Is what you do more important than why you do it?

By

Karin Lutz

EY Global Markets Strategy & Analysis Leader and Women. Fast forward

Leading change and promoting purpose for business success. Advocate for gender equality, diversity and inclusiveness. Passionate about nurturing talent, personal development, and mental health.

4 minute read 28 Mar 2018

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Entrepreneurs are proving that doing must replace saying when it comes to acting on purpose.

Need more proof that the conversation about purpose has reached a tipping point? You don’t have to look any further than this year’s EY World Entrepreneur Of The Year (TM) event in Monaco. At session after session throughout the event, I was struck by the passion of entrepreneurs and business leaders talking about making their company a force for good in the world.

Not least among them was Murad Al-Katib, the newly crowned EY World Entrepreneur Of The Year 2017, who used his acceptance speech to deliver a message: purposeful business is no longer an aspiration; it’s a must.

“The imperative of us putting our work toward changing society — this is no longer optional,” Al-Katib, President and CEO, AGT Food and Ingredients Inc., told the crowd at the annual awards gala. “Corporate social purpose is a reality of what we as entrepreneurs must deliver to the world.”

Growing a business, purposefully

Al-Katib’s company began with a vision: he realized that the world would need to feed billions more people in the coming years. The answer, as he saw it, was pulse crops — such as lentils and chickpeas. These crops require little water while fixing vital nitrates in the soil, meaning the crops can be grown in marginal farmland. And they’re full of the protein that will be key to feeding a growing global population.

AGT has grown from a seed of an idea to a global success — it now has 47 factories on 5 continents and exports to 120 countries — but it has never strayed from its purpose. At Monaco, Al-Katib could justly hold it up as a model for others. As Dr. Vishal Sikka, CEO, Infosys, noted, “[Purposeful business] is not simply about growing the top and bottom line.” Now, it’s a matter of spreading the word — and getting to work.

Turning rhetoric into reality

It wasn’t all that long ago that most companies, if they talked about purpose at all, considered it to be maximizing shareholder value. Nowadays, more and more companies are talking the purpose talk.

After all, purpose, done well, is good for the share price, innovation and return on investment, said Clare Chapman, Non-Executive Director and Remuneration Committee Chair, Kingfisher, and Board Director, Heidrick & Struggles. “But you know what really matters?” she asked. “People want to work there, and customers want to buy from you.”

But, as recent research from the EY Beacon Institute shows, walking the purpose walk is another matter. It also shows that organizations that claim to be purposeful but then don’t follow through with their actions expose themselves to reputational risks that can impact the bottom line. Embedding purpose throughout an organization can be hard work. Building a culture of purpose often takes patience and persistence. It takes commitment from the top and ownership from below. It takes building new relationships with stakeholders while maintaining good relations with your current shareholders or investors.

As Niall Dunne, Chief Sustainability Officer, BT Group, put it, “This stuff is tough. When you get out of the philosophy and get into making it happen, it’s really tough.”

Enter entrepreneurs

Entrepreneurs excel in seeing the opportunity that lies behind the challenge. They bring energy and new ideas to the fore. The drive toward purposeful business could make excellent use of those qualities. After all, “This is what entrepreneurs do: We ask questions. We challenge the status quo,” said Georgie Benardete, Co-founder, Align 17. “We prove everybody wrong.”

So how can entrepreneurs lead the way? Business luminaries at the World Entrepreneur Of The Year Forum offered some useful advice.

  • Lead, don’t follow. Don’t be a follower, said Yasmina Zaidman, Chief Partnerships Officer, Acumen. Purposeful business offers a real opportunity to innovate and be a leader. You run the risk that people won’t understand. Failure is a possibility. That makes it real.
  • Collaborate. Choose the harder path, Zaidman said, but don’t tread it alone. Find people who are like-minded, even if they’re outside your industry, added Say Jim Tan, Group Managing Director and CEO, IRIS Corporation Berhad.
  • Be persistent. In the risk-taking world of entrepreneurship, especially serial entrepreneurship, business can seem like a sort of game: the winning companies survive, and the losers go back to square one and try again. Purposeful business involves people’s lives, said Audette Exel, Founder and Chair, Adara Group. It calls for a steadfast commitment.

Embedding purpose in your organization

Building a purposeful business is one thing; maintaining it is something else. Chapman, drawing on detailed research, listed four things that really make a difference to long-term success:

  1. Get the ownership structure right. Make sure your shareholders or other investors believe in your purpose. If they’re focused on returns first, your task becomes much more difficult.
  2. Develop a great governance system. You want to be sure that the right mindset is being applied to decisions across the business, from R&D to customer service. Making sure the decision-making process is of the highest quality is crucial.
  3. Implement the right operating model. Make sure it’s geared toward the longer term, and that leadership shares and promotes a long-term mindset.
  4. Make sure your relationships are consistent with your purpose. The organization’s interactions with stakeholders such as regulators don’t occur in isolation. All must be consistent with its purpose.

 

Finding value in the short and long term

Business has a key role to play in bringing about change, but the task is neither simple nor easy. Many stakeholders, including activist shareholders, remain intently focused on short-term gains. Maximizing shareholder value remains their top, if not only, priority. Long-term planning can come under intense pressure.

But those organizations that look beyond the bottom line and embrace their role as agents of positive change enjoy many benefits. In many cases, their returns are robust; their workers are happier; their customer base is expanding. They are proving that it’s possible to do well while doing good. Most important of all, they are helping to build a better world.

By taking new and innovative approaches, entrepreneurs can play a vital role in furthering the purposeful business movement. Their willingness to take risks, to try and fail and try again, could put them at the forefront of the growth of business as a force for good.

In the end, I think perhaps our World Entrepreneur Of The Year 2017 winner said it best.

“Entrepreneurs,” Al-Katib told the Monaco audience, “we are the solution.”

Summary

By taking innovative approaches and embracing risk, entrepreneurs can lead the way in a world where business is a force for good.

About this article

By

Karin Lutz

EY Global Markets Strategy & Analysis Leader and Women. Fast forward

Leading change and promoting purpose for business success. Advocate for gender equality, diversity and inclusiveness. Passionate about nurturing talent, personal development, and mental health.