Why Companies With Purpose Will Win In 2020
“An effective social-purpose strategy creates value by strengthening a brand’s key attributes or building new adjacencies” — Harvard Business School Review (Spring 2020, Special Edition)
As a CEO, I want to ensure my company’s success. But what does success mean? Success is attributed to a variety of variables; one being, a company’s purpose. A companies raison d’être if you like: a reason for being. I recently read the spring HBS special edition review ‘How to lead with purpose’ — a review I will cite frequently in this article. Further, If you haven’t read it, this article will summarize it for you. When reviewing what a company’s purpose might be, Netscape CEO Jim Barksdale pointed out what it is not: “Saying that the purpose of a company is to make money is like saying that your purpose in life is to breathe.” That is a given, as it doesn’t matter what your purpose in life is if you’re not breathing! In the same way, profit and ROI are core to the foundation of a sustainable business model. So then, what might ‘purpose’ mean for a company, especially a start-up, trying to compete in the year 2020?
During my studies at Stanford University, it became increasingly apparent that the companies that practice ‘a triple bottom line’: Planet, People, and Profit are going to be the winners in this day and age. To compete in this era, companies must take advantage of the shifting social and business climate. In this article, I will help you understand how companies can put ‘purpose’ at the core of their strategy.
Discovering the ‘purpose’ may be hard for some and easier for others. However, it is a crucial component to any organization that wants to be successful. Figuring this out is an internal process. Questions you should begin asking are: ‘Where have we come from? What makes us unique? Where does our DNA open up future opportunities we believe in?’ (HBS, 2020)
Create an inspired workforce
One component of creating a purpose-driven organization is by creating an inspired workforce.
‘“If you want employees who are more engaged and productive, give them a purpose — one concretely tied to your customers and your strategy.’ (HBS, 2020)
“Many employees feel disconnected from their organization’s purpose. In a recent survey, just 39% said they could clearly see the value they create. More than half weren’t even “somewhat” motivated, passionate, or excited about their jobs”. (HBS, 202)
We often see employees disengaged with their work and as a result, do not perform to their full potential. When management inspires their employees with a sense of higher purpose and inclusion in achieving this vision, the result is more commitment and engagement with employees who feel their work has meaning. “A successful company purpose is motivational because it connects with the heart as well as the head”. (HBS, 2020)
An example of one way to acquire and retain employees is by including them in CSR (Corporate Social Responsibility) initiatives. This allows for a sense of belonging, fulfilment, team building and community engagement. One particular CSR initiative that has seen increasing benefits for a productive workplace is employee wellness programs. The company Johnson & Johnson shed light on the benefits that this type of shared value approach yields, “By investing in employee wellness programs, Johnson & Johnson has saved $250 million on health care costs.” (HBS, 2020)
The UAE based company, Corporate Sports, has worked with a variety of companies such as; Nestle, Amazon, UAS International Trip Support and Emirates; to implement employee wellness programs.
“Corporate Sports is passionate about unlocking potential and accelerating business performance and success by focusing on the human aspect of a business. We assist corporates to establish, facilitate, and manage holistic wellness programs and sports events, within their businesses to elevate their brand, enhance employee morale, and boost performance and profits”. (https://corporatesports.ae)
An eye-opening quote I came across in the HBS review is: “Societal needs, not just conventional economic needs, define markets, and social harms can create internal costs for firms”.(HBS, 2020)
Therefore, it is evident that there is a correlation between creating shared values, saving costs and retaining employees who ultimately benefit the company through enhanced productivity.
Creating Shared Value
Rather than viewing your organizations purpose as a CSR strategy, the HBS Review highlights the importance of creating a CSV (Creating Shared Value) strategy. The connection between competitive advantage and social issues can be attributed to, for example, what happens when a firm invests in a wellness program. When we consider this it becomes evident that “society benefits because employees and their families become healthier, and the firm minimizes employee absences and lost productivity”. (HBS, 2020) A company’s value chain “inevitably affects — and is affected by — numerous societal issues, such as natural resource and water use, health and safety, working conditions, and equal treatment in the workplace”. (HBS, 2020)
Redefining productivity in the value chain must include an internal ESG (Environmental, Social and Governance) assessment and strategy. With an increasing population of conscious consumers and educated employees, building a strategy that aligns all relevant stakeholders is no longer an option, it is an opportunity to gain a competitive edge.
The HBS review describes the factors necessary to build an effective strategy. This includes forming a deep understanding of a company’s brand heritage, customer tensions, product externalities, and brand attributes.
“Managers often struggle to reconcile corporate-level sustainability efforts, CSR programs, and social purpose strategies for their brands, causing them to misdirect brand marketing resources toward increasing consumer awareness of corporate-wide programs.” (HBS, 2020)
To ensure the proper allocation of resources, a company must clarify the roles of existing or potential social initiatives and assess the impact that such initiatives might have on it’s stakeholders. Allocating resources effectively includes conducting internal and external assessments of the company’s activities. Further marketing the correct impact that is associated best with a company and it’s customers leads its success. I have often seen companies that are not transparent with their initiatives, whether it be questioning their value chain, or certain marketing campaigns that are increasingly coined to the term “greenwashing”, this brings about a large feeling of distrust. Instead, companies must practice what they preach transparently by taking accountability for their actions. As a consumer, if I can trace the impact that you’re creating, whether that be through the production of your product or a social initiative that is close to my heart, you will have a customer for life. I will preach your product everywhere I go. I will use your product and I will keep coming back for more. Majority of the millennials feel this way and Gen Z will only continue to rep this societal trend.
A good example of a brand championing sustainability is the cosmetic and skincare company 100% Pure. (https://www.100percentpure.com) Not only are all the ingredients quite literally 100% pure and natural, for every sale made a tree is planted with trees.org.
The products are ‘animal-cruelty free’ and there is an ingredient glossary on the website that consists of sourced pigments from fruit, vegetables, tea, cocoa, and minerals. Some people may say well how do we know that it is animal-cruelty free? 100% Pure has gone through incredible efforts to gain certification to prove this. The question of how a company can effectively market internal and external sustainability practices is central to achieving an effective ‘purpose’ strategy.
Organic labelling is indeed creating a “green-washing” phenomenon, as research shows that customers in the united states do not trust USDA labelling and have a strong distrust for supply chain sustainability. This opens up a new door of opportunity where company’s that are truly putting sustainability at the core of their business practices, can showcase their efforts transparently, which will give them a competitive edge against those companies that do not showcase and attribute impact appropriately.
At Global Impact Network Inc, our purpose is not our vision or mission statement, nor is it our core values. Our purpose is how we connect our core values to our vision and mission. It’s the culture we are creating not only within our company but in every community, every organization, every corporation, every country, and all around the globe. It’s defining what matters most to us and our customers and making sure that we are aligned in the ways we choose to make a global impact.
If you need help creating a strategy of purpose, be sure to reach out to my team. A part of our purpose is making sure that companies adopt to the shifting societal and business climate so that you can bring shared value to your customers, your employees, and your shareholders.
Please visit www.globalimpact.world or email us at info@globalimpact.world. We look forward to helping your company become an industry leader in championing sustainability!
References:
‘How to lead with purpose’: Harvard Business School Review (Spring 2020, Special Edition); (HBS, 2020).
