We hear more and more of how businesses are coping with the challenges brought by the Covid-19 pandemic, and how many are being pushed to rethink ‘business-as-usual’. The actions they take during this time of crisis are under the spotlight and will shape how they are perceived in a post-Covid world. Though it is not just business’ actions that are under intense inspection; leaders are now confronted with wider questions surrounding their corporate purpose. This is not a new line of questioning as many businesses, in recent years, have moved to embrace corporate responsibility as a means to address their social and environmental impacts and communicate their contribution to something bigger than the bottom line. Few, however, have managed to define their purpose and fewer still successfully incorporate it at the core of their strategic planning or align their future actions against it.
A strong purpose statement should clearly articulate why companies, put simply, do what they do – their raison d’être. Typically, many confuse purpose with a company’s vision, values, or mission, which provide an inward perspective of the organisation. For instance, a vision statement describes the business’s aspirations for where it hopes to be in the future; values speak to the internal culture within the company; and the mission statement details what exactly the businesses does – what products and services it delivers to who.
Company leaders are required to think differently when it comes to defining purpose and go beyond looking inward. Success here demands an assessment of how the company is impacting and making a meaningful difference in the world outside the factory floor and the board room. Consider Patagonia as an example who, incidentally, recently changed their purpose statement from one that was product-driven to “We’re in business to save our home planet”. A simple and short purpose statement yet one which is at the core of everything Patagonia does as a company and answers the key question: why do we exist as a business? The company makes good on its promise through environmental activism and dedication to reducing the impact of its products, whether this is through launching resale platforms to give used garments a second-life, or educating customers on how to repair and care for their products, lengthening the life of the garment in the process.
Leaders and businesses that have successfully implemented a purpose-driven approach are discovering new ways to engage with their employees and boost office morale. In a recent PwC survey of 1,510 employees, it was estimated that 83% of respondents valued finding meaning in their day-to-day work above other priorities. In fact, employees ranked purpose higher than company growth, reputation, talent attraction and track record of innovation. With new generations entering the workforce, the demand to find purpose in our work is set to become more of a deciding factor when selecting employers. It’s worth noting that the same survey of employees and business leaders found that millennials are over five times more likely to continue working for a company where they have a strong connection to the corporate purpose.
Going through the process of defining corporate purpose has led business leaders to rethinking their response to emerging trends and how they create shared value. In a study of 28 high-growth companies from across the world it was found that purpose played an important role in their success. Among other things, a purpose-led approach encouraged businesses to think beyond the market in which they operate and consider more opportunities for value creation. In turn, this helped tackle common challenges of slowing growth and eroding market share.
The current coronavirus crisis has forced many business leaders to reflect and revaluate corporate purpose. The ones that can get this right have an opportunity to deepen ties with customers and employees and deliver renewed loyalty to the company once we return to something resembling business-as-usual, whenever that may be.
Sancroft has played a pivotal role advising companies on embedding purpose within corporate and sustainability strategies. Please get in touch if you are interested in discussing how your business can develop a purpose-driven approach and what commercial advantages can be captured in the process.