation
Translate into behaviours
79% of business leaders surveyed by PwC believe that an organisation's purpose is central to business success, yet 68% shared that purpose is not used as a guidepost in leadership decision making processes within their organisation.
Purpose does more than branding
Purpose does more than make a brand unique. It can shine a light on a business' evolutionary path. At a basic level, purpose can express what an organisation aspires to be and do. But at a more advanced one, it becomes a conscious expression of how an organisation intends to evolve and transform itself.
Do you want to (re)focus on purpose, but you don't know how to begin? Get in touch; I can guide you through the process. In the last years, I helped financial, engineering, legal and nonprofit organisations refocus on purpose.