‘Ultimately, purpose is the engine of long-term profitability.’
Larry Fink, CEO, BlackRock
Over the past two years, the CXM team was regularly reporting on the importance of purpose and value in business. The impact of trust-building in the CX industry finally came into the spotlight. However, closing the gap between company purpose and the actions for its fulfilment.
The new report published by Black Sun, a global stakeholder communications company, offers significant data to leaders looking for purpose-driven growth. In this article, we summarize the key findings from their research.
Setting the right performance metrics
According to a new brief by Black Sun, a vast majority (98%) of global leaders believe that having a corporate purpose is now business-critical. However, only 51% reported recognizing the clear vision of their organization.
While the interdependency of purpose and profit became clearer over time, many companies still don’t have an intentional strategy for bringing the two together. To understand the gaps, leaders need to track the right performance metrics.
Yet, many business executives still lack the tools necessary for using performance reviews correctly and making informed strategic decisions. The research shows that only 11% of business leaders are making extensive use of performance metrics while bringing important business decisions.
“This research perfectly illustrates that society’s expectations of business are changing. As a result, business strategies that worked in the past will fail in the future. The key challenge for business leaders is to reimagine how they create value for all stakeholders, embed it into their business model and measure results – if they want to survive and thrive now and, in the future, businesses will need to adapt,” shared Andrew Harding from Association of International Certified Professional Accountants.
Where is the gap between corporate purpose and actions?
As explained in the Black Sun’s report, business executives believe that corporate purpose should be a strategic framework. Having a clear purpose and values serves as a lens for decision making and is often critical to generating sustainable profits over the long term.
Let’s take a look at the statistics showing us where is the gap between purpose and action:
- Nearly all companies have a statement of purpose but only about half (51%) of business leaders believe their purpose statement is clear.
- Nearly all executives surveyed (99%) agree that understanding all dimensions of value creation is necessary to make timely and well-informed decisions.
- A majority of executives surveyed (75%) believe that company performance would improve if management used longer-term perspectives. Only 28% of them actually work with a time horizon of more than three years, although 58% would like to do so.
- Most business leaders (62%) believe that their current reporting meets the information needs of key external stakeholders. However, executives acknowledge that there is still room for improvement.
- 75% of executives believe integrated reporting enables a company to communicate the factors that create value over time.
“There is a growing and global understanding that integrating purpose, long-term value drivers, and transparency into a business strategy can enhance economic, environmental and social outcomes. This report indicates that tools such as the Integrated Reporting Framework and Integrated Thinking Principles can help businesses deliver these results,” concluded JanineGuillot, CEO, Value Reporting Foundation.
Knowing your Why is not only important to your employees but also to the wider community as well. There are different socio-economic factors impacting the future of our planet, and our general wellbeing. Without a strong purpose, businesses might struggle to stay on the market long term.