In recent months, there has been a lot of talk about purpose.
In August, the Business Roundtable (made up leaders of many major US companies, such as Apple and Walmart) signed a radical new statement of purpose. The roughly 200 CEOs committed to broadening their goals beyond maximising shareholder value, to benefit all of their wider stakeholders, including customers, employees, suppliers, communities and the environment.
In September, at the UNGA, 17 multinational ‘Business Avengers’, including the likes of Google and Nike, committed to upholding and helping deliver on the Sustainable Development Goals (SDGs) by 2030.
This new focus on purpose is also apparent at a much smaller scale. Social enterprises, defined as businesses that operate to achieve social and environmental objectives, are growing in number and in size. A new report from Social Enterprise UK shows that, by several metrics, these purpose-driven organisations are not only growing, but outpacing purely profit-driven SMEs in revenue growth, with 52% experiencing growth in the last 12 months in contrast to 34% of SMEs. Businesses focused on social and environmental missions can deliver economically, too.
All of this seems encouraging. Whether through decisions on hiring or on their supply chains, purpose driven businesses are more likely to bring about social goods than those purely seeking profit. Nonetheless, there is a real risk that these bold and admirable commitments are mere lip service, or purpose-washing, in order to appeal to changing spending and investing preferences of millennials.
A cynic might argue that the statement of purpose of the Business Roundtable was just that. Or worse, an attempt to appear responsible enough to self-regulate to blunt a potentially more regulatory US president in 2021. Afterall, their statement, as with that of the Business Avengers, was conspicuously light on specific goals or actions: They may ‘share a fundamental commitment to all of [their] stakeholders’ and ‘commit to deliver value to all of them’, but without a clear plan this is unlikely to succeed.
This apparent lack of clear strategy for purpose is widespread. Business in the Community, which tracks the behaviours of businesses in the UK, reports that 86% of UK companies surveyed had a purpose statement, but only 17% had a plan to put it into practice. Not only does lack of strategy for executing purpose make real progress near-impossible, it can actually be a distraction: ‘it is not only delusional, but diversionary,’ said Business in the Community’s CEO.
If businesses want a chance to be taken at their word, let alone a chance to fulfil their noble ambitions, they need a clear strategy for how they will get there. Just as they long have had with their core profit-driven business. They’ll need to strategize, measure and learn from purpose.
One frequently cited barrier in the business community is that purpose is often thought of as intangible and hard to measure. As the Editorial Board of the FT argued recently; ‘one of the biggest challenges of all, however, is how to measure something as nebulous as ‘purpose’.’
But purpose doesn’t need to be nebulous. It can be strategized and measured.
In the social sector, purpose is not a new buzzword. We have long been using organisational purpose to set ambitious goals against complex social problems, and determine the best activities for achieving those goals, while rigorously measuring and learning along the way.
We recently worked with a London real-estate developer who were committed to having a social impact in their neighbourhood, but didn’t know where to start. We helped them define and refine their goals, analyse the local need, and set a strategy. They are now working in partnership with local voluntary organisations to fight homelessness in the area, and are confident that though they don’t have all the answers their clear strategy in conjunction with their approach to measurement and learning will keep them on course to reaching their goals.
NPC is holding the first of our Social Impact for Business event series event on Thursday 13 February on Social Impact Strategy for Business. Please sign-up and come along.