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Why Purpose Matters

Flourishing enterprise is what every leader wants. It is about people being inspired everyday and bringing their whole selves to work; it’s about innovation arising from everywhere; and it’s about realizing remarkable relationship value with stakeholders—customers, employees, communities, and the biosphere—to create unprecedented, enduring business advantage.–David Cooperrider A few months ago, I did Appreciative Inquiry […]

Flourishing enterprise is what every leader wants. It is about people being inspired everyday and bringing their whole selves to work; it’s about innovation arising from everywhere; and it’s about realizing remarkable relationship value with stakeholders—customers, employees, communities, and the biosphere—to create unprecedented, enduring business advantage.
–David Cooperrider

A few months ago, I did Appreciative Inquiry interviews with employees at Tesla—at display centers in Amsterdam in the Netherlands and also Columbus, Ohio, and Sarasota, Florida, in the US. In one of the interviews, I was speaking to a young millennial at the display center. He was passionate. Brilliant. Responsive. And it was apparent that he loved what he was doing. So, I asked a simple question: “What is your job here—what do you do?” He smiled with pride. He said: “my job is to electrify the renewable energy age.” I said, “no, that’s not what I’m asking…I want to learn more about your job. You know, what do you do here at Tesla?” He repeated: “my job is to electrify the renewable energy age.” I said, “Okay, let me ask it a different way…how would you describe your job to your mother, you know, what you do every day?” 

Then he raised his voice higher: “I share with my mom exactly what I’ve told you: “my job is to electrify the renewable energy age.” 

As a leader, can you imagine if every employee in your company said the same thing—from the shop floor to your C-suite team—when asked about their job in relation to the corporation’s purpose and mission? Like him or not, the founder of Tesla has successfully demonstrated what we call “the corporation as a cause” and an agent of change–in this case industry and world change. Purpose-driven companies are magnets: they are magnets for investors; they can rally employees; they can grab new business opportunities and even react to crises more efficiently. If you want to look at how tomorrow’s companies organize, strategize, and compete, just look at companies that summon extraordinary contributions from their people and win the hearts and minds of whole communities of stakeholders ready to join a mass movement. Musk justifies nearly every business decision by referencing his “mission of accelerating the advent of sustainable transport and energy, which is important for all life on Earth.” Musk is always reiterating that his primary focus is the relentless pursuit of developing technology that best serves humanity. 

Let’s call it purpose with an attitude. Others call it strategy as advocacy. Today it’s not enough to be different–a company needs to be different by making a difference, championing betterment, transformation, and breaking the mold. At the time of this writing, Tesla’s market cap was $124 billion. And just for comparison: GM’s was $37 billion. Ford’s was $22 billion. GM and Ford combined sold over 10 million vehicles in 2019, and Tesla just under 368 thousand—yet it is valued almost double what Ford and GM are combined. Moreover, this is only one contemporary example. We have thousands of these stories published in perhaps the most extensive database in the world on purpose-driven companies—the corporation as a cause.  See: www.AIM2Flourish.com 

Today in terms of business acumen, it’s not enough to be different–a company needs to be different by making a difference– by being a difference, by championing betterment, transformation, and breaking the mold.

Have you ever stopped to wonder, “Am I making a difference?” Do you think businesses should be about more than just profits? If so, here’s your chance to be a transformational leader in your company. If not, you’re probably wondering, “Why bother? I’m making a profit, and that’s what matters.” Still, others may be wondering what it means to be a purpose-driven organization.

The Corporation as a Cause: Profit-Driven vs. Purpose-Driven
When asked what your organization’s purpose is, can you provide a meaningful answer—and would every employee, customer, and partner know it and be aligned in focus? For many individuals in today’s society and workforce, this is becoming an increasingly important issue. Research shows that replying that you’re in business to make money doesn’t inspire the best in people. We’ve all heard of corporations that value profit above the lives of those working for them, or even above the well-being of consumers. Think big tobacco. 

These days, it reflects poorly on a brand to be outwardly projecting the idea of profits above making a difference—helping people build better lives or contributing to a better world. Few if any organizations actively advertise this philosophy of profit first. However, many organizations don’t dig deep enough when it comes to living out the broader meaning, significance, and value they espouse. We often hear an organization has developed a new mission or vision statement and is rebranding itself. The problem here is that the mission or vision statement rarely goes beyond a logo on their company letterhead. Perhaps company managers will mention it in passing at a few all-hands meetings each year, but if you asked an employee what the company does to fulfill their proclaimed mission, most would struggle to provide an adequate answer.

Companies also fall into the trap of being very vague and general when it comes to mission statements. The statements may sound good in theory, but it’s difficult to measure precisely how well the company is living up to its goal. Generic claims like, “our mission is to put our clients first,” could belong to any company. While that certainly does sound like a good thing, most companies would claim they put their clients first. What sets the company apart from others? What measurable data can be found to lend credence to their vision? 

Even organizations that do have bonafide mission statements can miss the mark if their policies aren’t aligned with the vision of the purpose statement. 

The point is, there is a great deal of lip service given to the idea of being a purpose-driven organization. Still, those organizations that actually allow their purpose to guide the organization’s decision-making process and place it at the core of their business strategy are the ones who will actualize significant benefits. A Harvard Business Review Analytic Services report, based on a survey of 474 global executives indicated that 90% of executives believe their company understands the importance of purpose; however, only 46% use purpose to inform strategic, operational decision-making. 

