For this inaugural blog post, let’s start with something light. Say, can a company have a higher purpose beyond just profit, yet still be profitable? The answer: yes. See, nice and easy!
If you don’t want to take me at my word, I totally understand, so I’ll expound a bit. There is a growing body of evidence that demonstrates, yes, it is not only entirely possible for a company to pursue both a higher purpose and being profitable, it is actually more sustainable in the long run to do so. The book, Firms of Endearment, charts overwhelming success for companies pursuing a higher purpose and taking all stakeholders into account. Success to the tune of outperforming the S&P 500 by 14x, and outperforming Good to Great companies from Jim Collins iconic book by 6x.
Recent evidence during the pandemic exists too. A piece from Forbes states:
A lot of businesses are thriving in spite of the major challenges presented by the Covid-19 pandemic. The common thread among companies that are weathering the storm most successfully is an authentic and integrated commitment to purpose larger than profitability or growth. Indeed, in the last financial crisis, certified B Corps were 63% more likely to survive than other businesses of similar size.
So, whether you are in full agreement companies can pursue both, or just willing to concede that maybe it’s possible, there is an immediate next question. How? How does a company identify a purpose? How does a company pursue that purpose at all levels of the company?
I won’t be able to provide a magic potion that makes this easy, but maybe going back to basics is a good place to start. The ABC(D)s should help.
Articulate: It sounds simple, but this is really hard work to articulate a company’s higher purpose. Put differently, you want your company to answer the question, what is the worthy problem we are trying to solve every day?
Believe: Once articulated, the purpose needs to become such a strongly held belief that the CEO down through the front line employees regularly choose to pursue the company’s higher purpose even over short-term profits.
Change: If this higher purpose becomes such a strong belief, inevitably change will occur throughout the company. And, if there is one thing we know about change, it is that change is uncomfortable. Prepare yourself for being uncomfortable.
Dedication: Pursuing higher purpose is a looooonnnnngggggg process. This is not for the faint of heart. A commitment to higher purpose will deliver meaningful results over the long term, but to do so requires continuous commitment, experimentation, and passion to achieve.
Deep respect and gratitude to all you pioneering folks pursuing purpose-driven companies. You are making the world a better place, one company at a time!