A World In Change
The global economic events of 2020 accelerated big changes in how we do business across the world.
Attention is inevitably turning to the type of business ecosystem we want to create for the future. Iain Wright, Director for Business & Industrial Strategy from The Institute of Chartered Accountants in England & Wales has said: “Profit is the lubricant by which society can move on, but there’s been a recognition that business is wider than profit”.
And at the 2020 UN Global Compact Leaders Summit, the incoming Executive Director Sanda Ojiambo said: “Now, more than ever, business can and should play a central role in societal transformation.”
Seismic change is now part of the global business landscape, and companies must evolve and adapt in order to thrive.
What role does purpose play in this changing business world?
2020 has been a litmus test for businesses with a purpose.
The strength and authenticity of a business’ purpose, and its employees’ belief in it, seems to have dictated how well a company responded to the pandemic. In short, purpose was the key to surviving the biggest changes businesses and employees have weathered in decades.
Having purpose has not only enabled businesses to survive through 2021, but ensured they continue to evolve and perform, and establish an organisational and cultural framework that can survive any further change.
How does purpose enable business to survive change?
Purpose is the ‘North Star’ of any business.
Purpose in business acts as a guiding light through uncertain times. A fully realised and authentic purpose is a stake in the ground; a declaration of an organisation’s reason for being and what they believe in. This value-led statement of intent guides daily and strategic decisions, giving clarity and direction during periods of change and uncertainty.
Purpose enables worthwhile collaborations
Periods of change often require businesses to work together to keep performing. In the ICAEW 2020 Quarterly Insight, Emma Cox, PriceWaterhouseCoopers Partner and Head of Purpose, says:
“Alliances [will be] another pillar of the future – businesses not doing things in isolation for their own self-advantage, but looking at where they deliver impact, who they do that with, how they can work with suppliers, customers, stakeholders and investors in a broader platform on a range of topics they can influence.”
Way before the global pandemic, partnerships were an intelligent and strategic way to reach new audiences or increase the impact of a marketing campaign: Jay Z + Bing, Starbucks + Barnes & Noble, Spotify + Uber are three successful brand alliances of the past 10 years.
However, working with other purpose-led organisations during Covid reinforced how exploring strategic partnerships could support businesses to survive change.
US-based outdoor gear and apparel company Cotopaxi, for example, had to shut its brick and mortar locations following stay-at-home orders, with their online retail and wholesale business taking a heavy hit (A. Simonovic, 2020).
Cotopaxi CEO Davis Smith, reached out to another Utah company, Uncharted Supply Co. who have a similar purpose and company culture. Uncharted sells survival supplies packs and had seen a huge increase in sales resulting in stretched internal resources.
Cotopaxi employees were drafted in to support the increase in Uncharted’s demand. The brands’ similar purpose and company ethos meant working together felt like a natural and supportive fit and the partnership put both of these Utah-based, sustainability-focused retailers in a better position to get through the challenges of Covid together.
Purpose retains and attracts talent
In our Connecting Your People To Your Company Purpose Webinar in September 2020, Head of Colleague & Community Engagement at Pfizer, Ali Fox-Robinson, told us:
“During the Covid Pandemic, employees felt disoriented, anxious and unsure. They needed to rely on leadership, to shape, articulate, define and establish a constant.”
Pfizer’s authentic purpose was that constant. Communicating it, standing by it, and ensuring employees were engaged with it, kept employees secure, focused and motivated during a time of enormous change.
Ali continued: “Before the pandemic, we used to roll out employee surveys annually to keep a temperature check on how our people were feeling. But from the start of the pandemic, we realised it was important to be closer to how our colleagues were feeling, so we increased our surveys to twice a year. We have found that people want to come and work at a place that genuinely cares about the community, the environment and causes – but also, about them.”
Purpose delivers performance
Purpose has been linked to profit for years.
A Korn Ferry study found purpose-driven consumer product firms reported compound annual growth rates of 9.9% from 2011-2015, compared to ‘purposeless’ peers, who averaged only a 2.4% growth rate.
Larry Fink, BlackRock’s influential CEO, has emphasised the importance of company purpose in his last three annual letters to CEOs, writing in 2020 that “a company cannot achieve long-term profits without embracing purpose and considering the needs of a broad range of stakeholders”.
So even before the pandemic hit, momentum was building behind the idea that “company purpose” will help businesses operate profitably as well as benefiting all stakeholders and the wider community.
For example, Unilever’s ‘sustainable living’ brands (i.e. those with a focus on reducing Unilever’s environmental footprint and increasing social impact) including Dove, Vaseline and Lipton delivered 75% of the company’s growth and grew 69% faster on average than the rest of its businesses in 2018 (Deloitte Insights 2019).
Unilever sells household products the ingredients of which probably don’t differ much to other brands, but putting sustainable living at the heart of those brands, authentically lives their purpose, engaging the consumer and ultimately, delivering sales.
Company purpose isn’t just an indicator of profitability during times of change, it’s a driver.
But having purpose alone won’t enable a business to make the most of brand collaborations, retain and attract talent, and keep focused on performance while sailing the stormy seas of change. Communicating purpose clearly and effectively to employees, in a creative, engaging and inspiring way will drive buy-in, so the business can move forward as one while it adapts is crucial to success too.
Purpose is essential for thriving during change
With changes set to continue across the business landscape for many years to come, the businesses which survive will be those with a purpose, who seek out collaborations and partnerships with like-minded companies, attract the right people who are aligned with that purpose, and connect with their employees and the world in a meaningful, authentic and sustainable way.