Purpose-Driven Organisations: A New Paradigm in Business Value

In a recent article by Jonathon Porritt, he laments the fact that Unilever profits have increased – great for shareholders. But their sustainability targets have been reduced- bad for planet.

As one of the largest global consumer goods manufacturers their footprint is significant, and they’re aware of this.

Unilever have been a longstanding leader in sustainability, with a purpose ‘to make sustainable living commonplace’ . So, to hear that targets have been modified, seemingly in favour of short-term profit, makes for uncomfortable reading.

However, the past few years have seen many companies continue to move away from purely profit driven missions to focus more on being led by a meaningful purpose.

Businesses are balancing profit with transparency. As well as an awareness of wider social and environmental responsibilities and impact and in the process, redefining the meaning of their value.

In Harvard Business Review’s The Business Case for Purpose, this shift has been driven by a number of factors.

The climate crisis being key, but vitally rapidly changing customer expectations have played a key part.

There is a growing body of evidence to say that companies able to harness the power of purpose to increase value and drive performance and profitability enjoy a distinct competitive advantage.

Purpose as standard

A certain type of organisation is now garnering a greater share of the spotlight.

Purpose Driven Organisations (PDOs) are led by a strong, unifying purpose but the difference is, within this, they prioritise above all the long-term wellbeing of people and planet (sustainability).

This is a hard transition for many businesses to make as it potentially changes their role and remit.

But as we face a climate emergency, the importance of thinking this way could not be more important, so much so, a PDO will ultimately be recognised by its own ISO standard.

One of the original PDOs is Patagonia.

Led by a clear and defined purpose, Patagonia are consistently bold, and have achieved continual growth and recognition, while staying true to their commitment to protect people and planet.

In an article by McKinsey, Yvon Chouinard, founder of Patagonia, reflects on how companies can be responsible for the planet and its people while still increasing growth and value.

And the B Corp certification, set up by B Lab, is an example of an accreditation now used by many organisations to actively demonstrate how sustainably they operate.

Way back in 2015, Unilever’s CEO Paul Poleman told the Guardian Sustainable Business in Davos that:

becoming a B Corp would send a powerful signal that the purpose of business is not just profit, but to have a positive impact on society and the environment.

Make it your business

Whether you’re a business pivoting around a more meaningful purpose, or already a PDO, one thing is clear.

To be successful your purpose needs to be integral to business strategy and realised through all aspects of your operation.

Data from The Business Case for Purpose shows that companies with a powerful sense of purpose can transform and innovate better too.

Innovation is key.

Organisations need to be innovative to transform their work.

Especially if they’re aiming to deliver on a purpose that reduces the harm they do to planet, and people.

The balancing act: purpose, profit – or both

Rest assured, it’s possible to do both. Think back to our Patagonia example – it continues to successfully balance both ‘enough’ profit and purpose.

Similarly, Grameen Bank is a purpose led social business.

Since its inception, it has successfully reduced the percentage of people living in poverty in Bangladesh via the use of microcredit.

The bank won the Nobel Peace Prize for their work in 2016.

In Profit and Purpose, HBR’s Editor in Chief Adi Ignatius proposes a specific approach to balance purpose and profit called ‘hybrid organising’.

Ignatius describes the process as:

… setting and monitoring social and financial goals, structuring the organisation to pursue both, hiring employees who can embrace them, and managing with both goals in mind.

To be truly purpose-driven means focusing on growing a strategic contribution to a sustainable future to create true value for all stakeholders.

The Institute for Real Growth, a global network of senior marketing leaders, calls this new kind of growth, “humanised growth”.

It addresses the needs of colleagues, customers, communities and all capitals.

Rather than focusing on maximising profits as the primary measure of growth, as many companies have done until now.

The role of marketing

Marketing plays a pivotal role in connecting organisational purpose to audiences.

Successful marketing builds trust, engagement, and loyalty.

But its role goes beyond that.

When an organisation is genuinely purpose-led and motivated to create a more sustainable future- marketing can step up to play a key role.

By influencing individuals, be they customers, employees, or stakeholders, to think and behave differently, and ultimately make more sustainable choices.

Last thoughts

So, the case for purpose is a strong one.

Not just as a compass to help facilitate customer choice. But morally too, as we face an increasingly urgent need to act to protect wellbeing for all.

If you’d like to discover more about the power of purpose, we’d love to hear from you.