Some monumental events have occurred in the business world recently, indicating a significant shift in how business will be expected to operate now and in the future. Some might even call it a tectonic shift, given that each one of these ‘events’ signals a step away from the traditional view of shareholder supremacy.
Blackrock CEO Larry Fink’s annual letter to CEOs in January 2018 that crystallised that “if you don’t have a social purpose you won’t have a business anymore”. For those who don’t know who Blackrock is – they’re the world’s largest investment management company.
The Business Roundtable, which represents CEO’s of the USA’s 181 largest companies, released a new statement last month on the Purpose of a Corporation. The new statement is 300 words long and doesn’t mention shareholders until word 250! Before that, the statement refers to “delivering value to our customers”, “investing in our employees”, “dealing fairly and ethically with suppliers,” “supporting the communities in which we work,” and “protecting the environment.”
Just over a week ago, the FT called for a reset of capitalism. In their biggest campaign since the 2008 financial crash, the FT has issued a challenge to their readers - “we challenge you - leaders in the boardroom and beyond - to protect the future of free enterprise and wealth creation by pursuing profit with purpose. This is the new agenda.”
A movement of business leaders supporting the #ClimateStrike. Over 3,000 businesses have come together under the banner “Not Business As Usual” to pledge their support for worker participation in the strike.
Yet it would be fair to assume that most of these business leaders – at least those from the big corporations – haven’t woken up suddenly with a spontaneous urge to behave more ethically. They’re simply responding to the market – the growing demands of employees and consumers for business to operate for the benefit of a wider range of stakeholders.
In a nutshell, people believe business is failing to take care of the planet and society. Yet they expect businesses to contribute to society, actively. Perhaps they’re looking for leadership from business, in the absence of it from our political leaders.
I’d like to think as well, that they’re being led by the example of some great businesses who are leading from the front – businesses like Patagonia, Unilever and Salesforce. Regardless, business leaders are waking up to the risk they face if they continue with business as usual. That’s why suddenly there’s this common theme emerging around “Purpose” and “Profiting with Purpose”.
But there’s a danger here I believe, as there seems to be some confusion about what “Purpose” actually means. Up to recently, Purpose has been focused on a business or brand’s ‘Why’. Most of us are very familiar with Simon Sinek’s work on this subject. But just because you know the ‘why’ behind your business doesn’t mean you are making the world a better place! Don’t take my word for it – check out this Financial Review article with a list of Australia’s top 50 ASX companies and their “Purpose Statements” and judge for yourself.
For many businesses such as Patagonia, Salesforce, Unilever and Zambrero, Social Purpose IS their Purpose and they ARE focused on making the world a better place, each in their own way. This is the true path to the kind of purpose that employees and consumers are calling for today.
Given this confusion and the enormity of the changing times, I wanted to share the one-pager below which highlights some of the key differences between Purpose and Social Purpose.
I hope it provides some clarity, ideas for discussion and perhaps takes out some of the fear that might be holding you back from taking the next step to building a Social Purpose strategy for your business or brand.
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PARTNERING FOR PURPOSE WORKSHOP
As the move towards a purpose-driven economy picks up speed, we invite business leaders to attend this value-packed full-day workshop. Participants will walk away with a practical strategic plan to unlock the full value of a Purpose-led approach for their business, leveraging their existing partnership assets. Click on the image for more details and to register.
REMEMBER, doing good is good for business. So if you're not doing any good... what are you doing?
P.S. When you're ready, here are 3 ways I can help you to build your Social Purpose strategy: