The goal of all businesses is to make money, but those that have a purpose beyond profit tend to do better.
All businesses exist for the same reason: to make a profit. That’s the common goal of every enterprise.
How they do that differs, of course. An architect makes a profit by charging for his time when he designs your new office building, being sure to bill you for more than his time actually costs so that he’s left with a surplus.
So, if the goal of our architect is to make money, and he does so by selling architectural design expertise for a profit, what might his purpose be?
Well, in truth, he may not have a purpose beyond profit. Not every business does, and even some that do don’t always fully realise it.
But let’s say our architect makes it his mission to design energy-efficient office buildings that incorporate passive solar design, greywater recycling and maximum use of recycled raw materials? That could be his purpose beyond profit.
What’s yours? Do you have one? And why does it matter?
Businesses with a purpose beyond profit do better
In a study entitled “The Business Case for Purpose”, a team from Harvard Business Review and EY’s Beacon Institute reported that “those companies able to harness the power of purpose to drive performance and profitability enjoy a distinct competitive advantage”.
They define purpose as “an aspirational reason for being which inspires and provides a call to action for an organisation and its partners and stakeholders, and provides benefit to local and global society”.
Going back to our example of the architect that wants to make more environmentally sustainable office buildings, you can see how such an aspiration would qualify as a purpose based on the Harvard and EY definition.
The benefit of doing business with a purpose beyond profit is not a recent revelation. Jim Collins and Jerry Porras wrote in their 1994 book ‘Built to Last’ that between 1926 and 1990 a group of “visionary” companies — those guided by a purpose beyond making money — returned six times more to shareholders than explicitly profit-driven rivals.
How would you like that? 6 times more earnings than your competitors are making just because you do business with a purpose.
Why is that though? What is it about that purpose that makes such a difference?
Building a purpose centred around your customers
In part, it’s because it can be used to unite and motivate suppliers and employees to collaborate more and go further. But it works best when the purpose is aligned with and viewed from the perspective of the customer – after all, it’s the customer that pays for it.
Take our architect with a purpose. He understands that people and businesses are increasingly environmentally conscious nowadays and so he knows that there will be an appetite among developers to build offices that appeal to this trend. He serves their need, and that of their chosen markets, by providing sustainability-led architectural design services.
In our business it looks like this.
Goal: to make a profit
Purpose: to help strengthen communities and enhance the environment around us
How we do that: by providing sustainability and CSR consultancy services to growing businesses that want to make a difference, whilst looking after our people and suppliers.
In this way, you could say that we leverage our clients to achieve our purpose, whilst at the same time serving theirs too. Win-win.
If you haven’t already found your purpose, don’t worry – it’s easy.
For example, if you’re a recruitment company, your goal will be to make money; your purpose could be to help improve life chances for the people you place; and you could do that by finding them jobs that they’ll love and that will reward them well (not just financially, but with opportunities too). Otherwise, you’re just another “me too” recruiter that’s no different from all the rest. Wouldn’t you rather stand out because you stand for something?
And if you don’t adapt to find and invest in a purpose beyond profit?
Unilever CEO Paul Polman set the consumer goods conglomerate a simple objective: to double in size while reducing the company’s overall environmental footprint and increasing its positive social impact.
He’s on record as saying: “If you want to exist as a company in the future, you have to go beyond [CSR and philanthropy].You actually have to make a positive contribution.”
His is a stark warning, but it boils down to this: if you don’t start to make a positive contribution, you have no future.
Remember, it’s not about what you make, it’s about what you make happen; it’s not about what you do, but about the good that that does.
It’s about making money and making a difference at the same time.
Need help finding your purpose beyond profit? No problem, [email protected]