There is evidence that we are in the middle of a shift in how customers and employees look at organizations and their raison d’être. Why do we go to work at all? What is the purpose of our companies? Why do we earn money? What are our values? In the past it has been relatively easy to answer these questions. Largely it has been about fulfilling the owner’s interests, producing, and being effective and profitable. But even if effectiveness and profitability are prerequisites to running a business over the long term, there are more requirements today. Several studies point out that businesses are now forced to become more value driven, with a clearer overarching purpose of the business. The search for purpose has begun.
More and more of us choose employers, suppliers, products and services that stand for something. Companies have to find a “why” that engages and attracts both customers and employees. A study carried out in 21 countries shows that 65 percent of customers want to support companies that have a strong purpose, and they are willing to pay more for products and services that come from responsible companies. 1 In another study carried out amongst young academics in 29 countries, nine out of ten respondents said that a “feeling of doing something meaningful” is a determinant in their choice of employer. For millennials – those born between 1984 and 2000 – the number is as high as 77 percent.2
But meaningful companies are not only relevant because they please customers and employees; in the long-term they also produce better economic results. According to the study “People on a mission” carried out by the HR consulting firm Korn Ferry, meaningful companies have four times the annual growth rates of those that do not have a clear meaning.3 The same study shows that 90 percent of employees in such companies are engaged in their work, compared to 32 percent for other companies, while the likelihood that employees will stay in the company is three times as high.
The two big driving forces behind this trend are that both customers and employees demand it. What seems to be happening is that we – against the background of the many economic, social and environmental problems that we are faced with – are searching for ways to use our money so that it serves a greater purpose. This value shift toward a more altruistic mindset is driven by more and more people engaging in issues related to the environment, human rights, diversity, equality, peace, sustainability, safety and social benefit. To name a few. One doesn’t have to be a tree hugger or save all the whales, but one gets a lot of kudos for making life better for someone else.
Being the richest man in the cemetery doesn’t matter to me. Going to bed at night saying we’ve done something wonderful, that’s what matters to me. | Steve Jobs, founder of Apple
Being meaningful is spurred on by new values. A desire to contribute to something bigger. And if one can serve a higher purpose and make more money at the same time, we all win. Taking a clear stance for something creates the opportunity to differentiate one’s self from the competition. Different forms of meta values become increasingly necessary for making products and services more interesting. Even if one sells to other companies, it is physical people in the end – with all of the feelings, opinions, hopes and prejudices that involves – who make the important purchase decisions. In addition, many companies require that their suppliers live up to the values that they place on themselves to even be considered for business transactions.
What kind of higher purpose can a company serve? And who should one serve? In their book Fast/Forward – Make your Company Fit for the Future the writers Jonas Ridderstråle and Julyan Birkinshaw say that one must first decide which stakeholder one wants to serve and how one can address their values – beyond money.4 They say that serving stockholders is challenging because it seldom creates a differentiating uniqueness. The writers describe instead five stakeholders that one can focus on when attempting to create a more meaningful business: employees, customers, suppliers, the local community or the planet. Let’s see some examples that the authors raise.
The Indian multinational HCL Technologies has achieved great success by involving employees in defining the purpose of the business. Through their slogan “Employees first, customers later” their CEO Vineet Nayar succeeded in differentiating their business and thereby getting their employees to serve customers better. Through a solid makeover plan based on clear meaning creators they succeeded over a period of six years in creating an annual growth of 24 percent.
Another example that Ridderstråle and Birkinshaw give in their book is The Tata Group – one of India’s most successful companies with a product range that includes IT, steel, cars, chemicals and hotels. Tata’s purpose and raison d’être is to improve the quality of life in the local communities that they serve. To live up to such a high goal they spend – through their charity fund – a large portion of their profits on local communities, through investments that contribute to providing access to clean water and health services and improved literacy. Their investments in the local communities that they serve are usually over 100 million US dollars per year. In the past ten years, the company has more than tripled its revenue.
The examples provided above illustrate that there are several roads to wander if one wants to create a clear feeling of purpose and meaning. Regardless of which direction you and your company choose, one must live up to one’s values with heart and soul. Those who don’t invest wholeheartedly and genuinely but rather only want to sell and make money will become relentless and be seen right through in the future.
1 Globescan (2016, 6 June). Aspirational Consumers Are Rising. Are Brands Ready to Meet Them? Downloaded 2018-10-22 from https://globescan.com/aspirational-consumers-are-rising-are-brands-ready-to-meet-them/
3 Korn Ferry Institute (2016, 20 December). Purpose Powered Success. Downloaded 2018-10-22 from https://www.kornferry.com/insights/articles/purpose-powered-success
4 Birkinshaw, J. & Ridderstråle J. (2017). Fast/Forward – Make Your Company Fit for the Future. Stanford University Press.