It’s Not a Bottom Line; It’s a Cycle of Purpose

When thinking about what makes a company great, I find it helpful to think in terms of geometry. There’s one “shape” that is, perhaps, most prominent in business: the all-important bottom line. Bottom lines are no doubt important, however, I don’t believe they are enough to inspire associates and achieve a more holistic version of success. 

For this reason, I’ve found it useful to look to another great shape for inspiration: the circle, which incidentally is a looped line. Specifically, bottom lines should exist within a cycle of purpose that gives back to associates, the community, and shareholders systematically, fueling even more cyclical progress.

Why not leave it at profitability alone? Shareholders wield great power in the quest for profitability, so much so that profitability and success may be over-correlated. Statistics tell us that many shareholders aren’t in it for the long haul as it is: From the 1940s to 1970s, the average stock holding time hovered around seven years. In the 2010s, shareholders aren’t holding a stock for longer than eight months on average.

Given the abundance of short-term investors out there, you may think leaders would shift attention away from satisfying them, but they haven’t.

According to a research report published by Duke University, 78% of chief financial officers (CFOs) would sacrifice a company’s economic value for a good earnings report. Clearly, too much focus has been placed on delivering strong earnings to impress and attract investors, rather than building a sustainable long-term business model.

As Brad Power and Ric Merrifield, business innovation consultants, note in a Harvard Business Review article, delivering profits to create shareholder value was “once a natural feature of the competitive landscape,” but it has “become a trap for people and companies who are not able to adapt to a new landscape and change their focus.” 

To achieve sustainable success, businesses must shift out this profitability-based paradigm. They must operate with a higher purpose, looping that bottom line to following around and back again.

Being purpose-oriented leads to success

Profitability keeps you in business. Ironically, making it the core focus of your business doesn’t necessarily lead to success. As Keld Jensen, a business negotiation expert, concisely states, “maximizing returns is an outcome, not a strategy.”

 So, what leads to profitability?

 It’s a question I’ve been asking myself, as a CEO, for several years. I’m glad to report that I am finally able to articulate an answer that satisfies my beyond-the-bottom-line approach: It’s a culture of purpose, one that gives and keeps giving.

If you look at the business landscape today, the most successful companies are purpose-driven. Sherry Hakimi, founder of Sparktures, an organization design firm, believes this is so because purpose-driven companies are authentic, know how to bring in the right people, have a clear narrative, and create shared value.

In short, organizations first need to understand who they are and why they exist. This is what should drive strategy and motivate the team.

How to build a cycle of purpose

Leena Nair, chief human resources officer at Unilever, argues that businesses should take a lesson from purposeful people. She says this because “when we’re purposeful, we unlock our creativity, we have empathy, become better communicators and leaders — and are able to maximize our individual potential.”

Many companies have been waking up to the fact that having a purposeful workforce is how you maintain a competitive advantage. Howard Schultz, the man folks say saved Starbucks, attests that “when you’re surrounded by people who share a passionate commitment around a common purpose, anything is possible.”

So, companies must make team members more invested in the company. When teams have a stake in your vision and act with the greater purpose in mind, great things can happen.

 Here’s how that can be done:

1. Communicate your vision

According to a survey done by Robert Half International, a consulting firm, 35% of executives at companies with less than 50 people said their associates aren’t aware of the goals. How can you get the most out of your team when that’s the case? 

Your company’s mission or vision (my company follows a Vivid Vision, which includes a statement of purpose) is more than just something to put in the handbook and touch on at orientation. It should be instilled in the minds of every individual in the business. It should be the motivating force that pushes your team every day. To communicate the message effectively, try the following:

 ●     Use a simple but deep language. I specifically like sweetgreen’s mission statement: “to inspire healthier communities by connecting people to real food.”

●     Inspire and educate. Through creative storytelling and real conversations, rather than dictating from the top, you can get associates motivated and build optimism. Extract market insights to display the potential of your product/service, too.

●     Reinforce and invest. You’re not going to win over customers if you can’t win over your team members. Consistently communicate the purpose through mediums that suit your audience. Invest in training, mentorship, workshops and more to make your associates the biggest advocates of the brand.

 2. Share successes

Corporate profits have consistently been near or reached all-time highs in the mid- to late-2010s. During this time, labor productivity has risen, benefiting companies greatly. However, wages haven’t gone up at an equal rate to labor productivity improvements and corporate profit increases. This gap is a problem, as businesses aren’t sharing their successes with their team. This can cause issues down the line.

There are ways to tackle this. Starbucks is known for its incredible benefits packages, which includes free tuition, free stock, and free coffee (yes!). Other companies choose an employee ownership model, such as Publix Super Markets and Amsted Industries (a manufacturer of industrial components). The point is to make sure team members are stakeholders in the business.

3. Give back to your team

Consider this: 87% of millennials say development is important in a job. Your team members want to grow and improve. Help them do so.

At Unilever, Nair not only has focused on building a cycle of purpose, but also helping associates find their purpose. That’s why she’s implemented individual development plans and workshops. She wants team members to discover their calling. This, in turn, helps Unilever. As Nair states, they’ve found that by helping people find their purpose, they’ve been able to “develop individuals who work for purposeful companies on purposeful brands that attract customers seeking more purpose.”

4. Give back to communities

Sure, people want to work for innovative and influential companies. They also want to work for companies that have a positive global impact and give back to communities.

For instance, Google, though certainly not beyond criticism, does a lot of good around the world. From offering nonprofits free access to Adwords to initiatives like Project Loon, which provides internet connectivity to remote and rural areas worldwide, the tech giant is solving some of the world’s biggest problems. The chance to be a part of that attracts amazing talents to the company. It also motivates current team members to do incredible things.

Making the cycle of purpose sustainable

By inspiring people around a clear vision for the future and building a cycle of purpose that shares successes, develops associates, and enables communities to prosper, businesses can free themselves from the trappings of focusing on the bottom line — and actually build a sustainable model for success.

When profit does come, use the money to reinvest in the process. That’s how you avoid falling back into the old profit-oriented model. This way, you can continue the cycle of purpose, and everyone will prosper.