In the age of digital disruption, leaders are under pressure to drive growth and stay competitive. In times like these, purpose can be a guiding light for companies that want to keep up with the rapidly changing economy.
There’s an increasingly popular view in business today: organizations need to add the concept of “purpose” to become more successful and sustainable. Over three-quarters of chief executives surveyed recently agreed that purpose is fundamental to success, which makes it an essential part of organizational strategy. This is not only because purpose can help attract and retain talent; it also helps companies to outperform the competition, according to 78% of leaders in the same study.
But what exactly is “purpose”? And how does it translate into reality?
1. Purpose is not just “doing good”
Purpose is the core reason an organization exists. It’s why it does what it does, says where it stands, and takes action on issues that go beyond its products and services. In a purpose-driven company, everything – from strategy to actions – follows this principle. This is what sets it apart from profit-driven organizations, which have a primary goal to generate profit for shareholders.
Purpose can be an umbrella term for many reasons, but at its heart is the desire to make a difference beyond pure economics. Sustainable or “triple-bottom-line” organizations are one example since they set out to produce profits while also addressing environmental and social issues.
2. Purpose goes far beyond doing charitable work
A common misperception is that purpose can be achieved through “doing good” activities, such as donating money to charity or volunteer hours. But it’s not enough for companies to give away a small part of their resources and effort; they need to stand for something bigger: the values and beliefs behind their work. It should inspire everything from how they do business, structure themselves internally, and interact with partners and competitors.
3. Purpose helps attract and retain resources
People want to work in organizations that represent what they believe in – especially younger generations who value purpose-driven companies like never before. One study found that 87% of Millennials care about a company’s social impact on society’s future. If a company has a purpose, it’s easier to attract and retain talent and make people feel like they’re part of something bigger. Having an e-Delaware company formation can be a great option for those looking to have a company with ease and simplicity. It can be a good opportunity to have a company with a great vision and mission behind it, not only good for the individual but for the business itself.
4. Purpose can point the way in a fast-changing economy
As economies evolve, it becomes more and more difficult for organizations to remain competitive without having a clear sense of their reason for being. To respond to rapidly evolving markets, business leaders must act rapidly; attempting this without purpose is like trying to drive without knowing where you’re going.
It’s usually much harder to make decisions that will benefit the company over the long term when you’re focused on short-term wins alone. A sense of purpose engages people more deeply. It allows them to see the bigger picture, which directly impacts an organization’s ability to be resilient in the face of change.
5. Purpose helps outperform the competition
Research shows that companies with a clear purpose are more likely to attract and retain top talent, increase customer satisfaction, and have higher productivity levels. They also tend to be ahead of market trends, faster to react to changing conditions, and better at keeping up a positive public image. In short, they’re more likely to outperform the competition.
That’s why it’s crucial that businesses of all shapes and sizes determine their purpose – and that they do it well. Without this clarity, companies cannot hope to make the right decisions in tough business climates. Without knowing who they are, where they stand, and what makes them different, an organization will not be able effectively to hire or retain top talent.
The good news is that there’s no “right” approach to purpose. It’s something every company must define for itself, helping it to stand out from the competition and gain an edge.
6. Many organizations still lack a purpose-driven culture
Even though corporate leaders understand the importance of having a sound organizational strategy with a clearly defined sense of purpose, very few employees actually know what it is in their organization’s case – which is one reason why most companies fail to implement it effectively on a day-to-day basis. In fact, only 29% of employees say they know what their company stands for, as opposed to 36% of executives. In turn, that makes it far more difficult to put purpose at the heart of organizational strategy and make it a reality.