Delivering on the Promise of Purpose Beyond Profits
By Greg Hills & Bobbi Silten
Do you believe that companies should have a purpose beyond profits? If your answer is yes, you’re in the right place. Fortune’s fifth annual Change the World List celebrates those companies and leaders that embrace corporate purpose and recognize how it can add value to business and society.
Purpose beyond profits is being demanded from all corners including employees, investors, and the millennials and Gen Z who represent the next generation of leaders, so it’s not a surprise that business leaders are taking note. And the realities of the 21st century demand that companies act on their stated purpose, returning to a business environment that serves more than shareholders. The world has never been richer, but never more unequal, with the top 10% of adults holding 85% of the global wealth. The world is out of balance and we’re seeing this imbalance present itself in our public discourse, elections, and growing resentment and suspicion of those with power and resources who seem to be writing the rules of the game. With all the disparities in wealth, barriers to stability and prosperity for so many, and climate change testing the resilience of communities and governments, corporate purpose needs to take on a more substantive meaning that integrates societal benefits and helps meet the needs of our time.
A survey of global corporate executives shows that more than 80% believe shared purpose leads to greater employee satisfaction, customer loyalty, and higher-quality products and services. At the same time, less than half of the business leaders surveyed agree that their company’s stated purpose is well-aligned with its business strategy and operations.
So how does a company’s purpose statement grow into something more than words on a poster or in a marketing campaign?
The bad news is that there’s no magic formula to becoming a purpose-led company. Most companies grounded in purpose have different policies, programs, and practices to support their efforts toward achieving their purpose potential. The good news is there is a powerful practice that can be the economic engine in purpose-led companies.
'Shared value' as a guiding principle
Shared value, the business discipline coined by Michael E. Porter and Mark Kramer, aims to be that engine. As Porter and Kramer put it when they introduced the discipline in a Harvard Business Review article in 2011, shared value “enhances the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates. Shared value creation focuses on identifying and expanding the connections between societal and economic progress.” We believe shared value is the most powerful practice companies can leverage to fulfill their purpose aspirations because it uses the core business to drive societal change. It can also be one of the most authentic because it relies on core business practices and know-how.
In looking at companies that have embedded purpose into their strategy and operations we’ve found that their stated purposes have four common attributes.
- They are significant and tie to some unmet need in society, such as those defined by the United Nations’ Sustainable Development Goals.
- They are authentic with roots in the company’s history and playing out in the company’s operating culture.
- They are profitable and incentivize leaders to further invest, partner and scale their activities.
- And finally, they are serious, with leaders being held accountable for achieving their purpose.
We believe that companies at all stages in the purpose journey can aspire to do things better in service of delivering on the promise of purpose. We encourage you to look at your own work to identify where you can do things differently, finding new ways to drive shared value. And know that you can find fellow changemakers, idea generators, and committed leaders in the Shared Value Initiative community where you can exchange ideas, gain inspiration, and learn from each other.
As we look at this year’s list we applaud the pioneering individuals who are doing the hard, sometimes lonely and often complicated work of leading their companies to fully live into a corporate purpose. Now more than ever the world needs our collective energy and commitment to bend the arc of history towards a more equitable, just and sustainable society, and we hope that as companies drive to achieve their purpose potential, we will see much-needed progress.
This originally appeared as part of the 2019 Fortune Change the World List - https://fortune.com/2019/08/19/change-the-world-shared-value-purpose/
Greg Hills is the co-CEO of FSG, a nonprofit social-impact consulting firm. Bobbi Silten is the managing director of Shared Value Initiative, a platform for organizations seeking business solutions to social challenges.