Why Every Business Must Become A Purposeful Business
Does your business exist to serve a meaningful purpose? A purpose that your customers (and employees) can genuinely connect with? If not, you’re ignoring a major trend in the business world.
To be clear, purpose defines why the organization exists. (Not what the organization is or what it does or for whom. Therefore, purpose is different to mission and vision.) A strong purpose has the promise of transformation or striving for something better – be it a better world, a better way to do something, or whatever is important to your organization.
In other words, purpose is about creating a positive impact, for individuals, for communities, for society, or for our planet. Ultimately, then, this movement towards purposeful business is about delivering more than profits.
Why does purpose matter?
It matters because it matters to your customers. The groundbreaking Strength of Purpose study – which surveyed more than 8,000 consumers across eight markets – had people rate brands on their strength of purpose. The results showed that having a clear, compelling purpose delivered serious business benefits. For example, when brands had a strong purpose, consumers were:
Four times more likely to buy from the brand
Four times more likely to trust the brand
Four-and-a-half times more likely to recommend the brand to others
Six times more likely to protect the brand in a challenging moment
Clearly, having a strong purpose is now a vital part of competing for customers (and talent, for that matter). But purpose also delivers other tangible business benefits. According to Deloitte, companies that authentically lead with purpose enjoy higher market share gains, grow three times faster than their competitors, and achieve higher customer and employee satisfaction. Other analysis suggests that purposeful businesses outperform the stock market by 42 percent, while those without a sense of purpose underperform the market by 40 percent.
Examples of purposeful brands
One of my favorite examples of a great purpose comes from Danish multinational pharma company Novo Nordisk, a world leader in diabetes care. Novo Nordisk’s purpose is a simple one: to defeat diabetes. The company says, “We are committed to helping societies defeat diabetes, and our strategy is clear – accelerate prevention of type 2 diabetes and obesity, and provide access to affordable care for vulnerable patients in every country. Our success will be defined by the solutions we bring and the health and well-being of the people and communities benefiting from them.”
What a fantastic purpose. It’s certainly a transformational goal that’s all about creating a positive impact – both for individuals and for societies (especially given the huge costs associated with treating diabetes-related illness). It’s also a devastatingly simple purpose. And it’s a brave choice because, if you think about it, should Novo Nordisk help to defeat diabetes, its very reason for existing – again, the company is a major provider of diabetes care – is gone. For me, this is a great example of profit with purpose. I also like how the company sets out how it intends to achieve its purpose (i.e., by accelerating diabetes prevention and providing affordable care).
Let’s look at another purposeful brand. While Novo Nordisk is probably not a household name, you’ve no doubt heard of outdoor clothing and gear brand Patagonia. The company has long been known as an ethical, purposeful business, but a few years ago they upgraded their purpose-driven mission from “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis” to a much bolder “We’re in business to save our home planet.”
This is a great purpose for Patagonia because the brand knows its customers love the outdoors and care about the environment. Therefore, its purpose is both transformational and neatly aligned with the beliefs of Patagonia customers. I also like how this purpose recognizes that, if we don’t address the climate crisis, there simply won’t be a future... not just for Patagonia, but for all businesses.
f you take one thing away from this article, make it this: companies must be recognized as a force for good if they want to succeed in the long term. This isn’t at the expense of profit – profit is still important. Rather, the onus now is on “profit with purpose.”