Purpose and Meaning in the World of Business
In just a few hundred years, capitalism has proven to be an enormous force that’s transformed the world in remarkable ways. It’s spread virtues like self-governance and self-reliance around the globe and lifted many people out of poverty. It’s also clear that the “profit and power at all costs” approach to capitalism, the ‘Milton Friedman approach’, has left us with a world on fire, species and habitat loss, extreme inequality, and a global crisis of depression, stress, and apathy at work. We cannot keep going like this. It is simply not sustainable.
The good news is, the world of work is continually changing and capitalism is already being reinvented. Over the past decade, we’ve seen a profound shift in both business and culture; and the last two years have brought seismic shifts. Companies are waking up to the fact that having a purpose beyond profit is not just good for business, it’s essential. It’s increasingly evident that committing to sustainable development is not just charitable do-gooding, it’s a competitive edge. Having a clear purpose is paramount for success in today’s economy and it should shape the way a business is designed and run. Doing good is an integral part of making your brand appeal to customers, investors, and employees. It’s no longer just about making money — it’s about making a difference.
What do we mean by purpose beyond profit?
Simply put, the role of business is expanding. Profit can no longer be the only goal, nor the only metric for measuring success. Purpose is the higher reason that goes beyond profit. Purpose-driven businesses strive to be responsible, to do no harm, and to make decisions guided by core values every day. They act in the interests of all stakeholders, (including planet Earth and other species) not just shareholders. They have a mission and vision for a better future. Check out our blog on what it means to be a purpose-driven business or conscious company to learn more.
Why does it matter?
There’s plenty of data to support the idea that Millennials and Gen Z expect brands to address environmental and social problems. But it goes beyond just the younger generations. We’ve entered the age of the conscious consumer, activist employee, and impact investor.
86% of Americans believe that companies should support issues that directly impact, or are impacted by, the business.
The expectations of employees, customers, and citizens have evolved. People are ready to support and advocate for brands that genuinely do good. Let’s take a look at why purpose and meaning matter to three key stakeholder groups.
Customers
Every business is eager to attract customers. The data shows us that it becomes easier when you stand for more than making money. A 2018 study conducted by Edelman found that 64% of consumers will buy from, or boycott, a brand “solely because of its position on a social or political issue”. Consumers believe that companies could be a more powerful force for environmental and societal change than governments or NGOs. This is because businesses have greater flexibility in how they use their time and resources. They can respond more quickly to consumer demands and social trends.
These customers are not wrong. In a 2019 TED talk, Harvard Business School professor Michael Porter points out that we’re not making progress fast enough by relying on government and NGOs alone to address issues. He also aptly points out that businesses have greater resources to address current issues because US corporations have nearly seven times the annual revenue of the US government.
When a business embeds purpose, meaning, and values in its operations and actions, customer loyalty skyrockets. People are voting with their dollars in greater numbers than ever before, and 2020 was a tipping point. A January 2021 survey on brand values conducted by Vrity found that the majority of Americans (74%) say that “brands should try and make the world a better place”. Additionally, more than half (55%) of those surveyed said they pay more attention to brand values than they did one year ago, and 52% bought from a brand for the first time because of that brand’s values. Customers are smart, and they’re driven to learn more. For people 45 and younger, nearly half (49%) will research a brand's values online before making a purchase.
When a company leads with purpose, 89% of consumers have a more positive image of that company.
Purpose also has a profound impact on customer loyalty. According to the 2019 Purpose Biometrics study by Cone Porter, purpose helps to build deeper bonds. An impressive 79% of Americans say they feel a deeper personal connection to companies with values similar to their own.
Investors
It’s not just consumers who are voting with their dollars. Investors are also aligning their portfolios with their values. In fact, the impact investing market has exploded. According to the Global Impact Investing Network (GIIN), in 2020 the market hit $715 Billion in assets under management (AUM). That represents more than 40% growth since the prior year, and this trend is expected to continue over the next decade as the focus on corporate social responsibility increases. It’s not just institutions — this shift is happening among individual investors as well. Impact investments are made with the intention to generate positive, measurable, social, and environmental impact, alongside a financial return. All around the world, investors are working to unleash the power of capital for good, addressing the most pressing challenges along the way.
Larry Fink, the acclaimed CEO of BlackRock - the world’s largest asset management company - publishes an annual letter to CEOs each January. This letter has profound implications for how capital will be allocated for the year. In 2018 he said that “society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance but also show how it makes a positive contribution to society.” He went on to say that “profits are in no way inconsistent with purpose. In fact, profits and purpose are inextricably linked.” This rocked the investing world but also clearly shows that meaning and purpose are becoming essential.
While impact investing is producing strong returns, this shift is about more than earnings alone. People don’t want to leave a legacy of profiting from death and destruction. We want to know where our money is going, because where we invest is one of the simplest ways to contribute to values-aligned, positive change in this world.
Employees
Essentially, for individuals, purpose is who we are and it’s why we do what we do. People are searching for more than just a job, and with good reason. They’re fed up with working day after day for a company that doesn’t appreciate them, treat them well, or care about their wellbeing. This dissatisfaction is costly. Worldwide, fewer than 2 in 10 people are engaged in their work (according to Gallup’s 2020 State of the Global Workplace Report). It’s only marginally better in the US, coming in at 3 in 10 people. Overall, these numbers are dismal. It shouldn’t be this way, and it certainly doesn’t have to.
Purposeful workplaces attract talent and cultivate engagement, meaning, and motivation. If people feel connected to a company’s mission and values, productivity and engagement come more naturally. Focusing exclusively on pay, benefits, and perks to motivate employees might work in the short term, but it doesn’t last. To remain motivated and fulfilled, people need to be doing work that is personally meaningful to them. It’s up to leaders to bridge the gap between company purpose and each employee’s individual motivation. Unlocking this will have profound effects on morale, and ultimately, on an organization’s performance.
“It turns out only one percent of full-time workers who are fulfilled in life are unfulfilled at work. This means that, statistically, if you work full-time, finding fulfillment outside work doesn’t cut it.”
~ Aaron Hurst, Imperative (2019 Workforce Purpose Index)
Our jobs are certainly not the only place where we can find meaning and fulfillment in life. However, most of us need full-time employment, and that means we’re spending most of our waking hours at work. So, finding fulfillment in our careers goes a long way towards living a full life.
The Way Forward
The Global Pandemic has only accelerated the purpose-driven business movement. The past two years have been an existential rollercoaster. The world we knew disappeared almost overnight. We’ve been forced to reconfigure our routines, workspaces, priorities, roles, and so much more. Many of us have looked in the mirror and questioned how we’re spending our time. Perhaps it’s the realization that life is short and passing by too quickly. Or maybe you’re struggling with the feeling that your job wasn’t “essential”. Or perhaps, sadly, it was the loss of a friend, relative, coworker, or neighbor that opened your eyes and shifted your mindset. Whatever the cause, we’re never returning to life as it was before the pandemic. That’s simply not possible. We’ll build new ways of working and living, but so much has been fundamentally changed. Collectively, we are hungry for more — a deeper sense of purpose and engagement with our lives and our work.
