The power of purpose
Since the financial crisis, trust in big business has been on the decline. But it needn’t be this way. A business with a strong sense of purpose can engage positively with all stakeholders — be they shareholders, investors and customers, or local communities and economies.
“If you don’t have a broader purpose, you are going to have trouble attracting and keeping employers and customers,” says Steve Case, who won the Entrepreneur Of The Year Award in 1994 as a co-founder of AOL, and went on to found venture capital firm Revolution.
Operating a business with a strong sense of purpose should not only bring about change in the wider world, but also bring on board more trade and better talent. It should also highly motivate existing workforces, who will be prepared to go the extra mile because they know they are not just working for the shareholders’ bottom line, but for something bigger than both themselves and the company.
How to be more purposeful
It takes more to be a purposeful business than just creating a mission statement and putting a few motivational quotes around the office.
Building that sense of purpose into the company from the top down requires a continued demonstration of the connection between that purpose and the company’s business model. Such a strategy needs metrics; but quantifying how well an organization is adhering to a sense of purpose can be a slippery task. Employees can be surveyed with questions that ask how well the company purpose is resonating with and motivating them.
Companies can also look to their hiring and retention numbers — two metrics that often show that purpose-driven companies outperform their less purpose-driven rivals.
There are also financial decisions that companies can take to further instill a sense of purpose in an organization. For example, rather than take early-stage venture investment (and the potentially intrusive investor oversight that would come with it), Steve Tanger, founder of Tanger Factory Outlets and 1993 award winner, phoned bank after bank to fund his retail chain with loans rather than venture capital, allowing him to maintain control over the company’s direction and sense of purpose.
Taking pride in purpose
But besides performance objectives, there can also be a sense of pride in following your principles. Online retailer zulily sells collections of clothing, home décor, toys and gifts. The team prides itself on pursuing the very highest standards. The depth to which this philosophy had become ingrained in this company was demonstrated when CEO Darrell Cavens went undercover on the production line, and packed a basket poorly. “Would you send something like that to your mother?” one employee demanded.
Making purpose real
Ultimately, to deliver on its purpose, a company needs to repeatedly reinforce that purpose at every level of the organization, not just in the boardroom. That way not only will a sense of purpose be understood and shared by the team, but also it can also provide a focus to outperform commercial targets.
In 2016, EY analysts joined forces with Harvard Business Review Analytic Services to quantify the combined accomplishments of the 9,200 visionary men and women who have been recognized to date by the Entrepreneur Of The Year awards, and to interview many of the winners.