“To prosper over time, every company must not only deliver financial performance but also show how it makes a positive contribution to society.”Larry Fink—Founder of BlackRock
The Covid-19 pandemic has fundamentally changed the way we look at the world, including our relationships with family, friends, employers, public spaces, technology, and wider society. Over the last two years, world economies have buckled under immense pressure, in parallel we have seen growth and increased prominence placed upon the need to act with genuine purpose.
The pandemic is one of many factors that have challenged the traditional operating paradigm. Some of the additional factors include climate change, social and economic inequality, and market- and technology-driven distribution. All these social and economic challenges are forcing governments and organisations to respond in a genuine purpose-driven manner.
Society is now demanding that businesses stand for something greater than financial performance— a purpose that is optimised economically and socially. Thus, the challenge that many business leaders are facing is how to build genuine purpose-led organisations that will be relevant and viable in the long term.
The strategic imperative for purpose-led organisations
Over the last decade, industry leaders have incorporated a sixth ‘P’ to the business equation: Purpose. This element is included alongside Product, Place, Price, Promotion and People. Industry leaders such as Larry Fink argue that purpose will be the variable deciding which companies survive and win over the next decade. Therefore, it is a factor that cannot and should not be ignored or demoted to a soundbite.
During the last 30 years, purpose-driven businesses have outperformed competitors according to most profitability benchmarks. It seems that these organisations are well-positioned to succeed within the emerging purpose-led economic model. They are actively harnessing this period to update and rewrite their playbooks.
However, it is important to differentiate between corporate social responsibility and a purpose-centric approach. The former can be broadly defined as an action or service that aims to support a specific cause, such as a particular sustainability initiative. The latter, on the other hand, integrates the goal of social value generation into the very business model, making it central to the organisation. Consequently, a purpose-led leadership ensures that social good is actively promoted at both times of abundance and distress.
The evolving need for purpose-led leadership in business
I recently facilitated a strategy session with a client using a set of purpose-led questions to anchor the conversation. The questions were as follows:
- What type of value do we need to create/maintain to be viable in the long term?
- What are our values and contributions to wider society?
- What changes do we need to make to ensure that we bind purpose into our business and ways of working?
What I took away from these sessions is that responsive leaders are increasingly binding purpose within their business models. They strive to connect their growth strategies to wider economic and social agendas, such as United Nation Sustainable Development Goals. To contribute to this global mission by 2030, businesses are aligning their value propositions and purpose with the impact they might have on society. Therefore, for winning businesses, being purpose-led is becoming an integral element of their identity.
Creating space for new workplace challenges
It is also important to highlight how interconnected today’s world is, which in itself calls for a new and purpose-led leadership approach. In other words, the leaders today have an opportunity to reinvent themselves through experimenting and addressing some challenges we have not had the chance to talk about earlier: mental health and wellbeing at the workplace, equality, inclusion, diversity, ethics, and new ways of collaboration.
When leaders take these challenges as their starting point in building the company’s culture, they essentially start building the purpose-led culture throughout all organisational levels. Why is this essential in today’s world? Because being purpose-led might be the only competitive advantage for many companies going forward in an uncertain economy, where trust and transparency are vital.
Businesses that fully integrate purpose are growing faster than those that do not, and the market, consumers and investors are taking notice.
Still, companies should not apply a superficial veneer to purpose, as this may jeopardize trust and cooperation. Instead, they should align all organisational levels accordingly and deeply root purpose into the culture, brand and its’ DNA.
All views expressed are my own.