Many of the entrepreneurs we meet are either struggling against, or giving in to the gravitational pull of day to day operations. As expectations from customers, employees and even government ratchet endlessly upwards, it is understandable that their focus gets pulled towards the demands immediately in front of them: Client expectations, staff morale, cashflow.
For many this becomes the norm and brings its own rewards – including the emotional payback of being seemingly indispensable.
So why should we care about, let alone invest in purpose?
Your business purpose: a powerful differentiator
The danger comes when your customers and employees begin to lose sight of why: why they chose you over another equally energetic and committed supplier. Why they chose to work in your firm rather than another. Why they keep staying late at a cost to their personal lives and loved ones.
Absent this perspective, they will begin to focus on what you do, which may ultimately be little different to your competitors, or how you do it. Ditto. In many sectors, clearly articulated product and service propositions are ‘table stakes’: necessary to be considered a credible player, yet insufficient to drive meaningful differentiation and preference.
Unless you give them a more powerful and sustainable reason to prefer your business over competitors, the risk is that your clients, employees, suppliers and other stakeholders who may be asking themselves why they should stick with you, conclude that they shouldn’t, and leave.
So is that reason your purpose alone, or is there more to it?
Business purpose and profit: an inextricable link
The idea that businesses will benefit from identifying, articulating and determinedly pursuing their purpose is not new.
Simon Sinek famously and brilliantly extols the value of ‘starting with why’ in his TED Talk ‘How Great Leaders Inspire Action‘. As he so brilliantly puts it: ‘I have a dream’ is infinitely more engaging than ‘I have a plan’!
In their book, Conscious Capitalism: Liberating the Heroic Spirit of Business , John Mackey and Raj Sisodia provide a very full and persuasive explanation of why purpose-led businesses are inherently better organised to balance and meet the expectations of all stakeholders, compared to businesses whose leaders prioritise shareholder returns above all else.
Yet some business owners and leaders may harbour a lingering doubt that this is somehow disconnected from a more hard-nosed, commercial approach to business. If you are one of them, consider what the leader of the world’s largest asset manager recently wrote on the subject.
Larry Fink is Chairman and CEO of BlackRock, which has more than $8 trillion under management. Each year, Mr Fink publishes a letter to CEOs in order to ‘advocate for practices that we believe will drive sustainable, long-term growth and profitability.’
The title of Mr Fink’s 2019 letter was Purpose and Profit, in which he stated, in bold type: ‘Profits are in no way inconsistent with purpose – in fact, profits and purpose are inextricably linked.’
He continues: ‘Profits are essential if a company is to effectively serve all of its stakeholders over time – not only shareholders, but also employees, customers, and communities. Similarly, when a company truly understands and expresses its purpose, it functions with the focus and strategic discipline that drive long-term profitability.
‘Purpose unifies management, employees, and communities. It drives ethical behavior and creates an essential check on actions that go against the best interests of stakeholders. Purpose guides culture, provides a framework for consistent decision-making, and, ultimately, helps sustain long-term financial returns for the shareholders of your company.’
It is a theme he has returned to every year since. In his 2022 letter, Mr Fink writes: ‘It’s never been more essential for CEOs to have a consistent voice, a clear purpose, a coherent strategy, and a long-term view. Your company’s purpose is its north star in this tumultuous environment.’
The power of purpose – shaping company culture
Mr Fink’s letter leaves little room for doubt: in his view, at least, purpose is powerful stuff indeed!
We agree, and believe that the clue to its ultimate power lies in three words he uses, above: ‘Purpose guides culture…’
Nobody could reasonably argue that simply knowing your purpose is enough. The power is felt when it influences every aspect of the organisation, and the mechanism through which it does this is a company’s culture.
In Conscious Capitalism, Walter Robb, co-CEO of Whole Foods, describes how this happens:
‘At the heart of WFM (Whole Foods Market) are our core values which represent true stakes in the ground – deeply held beliefs which we use to guide our decisions. All around the values is our culture, which represents the actual practice of those values over time. The culture is a living thing that weaves in and throughout our company operations, breathes life into the company execution, and leaves team members feeling at a minimum connected, and from there full, affirmed, hopeful, and even joyous in the workplace.
‘Culture is no less than “how we do things around here.” Less tangible than other assets on a company balance sheet, it is nonetheless the most valuable asset a company has – for it stitches people together in common beliefs, values, and purpose and represents the basis for authenticity of experience for both team members and customers.’
Purpose guides culture – your most valuable asset
There it is: the powerful and sustainable reason to prefer your business over competitors is your company culture, which flows from and is guided by your purpose.
Culture offers such a powerful and sustainable advantage precisely because it is so much harder to create and sustain than product or service propositions, and is almost impossible to copy: there are simply too many variables.
Assuming you had a purpose in mind when you set up your business, ask yourself to what extent it still informs, guides and inspires every aspect and every member of your operation today.
Company cultures guided by purpose are scalable and sustainable
A popular notion is that ‘People buy people’. This is powerful, except that in a business sense, it isn’t scalable or sustainable. People move on and one day, business owners may want to exit. A much more powerful and ultimately valuable notion is that people buy cultures: the unique way that a business goes about its business, irrespective of which person or department is involved.
We have all experienced the power of this: the hotel where every member of staff greets you genuinely and warmly, the car dealership where you are made to feel looked after by everyone from the reception team to the mechanics, the hospital where care and compassion appear to be limitless.
Company cultures outlast people and can be passed from one generation to the next. Great cultures are agile, and can adapt to changing times and requirements. Those that flow from a clear purpose and are built around solid values can do so without losing their way, and this, ultimately, is the value of purpose in an ever-changing world.
Would you like to find out more about improving your business by understanding its purpose, with the help of a business coach? Book a call below, contact us online or call 0345 222 5618 to start the conversation.