What's the point of your business?
No one cares about your success anymore.
In the 2020s, people want to know what you're doing for the world.
If you are doing something meaningful, others will follow you, work with you and buy from you.
If others don't believe in your business it will fail.
In previous decades consumers, employees, and investors wanted to work with profitable and successful companies.
Historic financial success was enough to propel a business further. Brands like Coca-cola, MacDonalds and British Airways thrived on admiration — success bred success. A profitable business was seen as strong and stable. It was prestigious to be associated with these companies, as an employee, investor and even a customer. People wanted to be associated with successful, profitable companies because it meant they were successful consumers, employees and investors.
Historic success no longer leads to future success.
The reputations of so many companies have been damaged by corporate scandals, defective products and conduct issues. Increased awareness of the damage businesses can do has turned public opinion. Financial success is questioned. "How was that success achieved?", "At what cost to others?" and "What damage was created?". It's no longer enough to answer these questions, your whole business has to be ahead of questioning, demonstrating worthiness in every action.
Consumers like to buy from companies that care.
95% of consumers think businesses should benefit all stakeholders, not just shareholders. That influences buying decisions, with many customers still willing to pay a premium price for a purposeful product or service.
Employees want to work with businesses they believe in.
70% of employees think business should make the world a better place. Social Purpose businesses provide employees with a reason to get up in the morning, and a mission to work on.
Investors want to back businesses that make a difference
Investors are now looking for impact as well as returns. They want to be seen as responsible and don't want the embarrassment of corporate scandals. Smart investors realise that the tides have turned and that social-purpose businesses are going to be the success stories of the future. In the future social purpose businesses will generate the highest returns, as well as positive impact, and greater employee engagement. By 2019, 73% of investors considered the social impact of investment decisions and it's risen since.
(Source: Harvard Business Review )
A problem and an opportunity for existing businesses.
Since the mid-20th century, business thinking has centred around shareholder value. They were maximising returns for shareholders to create growth, profit and jobs. This is exactly the opposite of what customers, employees and investors want now. Most existing businesses are not satisfying the needs of those important stakeholders. There is already a huge demand for social impact businesses and not enough of them, and the problem will get worse.
I? recently helped a major UK asset manager to launch an impact investment fund. Each investment was chosen on the merits of its impact (social purpose) as well as risk and return. The fund very quickly raised ￡5bn of investment. However, they struggled to find sufficient social-purpose businesses to invest that money into. Billions of unplaced investments like this can't find a suitable home.
It's the same situation for customers and employees.
There's a lack of social purpose businesses compared to customer demand. Customers are forced to buy from businesses they don't agree with, pay a premium price to the ones they do, or go without.
Huge numbers of people do jobs where the company values don't align with their own. They are struggling to find employers with a purpose that they can get excited about.
The tipping point is creating opportunity.
Small and medium-sized businesses have been leading the way — businesses like Who Gives A Crap , Divine Chocolate UK , and The Wholeleaf Company . The social purpose of Who Gives a Crap is to ensure every person in the world has access to sanitation, in the founder's lifetime. There are 2 billion people without access to a toilet. Who Gives a Crap is helping to solve this problem by selling toilet roll and donating 50% of all profits to their cause. Having a social purpose also means they've built their business on sustainable principles. What's the point of solving world sanitation if you're flushing the environment down the toilet?? The result is a passionate customer following, free publicity, 50% revenue growth and ￡10m (Ausie) donated to their cause so far.
Opportunities for existing businesses.
Start-ups alone cannot meet the huge demand for social-purpose businesses.
Your existing business already has a social purpose. It might be hiding in one of two ways.
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The first way a Social Purpose hides is by not being well articulated or being understood clearly. The second is it isn't fully integrated into your business.
Solving these problems can be difficult for business owners and leaders. That's because, as leaders, we weren't taught about business grounded in social purpose. All business education to date has been focussed on how to maximise shareholder value. As a result, the true purpose of your business is hidden or not properly used. The result is lost impact, lost engagement and lost growth. It also means less shareholder value and declining profits in future.
The opportunity exists in re-surfacing the genuine social purpose behind your business and integrating it into everything you do.
Re-imagining a business
Imagine a supermarket with a strong social purpose. Perhaps it was founded 100 years ago to provide food for local people. Over 100 years, that message gets lost.
Now imagine that the retailer's leadership team, re-discover the original social purpose and re-image the modern business as a result. Perhaps they're bold and re-design the business to solve world hunger. That's a clearly defined and ambitious social purpose.
It's not enough to just state the purpose.
The next stage is to fully integrate the social purpose into everything they do. From suppliers and sourcing to distribution, recruitment and sales activities. It would require new processes central to their purpose, In this case, it might include better waste management, with the distribution of excess food to those that need it. They might develop initiatives to feed the homeless and those below the poverty line. Research to prevent the causes of food poverty or employee engagement programmes where staff distribute food to those who need it.
Imagine how these new social purpose practices would appeal to customers, creating fans. Staff that truly believe in the business. New products, new partnerships and new market opportunities. Imagine how a loyal following would also excite investors. Because the genuine desire to create impact is at the core, it's also fun and enriching for everyone involved.
The result is more impact, higher engagement and faster growth.
Your Social Purpose
Every business can re-imagine itself around a genuine social purpose. The ones that don't will fail. The ones that do have the potential for huge success. It's not easy, but it can be done in bite-sized stages.
Start with the Social Purpose itself:
(1) Assess your social purpose,
(2) (Re)Define your social purpose,
(3) Integrate your social purpose into everything you do.
(4) Measure your Impact, Engagement and Growth
You can assess your social purpose with our assessment tool . It only takes 5 minutes. A report will tell you how well your social purpose is defined and how integrated it is into your business. You can then work on (re)defining your Social Purpose or integrating it into your business depending on the results.
You can redefine your social purpose within your management team or with the help of a facilitator.
Once your social purpose is defined you can work through integration over time by following a plan based on your priorities and in an order that creates maximum impact, engagement and growth. As you do you'll gain momentum, creating impact, engagement and growth for your business.
The future of social purpose business
Customer, investment and employment trends show us that the age of profit-first business is ending. It's being replaced by social purpose business. We are now at the tipping point. There are not enough social-purpose businesses to satisfy the demand from customers, employees and investors.
Businesses that lead the transition to social purpose will experience greater impact, higher engagement and faster growth, both now and in the long term. Eventually, when there are enough social purpose businesses old profit-first businesses will die, as social purpose businesses will have the bulk of customer employees and investment.
When that happens we'll have a business world that benefits everyone and harms no one. I hope that you'll be a part of it.
Resources
Here are some resources to help you on your Integrated Social Purpose Journey.
CEO of Purposefully Business
8 个月We've now updated the article with some useful links, as requested