The Importance of Business Purpose in 2022
Filter tag: Change Management and Executive Outplacement, Customer & Brand, Leadership Capability, Strategies for Growth
The challenges of the past two years have certainly highlighted the importance of purpose from a social standpoint as businesses have become more vocal and cause-driven than before. We have seen businesses take a stand on the issues their customers care about and that impact us all societally. Those who get it wrong or do so inauthentically have often fallen under the scrutiny of the court of public opinion, but those who get it right can reap major reputational and business reward. Research has found that 52% of purpose-driven companies experienced over 10% higher growth versus of non-purpose-driven companies (42%), benefitted from greater global expansion (66% versus 48%), launched more products (56% versus 33%) and had higher success in major transformation efforts (52% versus 16%).
With all that in mind, what role does business purpose play in 2022? As we begin the new fiscal year, how should leaders be thinking about and enacting purpose within their organisations in order to overcome these challenges, build stronger teams, and earn trust in the marketplace? Most importantly, how do you get it right?
As a recap, your purpose is your ‘Why’ when following Simon Sinek’s Golden Circle Model. It is that highest level of fulfilment on Maslow’s Hierarchy of Needs after the basic requirements of sustenance, security, and socialisation are addressed. It is the principle at the heart of all of your business activities and the core reason for the organisation’s existence. On a more individualised level, purpose is the reason why you get out of bed every day. It is why you are in the role that you are in, doing the work that you have chosen to do. Purpose does and should underly every business activity, which is why it is essential that you have one.
Of course, every organisation exists with some money driven objective. It is the aim of organisations in the private sector to turn a profit, and even not-for-profit organisations typically have some sort of fundraising objective tied to whatever cause they support. While these financial goals are fundamental to the operations of the business, they cannot be the sole reason the organisation exists in 2022. Today’s customers will no longer accept it, and staff will no longer support it.
That’s because the past two year have accelerated a change that was slowly boiling under the surface. Being dealt so many societal and personal challenges all at once left us all a bit more empathetic of one another and more pensive about the bigger picture. We have experienced major shifts in the ways we live our lives and do business. Today’s customers want to do business with organisations they feel stand for something or share their values. In the wake of the ongoing ‘Great Resignation,’ staff want to feel like more than just a cog in a machine and want to know that they matter more than the bottom line. Identifying and living out a purpose is how the business and its leadership are able to make that happen. One of our previous blogs goes into more detail on how to identify purpose, how to enact it, and why it matters, all of which are still relevant today.
But as the new fiscal year begins, there are extra considerations that need to be made given our current social, economic, and geopolitical climate. Here are a few things we recommend leaders think about moving forward:
- Be clear about your purpose: If your business does not already have a clearly defined purpose, it’s time to get one. If you do have a purpose statement but it’s tied to profits in any way, it’s time to rethink it. Your purpose needs to be achievable, honest, and in line with what you do as an organisation. You aren’t trying to pull a rabbit out of your hat or make a purpose appear out of thin air. Odds are, you already have one hiding in plain sight. Why do you offer the services you offer or sell the products that you do? How does it benefit your customers or the world around you? The answers to those questions will likely highlight your core purpose, but once that is solidified it is okay to add on. You may choose to align your purpose with some of the macro issues in society. For example, you may decide that your business needs to play a role in helping combat climate change and work that into your purpose via changes in your supply chain or daily practices. You may be disturbed by any talent inequalities in your industry and decide to strive towards fairness, working equality into your purpose via your hiring practices or the makeup of your board. So long as you understand that your business stands for something bigger and you operate from that place, you are on the right track.
- Authenticity matters: That said, whatever you choose to champion needs to be something you are willing to and capable of enacting. Today’s customers are savvy, and they are willing to do their research. If you are publicly championing diversity and equality yet your HR figures don’t reflect that, your customers will see right through you and the reputational blowback will be damaging. Once you define what your purpose is, you then need to live it out. Do not say your organisation is dedicated to making the world a greener place if you aren’t doing anything to improve its environmental impact. You cannot call yourself a people-centric organisation if your staff are unhappy and feel mistreated. It all goes back to the idea of ‘walking the talk’ from our previous blog, which now feels more relevant than ever. Say what you mean and mean what you say. In the digital age, businesses and their leadership are under constant scrutiny. Information spreads like wildfire and all it takes is one viral post to tank your customers’ trust and support. You need to ensure that whatever it is you claim to stand for is what you are living out day to day.
- Purpose and your people: But it isn’t just your customers who are invested in your organisation’s purpose. Your team are critically important for bringing it to life, all while having their own personal investment in the mission. The challenges of the past two years have made many professionals reprioritise what matters to them in their career, and the ways that businesses treated their people during this time had major impacts on their organisational success during this challenging period. Those who were more focused on their own profits while their staff contended will the damaging effects of the pandemic and struggled under the weight of higher costs of living are the businesses who were most likely to be hit hard by the Great Resignation. After living through so much loss and hardship, your people want to be treated like people instead of numbers. Your staff are not a means to an end; they are the heart and nervous system of your business and should be treated as such. Your people want to feel as though they are contributing to something bigger and that their work has meaning beyond just making money for those at the top. Purpose can provide that, especially once it becomes an integral part of the business and its operations. By providing that deeper sense of fulfilment and keeping your people front of mind, you may be able to more easily retain staff who are on the outs or attract new talent as the business grows and evolves. But you need to understand that the modern career is now about more than simply going to work, doing your due diligence for eight hours five days a week, and collecting a paycheque. Our careers are a major part of our lives and should provide some sense of fulfilment on both the micro and macro level.
- Tune in: As a leader, you need to think about purpose from both an organisational and a personal standpoint. You are responsible for helping the organisation define what it stands for, but also for diffusing that message throughout every level of the business. Part of that role is tuning in to what’s happening around you both inside and outside of the organisation. Is your messaging in line with what is happening in the world today? Are you addressing the types of issues that your people care about? What do your team’s individual purposes look like? What ties them to the organisation or motivates them to show up every day? Keeping your finger on the pulse and adapting accordingly can help you more easily transition your business through periods of challenge or change. Taking a stand is only half the battle. How you choose to behave every day after the fact is what will have the most impact.
- Take a human approach: To quote one of our consultants Lesley Lindberg, “Being human needs to come back into fashion.” Purpose is what humanises business and needs to be dealt with in a human way. If you are thinking about purpose as a means to an end or telling yourself that “I have to care about this thing so that the business can turn a profit,” then you are doomed before you even begin. The next chapter of business asks us to step outside of purely commercial thinking and embrace what it is that unites us as human beings. Every single one of us has needs, wants, desires, motivations, and challenges. Once we examine those more closely, it’s likely that we will find more similarities amongst ourselves than differences. The past two years have dealt all of us challenges to overcome, and while differences in opinion caused some societal divisions, we saw a rise in empathy and understanding. The pandemic levelled the playing field, and now that it is near its end we need to remember its lessons and continue to live them out. At the end of the day, we’re all just people. That understanding and mindset will be valuable as we continue to navigate the ongoing geopolitical, social, economic, technological and business challenges that continue to oppose us.
As we enter the 2022-23 financial year, purpose continues to be increasingly important to our business lives. However, given the ongoing and new challenges we face, purpose needs to be more than just pretty words shared on your company website or regurgitated in your comms. Know what you stand for and then actually work to live it out. If you do so authentically, you will have a much easier time navigating change, building trust and credibility, and keeping your people on your side.