It isn’t enough to have your marketing department inundate social media and television with ads proclaiming your company’s mission. If your purpose is incongruent to your organization’s internal policies, it will eventually come to a reckoning – perhaps a very public and embarrassing reckoning. Saying one thing while doing another does not build trust or inspire confidence in your brand. According to Boston Consulting Group, “Organizations with surface purpose realize none of the benefits of authentic purpose: the energized employees, the stronger organizational alignment, the unswerving customer loyalty, and the greater value that comes from making longer-term investments in people, offerings, and new markets. And they may miss out on a fundamental element of purpose: its positive impact on society.”

A Convincing Argument
Purpose-driven organizations create value well beyond the sum of their parts. As Simon Sinek once said, “Profit isn’t a purpose. It’s a result. To have purpose means the things we do are of real value to others.” While being an ethical business and positively impacting the world may be reward enough for some organizations, for those that need more convincing, the benefits go well beyond making the world a better place. Believe it or not, purpose-driven businesses tend to outperform and evolve faster than other companies. 

A study involving 50,000 companies over ten years found that “purpose-driven companies saw 400 percent more returns on the stock market than the S&P 500.” This shouldn’t be surprising, though, considering 63% of global consumers prefer purchasing from companies that stand for a purpose that reflects their values and beliefs and avoid companies that don’t, based on research done by Accenture. Another finding from their study indicates that 62% of consumers “want companies to take a stand on the social, cultural, environmental, and political issues that they care about the most.” And don’t count on this trend to end anytime soon. Research done by MediaCom noted that 54% of teens age 16-19 have deliberately purchased or stopped using a brand because of its ethics. It is becoming increasingly apparent that brand purpose matters to consumers, but that’s not the only way the desire for purpose-driven business is affecting companies’ bottom lines. 

Purpose-driven companies are better at employee recruitment, engagement, and retention than profit-driven companies. That means better performance and more profit in the long-run. Employees who feel that they are part of a team working toward a goal they value are more likely to perform to their fullest potential and use their creativity to find innovative solutions. They want the company to be efficient. They are also more likely to stay with the company, saving time and money when it comes to issues like hiring. 

Based on the research, employees who feel their company has a higher sense of purpose are 1.4 times more engaged at work and report 1.7 times higher job satisfaction than those whose companies are profit-driven. Human beings need to feel like what they’re doing matters, and companies that lean into that innate need will reap the rewards. 

An employee who believes in the work they’re doing and feels inspired by their company’s purpose is going to talk openly about their experience. Employee advocacy is one of the most significant forms of word-of-mouth advertising that exists. According to Nielsen, “83% of consumers say they either completely or somewhat trust recommendations from family, colleagues, and friends about products and services – making these recommendations the highest ranked source for trustworthiness.” 

This isn’t even accounting for the word-of-mouth value received from loyal customers. Research indicates that “consumers view purpose-driven brands as being more caring and, as a result, are more loyal to them.” In a survey done by Cone and Porter Novelli on purpose-driven brands, 79% of those responding indicated more loyalty to purpose-driven brands, 73% would defend them, and 78% would recommend the brand to others. Another 73% would share content about the company. 

Simply put, people talk about companies that are doing good things in the world, and they want to support those companies. Companies that can clearly and effectively communicate their purpose to their employees and consumers perform better and make a difference in the world.

What’s a good litmus test for a purpose versus a strategy, for example? Here is what I think comes close:

 A compelling organizational purpose is one where people, near the end of their life, would say: my life was good, had meaning and significance, and was made richer because I was part of this organization as a cause. It was a platform where I could make a more significant difference in the world because I was part of that organization

Imagine if every employee, customer, and stakeholder community felt this. If that’s happening, you are on the way to building the kind of company every leader wants. The company as a cause is what enables the flourishing enterprise:   

It is about people being inspired every day and bringing their whole selves to work; it’s about innovation arising from everywhere; and it’s about realizing remarkable relationship value with stakeholders—customers, employees, communities, and the biosphere—to create unprecedented, enduring business advantage.

***

 For more on how to use Appreciative Inquiry to propel the high purpose company see:

Cooperrider, D. (2013) The Spark, The Flame, and the Torch: The Positive Arc of Systemic Strengths in the Appreciative Inquiry Design Summit. In

Cooperrider, D.L et al. (2013) Organizational Generativity: The Appreciative Inquiry Summit and a Scholarship of Transformation. Volume #4 in Advances in Appreciative Inquiry. Bingley, UK: Emerald Group Publishing Limited.

Cooperrider, D.L., (2017) The Quest for a Flourishing Earth is the Most Significant OD Opportunity of the 21st Century: How Macro OD can be the most powerful form of Micro OD

The Organization Development Practitioner, Vol 49, No. 3, p. 42-51.

Cooperrider, D (2013) Afterword: Full Spectrum Flourishing: One Source of Business Value that Never Runs Out in Laszlo, C. et. al. The Flourishing Enterprise. Palo Alto Stanford University Press

Originally published on https://davidcooperriderai.co/

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