A company’s purpose is its core reason for existing. In a decade where fewer than 10% of Fortune 500 CEOs believe that profit should be their main focus, the importance of purpose can’t be overstated. And yet, one survey found that only one of 10 marketing executives could produce both a statement of corporate purpose and a strategic plan for achieving it.
Other research indicates that less than a quarter of respondents in B2B organisations feel that their company’s purpose successfully influences innovation, operations, or engagement, despite 86% acknowledging its importance to growth.
This paradox is problematic. Here’s some additional context that explains why:
- 72% of surveyed Gen Z shoppers consider a company’s purpose before doing business with it.
- Consumers are four to six times more likely to patronise, protect, and provide word-of-mouth marketing for purpose-driven companies.
- 91% of millennials (and 66% of all consumers) report a willingness to switch from a product they usually purchase to one that’s made by a purpose-driven company.
- Employees who feel inspired by their employer’s purpose are up to 225% more productive.
- More than 90% of employees would take a pay cut in order to do more purpose-driven work.
The market cares:
- Purpose-driven brands have experienced nearly 200% faster growth over the last decade and a half.
- Purposeful companies outperform the market significantly and consistently, even during a crisis.
The ESG factor
Environmental, social, and governance (ESG) issues are playing an ever-larger part in companies’ decisions and are much more than the “new corporate social responsibility” (CSR). A strong ESG framework helps create and deliver value on several fronts – from investment returns to productivity and top-line growth – while simultaneously providing a way for companies to show their commitment to purpose in tangible and measurable ways.
ESG is a top-down imperative for modern businesses because of its importance to investors, customers, and other stakeholders. A company’s purpose informs the strategy that it will use to prioritise and reach ESG goals. In other words, they go hand in hand.
Weaknesses and opportunities
This data combines to show how purpose is becoming more and more of a necessity where it once was a luxury. Much of the problem lies with the fact that purpose is treated as a marketing issue instead of one that affects – and must be implemented by – the entire organisation. Purpose isn’t just something you sell with clever advertisements; it’s something that leadership has to model, employees have to support, and customers have to believe.
Many businesses fail at this because they embrace purpose only as an idea, not as a process, missing out on the opportunity to tie it to the potential benefits of ESG activity. Timely tweets, social allyships, and public statements are not what makes purpose real. While it often does begin with words – as with a mission statement – action is what lends it true value. Consumers are increasingly savvy about knowing which brands walk the walk. Whose policies have actually changed? Which companies actually empower their employees and encourage disruptive thinking?
Gone are the days (and good riddance) when purpose never left the boardroom it was born in. It must start at the top, but to truly benefit a business, it must also be embedded into every employee, operation, and strategic decision.
Other companies fail at being purpose-driven by simply not starting. In the politically supercharged social environment in which we find ourselves, you could forgive entrepreneurs and executives for wanting to shy away from expressing views or committing to specific ideals. However, the problem with this tactic is that saying nothing is still saying something. While a purpose may be crucial in achieving a competitive advantage, you don’t necessarily have to become a social justice or sustainability champion to get the benefits. You need a guiding principle, but it’s up to you to decide what that principle is.
The statistics above prove that purpose matters, but what is the why behind them? The truth is that having motivation is a lot more than just a barometer for a brand’s intentions. It helps companies align with consumers, it helps employees engage with their work and one another, it helps guide strategy, and the list goes on.
Maybe more than anything, a company with a clear purpose (and a track record of genuinely pursuing it) reflects our collectively felt sense that capitalism has room for improvement – that modern enterprise can be and needs to be better. Through intentionality, transparency, and authenticity, we can build a more equitable and beneficial future for businesses and individuals alike.