“Earth is now our only shareholder,” Mr Chouinard wrote in an open letter posted to Patagonia’s website. Recently the hesitant millionaire who ‘never wanted to be a businessman’, transferred his £3billion company to a specifically designed trust and nonprofit organisation, ensuring the sanctity of his organisations’ mission — a commitment to conserving nature — for generations to come.
Gone are the days when running a business was only about profit and loss. There’s a new generation of people starting businesses, looking for jobs and looking within their own organisations for something more than that.
Purpose comes before profit.
Purpose-driven companies make more money, have more engaged employees and tend to have more loyal customers. In a way, small and medium businesses have always known this. And now big organisations and Execs are recognising it — according to Harvard Business Review 90% of executives now recognise the importance of having “an aspirational reason for being which inspires and provides a call to action for an organisation…and provides benefit to society.” (Take a bow Mr Chouinard)
Look at Certified B Corporations, which balance profit with societal benefit. “The movement that began with 82 certified B Corps in 2007 has burgeoned into more than 3,500 B Corps in over 70 countries worldwide. A person could probably go the entire day just using the products of B Corps, and then still have ice cream for dessert. B Corps include household names such as Ben & Jerry’s, Allbirds, Athleta, and Beautycounter.” And they were 64% more likely than other businesses to survive the 2008–09 recession.
Purpose should be a positive force for change. At Magnetic, we’re working with a Global FMCG who is committed to living their purpose: putting our future world at the heart of how they do business today.
They’ve been making and buying cocoa for over 100 years — we worked with them to reimagine the business to understand what an equitable, sustainable future looks like for the cocoa industry. This is just one of the ways they are bringing purpose to life in the business and showing their own people they are responsible, purpose and people driven. Looking to the future and thinking about the impact to the environment and creating a more inclusive approach to working with farming communities.
Not all FMCG’s are equal. Some competitors on the other hand are pulling out of the cocoa industry to focus on other profitable areas, without considering what pulling out will do to the cocoa community. Not something employees would look upon in a good light. That counts at a time like this.
If there’s no purpose without a positive future that means purpose has to support the present. Yet, at a time when a recession looms and there’s real concerns as to whether people will choose heating or eating — what’s the real cost if we don’t prioritise our customers and employees in the midst of a cost of living crisis?
Can purpose really be about anything other than our people in a time like this?
There’s no purpose without profit
Most businesses say they have a purpose, sometimes it’s just a positioning tool — a plastic purpose. The problem with a plastic purpose is it only runs skin deep. If a company is only committed superficially to a purpose then it’s likely its people and the customers commitment to its product is pretty flaky too. Really purposeful brands command incredible brand loyalty — deeply resonating with customers and their people.
The art of great leadership is finding a way for the people who work for a company and the company itself to all be aiming for the same thing.
Often that comes down to defining and aligning behind a brilliant purpose. But, as an attendee at our latest Leaders Roundtable put it, “purpose doesn’t matter if I can’t pay the gas bill.” So what do you prioritise now?
As the cost of living rises and the costs for businesses rise with them, businesses need to think about what they need to do to keep the people that keep them working and drive them forward. They need to ask: What responsibility do they have to them as people? What role can purpose play in getting them and their staff through the tough times ahead?
After years of pandemic upheaval, the rate of rising inflation is still exceeding the increases in average wages. Some companies simply can’t afford to pay their employees more, others feel both an ethical imperative and intense commercial pressure, against a backdrop of labour shortages, to help those on low incomes.
And what about the role of investing now for a future return. In the business — yes. But think of it another way. What about investing now to give your people peace of mind? Some security.
Research by the CEBR found that 10% of UK employees missed days at work due to financial problems, while a further fifth of workers were less productive because they spent working hours worrying about money — at a total annual cost to businesses of more than £6bn. (Read more)
This prompts the question — how do you measure and value giving your people space to focus on their work instead of their bills? What’s the return on investment for leaders and the business on that?
And, can businesses really afford to right now?
As a recession potentially looms, our next Exchange is all about the role of purpose during a cost of living crisis. Will it be enough to weather the storm — or will organisations and their leaders have to do more? Join the conversation by registering for free tickets here.