Purpose, performance and value.
In EY Beacon Institute’s new research report, The State of the Debate on Purpose in Business, we considered why executives see purpose as an important strategic lever and how it can enable the performance necessary for growth, innovation and transformation.
Purpose is (re-)emerging as a “North Star” by which business can navigate and thrive in the 21st century. Purpose — an aspirational reason for being that is grounded in humanity — is at the core of how many companies are responding to the business and societal challenges of today.
Six forces are challenging companies’ old sense of identity and operating models.
What are they?
- The trust deﬁcit.
- Evidence suggests that a lack of trust slows growth and innovation. At the societal level, the trust deﬁcit could have far-reaching implications for businesses’ license to operate.
- The sustainability imperative.
- Executives are re-evaluating how they produce, consume and supply goods and services, in order to mitigate risks and make their operations, supply chains, products and services more socially and environmentally sustainable.
- Rising social inequality.
- Though the world is getting richer, inequality is at historic highs: just 1% of the world’s population now controls more than 50% of the planet’s wealth. Within companies, too, the differences between the bottom and the top salaries are magniﬁed — in some US organizations, that ratio is now 350 to 1.
- Diminishing brand control.
- Technology has enabled all people to be potential newscasters. Customers are quick to use their social media power to push their own political and social agendas. Dissatisﬁed consumers spread the word about unfulﬁlled brand promises faster than any marketing campaign can manage.
- Conﬂicting time horizons.
- A growing number of people believe companies have a role — and even an obligation — to address long–term global environmental and social challenges. Companies are struggling to manage for the long term despite many short–term pressures.
- Digitalization threats and opportunities.
- Instantaneous interconnectedness and increasingly powerful, real-time data analysis create new opportunities for businesses to know and serve customers better — and new ways for customers to spot any gaps between a company’s rhetoric and its action.
5 ways purpose drives success
(and how to take action)
Purpose instills strategic clarity
- Motivate with purpose (a “burning ambition”), not fear (a “burning platform”) in challenging times
- Keep purpose at the forefront of transformation, to clarify desired outcomes. This helps people understand the longer- term context of short-term changes
- Use purpose as a force to help your company to transform and respond to external pressures to grow and create value differently
Purpose channels innovation
- Let purpose frame how your organization understands the bigger picture
- Use purpose as an antidote to short-termism to open up people’s creative horizons
- Let your business’ purpose empower employees to see themselves as problem solvers and value creators, guided by the boundaries of your purpose
Purpose is a force for and a response to transformation
- Motivate with purpose, not fear, in challenging times.
- Keep purpose at the forefront of transformation; doing so will clarify desired outcomes and help people understand the longer-term context of short-term changes.
- Use purpose as a force.
Purpose taps a universal need
- Use purpose to tap into a basic human need to contribute to a wider group or bigger goal; it's a powerful driver of behavior.
- Explore how purpose can unite diverse global teams in new ways, which may help them work toward a common goal.
Purpose builds bridges
- Deploy your purpose as a guide and a force for better collaboration.
- Use your purpose to look for common ground - for both the "why" and the "how" alliances could work.
- Use purpose internally to help individuals work across silos in the interest of a single, compelling aim.
... but bridging the gap is not easy.
To successfully activate its purpose, a company must integrate it across the organization, aligning strategy, investments and activities and embedding accountabilities.
Research from Harvard Business Review Analytic Services and the EY Beacon Institute suggests that there is a significant gap between intention to integrate purpose (“ideal”) and the extent to which organizations actually do this (“actual”).