It is notoriously difficult for firms to balance financial goals and social responsibility.
In a world where social media has made firms immediately answerable to the public for both their product and their processes it is more important than ever for companies to have a purpose — and to make that purpose known.
This has given rise to the concept of a purpose-driven business, a relatively simple concept that can fundamentally change the way your business performs.
Traditionally businesses were ultimately responsible to their shareholders with the role of the consumer or client only being important in so much as their tastes and opinions affected their sales. Public opinion was relatively easily controlled through marketing and media relations and any unsavory business activity was outsourced or sent off-shore where it could be more easily hidden from prying eyes.
But over the last decade all of this has changed. Rapid globalisation and digitalisation has given customers and shareholders unprecedented access to information about almost every aspect of a business’s supply chain and inner processes. This, coupled with rising social activism, means that more and more people are holding brands to account for their contribution to society and impact on the environment — as much as their contribution to their bottom line.
The result is that purely profit-oriented businesses are increasingly at risk of being exposed and taken to task for their role — or lack thereof — in contributing to the greater good.
But the big question is: how can your business reduce this risk while at the same time satisfying shareholders? The answer lies in making your business purpose-driven, and the first step is to evaluate your organisation’s current purpose.
In his book Path to Purpose, William Bill Damon defines purpose as “a long-term, forward-looking intention to accomplish aims that are both meaningful to the self and of consequence to the world beyond the self”. For a business this means focusing on more than just achieving your goal — whether it is to be the biggest service provider or the most innovative tech company.
Social entrepreneur Patrick Cook-Deegan and behavioural scientist Kendall Cotton Bronk believe that a key aspect that separates businesses that have a culture of purpose from those who are simply trying to accomplish a set of goals is the why.
They explain that a business’s mission is the what you’re trying to accomplish, and a purpose is the why. For this reason it is as important for your employees and clients to know what your business does as it is for them to know why it is important.
Unfortunately businesses often have a tendency to make the achievement of goals — their performance objective — the ultimate purpose of their business, and this is where they fall short. If you can’t answer why your company is important to both business and society at large, there is little bonding you to your employees, customers and shareholders.
Certainly, business must not lose track of our profit motive; indeed profit with purpose can be more profitable. Without the long-term anchor of purpose a company is more likely to be swayed by passing trends, tempted to cut corners, or give up and change tack when things become too difficult.
Achieving a balance between performance and purpose will test the willingness of business to change, but a business that emphasises purpose without performance — while admirable — is not sustainable. And a business that achieves performance without purpose is meaningless.
Critically, being a purpose-driven company is as much about protecting your bottom line as it is about growing it. Studies show that employees in purpose-driven businesses find greater meaning in their work, are more engaged, and are five times more likely to stay in their current job. From a consumer perspective, purpose-driven businesses are perceived to be more authentic and more caring, and as a result, consumers are more loyal to them.
The desire to work for a purpose-driven business stems from a basic human need that what you do and how you do it serves a greater purpose than earning an income or filling your time. This is especially true in SA where decades of unequal growth and a lack of economic inclusion has excluded the majority of the population from benefiting from the country’s economic growth.
As the president of Business Unity SA president South Africa, Sipho Pityana recently pointed out at the Investment for Inclusion Forum, growth on its own is not enough to reduce inequalities, and business needs to play its part in driving inclusion.
Leadership plays a huge role in achieving this. A purpose-driven business requires its leaders to show commitment to their purpose. This means conducting your business in a way that is both personally and socially beneficial and acting in a way that is personally meaningful.
Unsurprisingly Cook-Deegan and Bronk found that purpose-driven leaders are more likely to inspire purpose-driven employees — and that they are more satisfied with their careers and their lives outside of work.
If this seems like a tall order, they suggest starting with a few simple questions to help you clarify your purpose. For example, why did you start your company? What were you hoping to accomplish? Are your personal values reflected in the way you do business and do they influence your decisions?
These questions should already start to identify the purpose behind your business towards establishing a more purpose-driven, conscious — and ultimately successful — business.
• Craker is the CEO of IQbusiness
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.