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The better the question. The better the answer. The better the world works. У вас есть вопрос? У нас есть ответ. Решая сложные задачи бизнеса, мы улучшаем мир. У вас є запитання? У нас є відповідь. Вирішуючи складні завдання бізнесу, ми змінюємо світ на краще. Meilleure la question, meilleure la réponse. Pour un monde meilleur. 問題越好。答案越好。商業世界越美好。 问题越好。答案越好。商业世界越美好。

The business case for purpose

Executives from companies that treat purpose as a core driver of strategy and decision-making reported greater ability to drive successful innovation and transformational change.

As part of our drive to understand how – and more importantly why - companies are employing purpose to guide and lend impetus to their transformation, the EY Beacon Institute sponsored Harvard Business Review Analytic Services (HBRAS) to conduct a global survey of 474 executives from across different sectors and geographies.

Launching this September, here is a snapshot of the survey’s findings and key messages from the report.

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Purpose is a powerful though underutilized asset

Most executives believe purpose matters.
Eighty-nine percent of executives surveyed said a strong sense of collective purpose drives employee satisfaction; 84 percent said it can affect an organization’s ability to transform, and 80 percent said it helps increase customer loyalty.
… but only a minority of executives say their company currently runs in a purpose-driven way.
Forty-six percent said their company has a strong sense of purpose while another 44 percent say their company is trying to develop one.
Companies with a strong sense of purpose are able to transform and innovate better.
Executives from companies that treat purpose as a core driver of strategy and decision-making reported greater ability to drive successful innovation and transformational change. More than half (53%) of executives at companies with a strong sense of purpose said their organization is successful with innovation and transformation efforts, while less than one-fifth (19%) report success at companies who have not thought about purpose.
A definition of purpose:
The survey defined organizational purpose as “an aspirational reason for being which inspires and provides a call to action for an organization and its partners and stakeholders and provides benefit to local and global society.”

Prioritizers, Developer and Laggards

The survey revealed that most companies in the survey fall into three categories with respect to purpose: prioritizers, companies that already have a clearly articulated and understood purpose (39 percent); developers, companies that do not yet have a clearly articulated purpose, but are working to develop one (48 percent); and laggards, companies that have not yet begun to develop or even think about purpose.

Purpose and growth

Prioritizers are reaping the rewards of embedding purpose: in those organizations where purpose had truly become a driver of strategy and decision-making, executives reported a greater ability to deliver revenue growth and drive successful innovation and ongoing transformation.

58 percent of prioritizers said they experienced growth of 10 percent or more over the past three years, compared to 51 percent of the developers and 42 percent of the laggards.

Purpose—or the lack of shared understanding of purpose—seems to have a direct impact on the bottom line. Forty-two percent of laggards reported flat or declining revenue over the past three years, compared to 19 percent of developers and only 15 percent of prioritizers.

Purpose-led transformation and innovation

Companies that treat purpose as a core driver of strategy and decision-making are much more likely to focus on innovation and continuous transformation, and are more successful in these efforts.

Purpose and meaning

Executives at prioritizers’ companies say their corporate purpose includes inspiring innovation and positive change, providing employees with a sense of meaning and fulfilment, creating value for the customer, and making a positive impact on their community.

“The sense of being part of something greater than yourself can lead to high levels of engagement, high levels of creativity, and the willingness to partner across functional and product boundaries within a company, which are hugely powerful,” said Rebecca Henderson, the John and Natty McArthur University Professor at Harvard Business School.

“Once they’re past a certain financial threshold, many people are as motivated by intrinsic meaning and the sense that they are contributing to something worthwhile as much as they are by financial returns or status.”

With so much potential, why is purpose not more widely embedded?

What to improve: the executives surveyed said that companies need to do a better job embedding their purpose in the organization, particularly in leadership development and training, in employee performance metrics, targets and rewards, and in operations.

Respondents also cited a number of barriers including short-term shareholder pressure, systems and infrastructure that are not aligned with long-term purpose.

One key difference between the prioritizers and laggards stood out in the survey: communication. The laggards reported poor communication from top leadership as the most significant challenge in activating purpose in their organization.

While most companies surveyed recognize the value and potential of purpose, a majority of companies have yet to embed a shared a sense of purpose throughout their organizations that would allow them to see it benefits.

Better communication from CEOs and senior executives, leadership development and training, a better fit between employee performance metrics and rewards, and better integration into operations all contribute to more successful purpose-led transformation.

“It is essential that companies develop the kind of leaders that can communicate and align the whole organization around purpose. It’s easy to state a purpose and state a set of values. It’s much harder to enact them in the organization because it requires you to continually search for consistency across many disciplines and many activities.”

- - Professor Michael Beer, Harvard Business School.