Transitioning to Purpose-led Economy — Part 2
An economy where every participant defines its activities by a purpose or a raison d’être.
In our first article we set the stage for the need for a Purpose-led economy but what exactly do we mean by ‘Purpose-led economy’?
Is it compatible with our current economy? Do we have examples of such companies?
A purpose-led economy is an economy where every participant defines its activities by a purpose or a raison d’être.
The Raison d’être guides those participants in making the right decisions: those that maximize the positive Social and Environmental impacts on the Environment and Human Beings.
Companies such as Interface, Patagonia, or Aetna have long understood the importance of setting a purpose that captures employee inner motivation, rally stakeholders (investors and customers included) towards achieving a common mission while non giving up on the required profits to build a sustainable future.
Take the example of Interface for instance.
The iconic CEO and founder Ray Anderson experienced a ‘spear in the chest’ moment through demands from customers asking ‘what are you doing for the environment?’ that led him to realize that Interface impacts on the planet were far from being positive.
It created a new purpose for the company to lead the company to sustainability.
The company put together EcoMetrics to measure the material and energy flowing in and out of the company, it defined ‘moonshot’ goals to reduce their CO2 and water footprint. Among the various pillars of the strategy, we can point to transparency, taking a circular approach which at BEYOND we call holistic and starting to share with others including their competitors their knowledge.
For what results you may ask? 92% reduction of waste to landfill, 89% water use reduction in factories, 89% shift to using renewable sources, 96% reduction in carbon emission.
In the meantime the company that is listed on the NASDAQ grew its revenue and its gross profits proving you can run a company with purpose, minimizing your footprint on the planet and still make profits for your investors.
Now Interface wants to go further as they define their new mission: Climate Take Back.
Note that it is not mandatory to link your purpose to the environment but having a clear vision that encompasses all your stakeholders and clearly defining your impacts act as a true compass.
Even companies such as McKinsey that are not especially known for taking purpose-driven decisions are starting to study the benefits of purpose at a company level using the traditional prism of profits and productivity.
- In a purpose-led economy, participants understand the impacts of the decisions they are taking as reliable information is easy to access and is naturally disclosed by participants
- In a purpose-led economy, trust is the primary resource. Not data, not dollars, not time.
- In a purpose-led economy, products and services are measured against their impacts on the people and the planet.
- In a purpose-led economy, employees are engaged, customers become advocates and investors are activists.
- In a purpose-led economy, long term impacts rather than pure profits, drive decision making. Profit is a consequence of positive long-term impact.
- In a purpose-led economy, human beings health is not something that can be traded
A purpose-led economy is easy to talk about but rather harder to walk. In the coming articles, we will explore the tools available to managers, entrepreneurs, and executives to travel that road; we will also discuss the roadblocks in today’s world to implement a purpose-led economy and how to measure its effectiveness.
We will also explore how you create harmony between the economy (the human organization of HOME) and ecology (the exogen environment around the economy)…the Ecologist Purpose Led Economy?
