The lifetime of businesses shortens, especially that of listed companies. Chasing quarterly results improvements to please shareholders overshadow any long-term sustainable business building. This causes ultimately damage to the business, its people and society.
Fortunately, a couple of ‘enlightened’ CEO’s like Paul Polman of Unilever and Larry Fink of Blackrock, understand that successful companies need to purposefully contribute to society. In a letter to the chairmen of boards of the world’s biggest companies, Fink this week has written: “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.”
Research indicates that the majority of CEO’s see the importance of purpose, less than half have actually articulated a strong sense of purpose, but only a few companies have truly embedded their purpose in all aspects of their business. Many companies have jumped on the ‘purpose’ bandwagon as it seems the thing to do. However, in most cases, the development of a business purpose doesn’t change the daily reality within the business and remains a PowerPoint and communication exercise.
During a presentation on the topic of Business & Purpose at Maastricht University earlier this week, I strongly advocated translating purpose in all aspects of the organisation. “An emotionally appealing and intellectually convincing organizational purpose is a key driver for an energised and committed workforce. Why is that so? Because, as humans, we are neuro-biologically wired to seek out a sense of purpose and meaning. A purpose triggers our intrinsic motivation buttons, much stronger (and cheaper) than any extrinsic motivators. Purposeful businesses create loyal customers and trust of society. Hence, purpose increases the chances to be and stay successful for a longer period of time, but only if that purpose is translated into daily practices and business activities. “Purpose that is not linked to the business is actually quite useless.”
What does this mean specifically? Your purpose needs to articulate ‘WHY you do what you do’ as an organisation, clarifies the reason your organisation exists, defines the difference and added value you are trying to bring in the world, demonstrates your deep commitment to adding real value to the world through its products, practices and services, enables the creation of value for customers and the capturing of that value for employees in such a way that broader societal & environmental challenges are also addressed, allows for the creation of meaningful connections with all stakeholders.
In the book Corporate Culture And Performance, John Kotter and James Heskett show that over a decade-long period, purposeful, value-driven companies outperform their counterparts in stock price by a factor of 12.
A truly lived purpose will lead to more sustainable success. Is your purpose alive?
Rien Van Lent
ELP Network – Realising Breakthroughs
ELP enables companies to unlock the power of purpose and provide a clear idea both of what the company wants to achieve and how in a sustainable way. We support our clients in the process of inspiring, defining and embedding purpose in business.