The Opportunity of Purpose

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June 20, 2022
Better Growth

The opportunity of purpose

What does your business exist for? In recent years it’s rapidly become accepted wisdom that to achieve meaningful success, a business must exist for reasons beyond merely making a profit. Maximising returns for shareholders may still be sit at the heart of the UK’s Companies Act (although there is mounting pressure from the Better Business Act campaign to reform section 172 of the Act), but it is widely seen as no longer enough.

To be successful, organisations must aim higher and wider. They must think bigger and work for all stakeholders, including current and prospective customers, suppliers, employees, their local community and indeed the whole planet. This can get a little overwhelming. Why should every business be doing something to save the planet? Working for shareholder returns or to achieve a return for investors may suddenly seem like a refreshingly simple objective. But narrow the scope a little and all those grand plans can be focused down under a banner best described as “purpose”.

 

What is purpose?

Purpose is different from, but closely tied to, concepts such as mission and vision. It is brilliantly summed up by Ashley Grice, CEO of Boston Consulting Group (BCG) subsidiary Bright House, when she says, “When you go to bed at night and you are worried about something, that’s generally your mission. But, when you wake up in the morning and you are excited about something, that’s your purpose.”

 

This quote is offered as part of a paper by BCG that highlights research showing how organisations with a clearly articulated purpose also achieved better performance (measured by total shareholder returns).

 

This would not be a surprise to self-declared “purposologist” (and apologies for using that term) and author of Bleed a Creed, Matt Carcieri. Carcieri has identified five major gains for businesses from being able to develop and clearly communicate a sense of purpose. These include:

 

1.    Boosting employee engagement

2.    Enhancing innovation activity

3.    Improving social contribution

4.    Highlighting brand relevance

5.    Focusing consumer attention

 

But does having a purpose always make a positive difference? There has been plenty of research work done on this subject, as this paper explores, the outcome of which is perhaps best summarised as having the right purpose will result in a positive boost to business performance and outcomes.

 

Case study

Helm member Geoff van Sonsbeeck is the co-founder with his wife of fashion company House of Baukjen. The business comprises two brands, Baukjen and Isabella Oliver, both of which are ethical and sustainable brands. Both are certified B Corp and 2021 Best For The World brands, while the business was a winner at the 2021 UN Global Climate Action Awards. But the business wasn’t launched this way.

For van Sonsbeeck and his wife, the lightbulb moment came while they were enjoying a daily walk on the local heath with their dogs. There, among the nature and wildlife, it struck the pair how much damage all the waste in the fashion industry was doing. The pair agreed they should refocus and rebuild the business from the ground up, with the business they rebuilt having sustainability right at its heart. As van Sonsbeeck explains, “You can’t just tinker at the edges. You have to look at all parts of the business, the whole supply chain and refocus and rethink everything.”

The net result was a new kind of fashion business, one which wasted less and didn’t over produce or discount. But the best news was actions that were good for the world were also good for business. “We cut emissions by 50% and made five times the profit,” says a clearly delighted van Sonsbeeck. “I urge every founder to look at their business and find a real purpose and then rethink the business putting that purpose at the core of everything they do. Decisions need to be taken with a view as to whether they get you closer to achieving your purpose.”

Put simply, putting people and the planet on a par with profits ends up being better for all three and better for the business as a result.

 

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