Aligning purpose with profit
April 26, 2019
By Daniel Cherrin
Young people want to work for purpose-driven businesses. Driven by client demand, reputational risk management and a supportive body of financial research, many customers and investors want the companies they do business with to think more broadly about their impact on their community, their company and on the environment. This includes taking positive steps in areas such as environmental sustainability, human rights and community involvement.
Early in 2018, Larry Fink, the President of BlackRock, the world’s largest asset manager, sent a letter to CEOs of companies he invests in that stated, “Without a sense of purpose, no company, either public or private, can achieve its full potential.” In sending that letter, Fink recognized the purpose of business is not simply to make money. It’s also to find solutions to the most acute environmental, social and economic challenges we face.
In fact, brands can do more than government today to solve the problems that exist around us—education reform, workforce training, environmental issues, free trade, gender issues, income inequality, climate change and sustainability are all issues companies can directly impact.
Business leaders, such as DTE President Gerry Anderson, are beginning to see that purpose creates value. More importantly, CEOs of purpose-driven companies are seeing that embedding a sustainable strategy into their core business creates value for the company by:
Driving financial results
Reinforcing company values
Contributing to employee satisfaction and retention
Creating customer loyalty
Shifting to a purpose-led culture also supports securing quality talent and contributes to employee satisfaction, especially with the millennials.
You do not need to be a Fortune 500 company to shift your strategy. Unilever (NYSE: UN) recently acquired five small companies that were B Certified, including Sundial, Seventh Generation, Pukka, Mae Terra and Ben & Jerry’s. And SC Johnson (NASDAQ: JOUT) acquired Method and Ecover, both B Corps. Certified B Corporations are businesses that meet rigid standards of verified social and environmental performance, public transparency and legal accountability to balance profit and purpose.
Look at Interface (NASDAQ: TILE). They design and make carpet tile. Based in Atlanta, Interface employs 3,278 people. While it may not be a small business by our standards today, it was at one time.
In 2002, Interface company founder Jay Gould began to transform the company he created in 1975 into a purpose-driven company. His company’s vision is “to be the first company that, by its deeds, shows the entire industrial world what sustainability is in all its dimensions: people, process, product, place and profits—by 2020—and in doing so we will become restorative through the power of influence.” Interface posted $958.6 million in revenue in 2016.
There are a lot of companies that are involved in their community, through philanthropy and public policy. However, to become a purpose-driven company, a company’s mission needs to drive the business strategy and it starts with the leadership.
It does not take a lot of resources to transform your business; it simply takes a willingness to pivot your business strategy. This includes:
The leadership team needs to own the process of embedding purpose into the core business and shifting the conversation about the company’s values and the problems your company is working to solve.
Articulate a compelling purpose that can make a difference in the world. Find the unique intersection between the needs of the world and what your company can be the very best at.
Find the authentic values that define your company.
Go back to your company’s roots and figure out the problem your company tried to solve. Align your organization with an authentic higher purpose that intersects with your business interests that also guides your business decisions.
Make a plan to create value for all stakeholders.
You are still in business to profit and you cannot lose sight of that, but at the same time it is vital that you remain focused on how you are adding value to others. Adding value to others is a super important outcome of the work we do so we can continue to pursue our purpose.
Recognize the need for authenticity.
Your words matter, but they also need to govern the behavior of senior leadership, otherwise your employees and customers will see through them. When you are in, you need to be all in. If your purpose is authentic, people know, because it drives every decision and you do things other companies would not. Your employees will also begin to see a change and then they too will begin to work for you with more passion and purpose, giving greater meaning to their work.
Consumers expect the companies they do business with will act responsibly and ethically. However, they also want companies to tackle much larger issues.
Brands are beginning to take stands on issues they believe in. CEO’s are speaking out and companies are becoming agents of change that are driving the agenda for the greater good. Companies today are expected to deliver financial performance, but they are also expected to show how they are making a positive impact on society. Without it we are not achieving our full potential.
If you want to learn more about how you can become purpose driven and profitable, tweet me @DanCherrin #SBAM. You can also join me for SB Detroit 19, at the Sustainable Brands in Detroit this June.
Daniel Cherrin is the founder and Chief Strategic Communications Officer of North Coast Strategies and public affairs + relations consultancy in Detroit. Daniel works to protect and enhance the reputation of others through strategic relations, engaging content, insight and good stories to tell, to influence behavior around informed decisions. He also works with organizations to create opportunities, to make connections, and start conversations to influence decisions about difficult issues. www.northcoaststrategies.com.