While 90 per cent of respondents in the new study said their company understood the importance of purpose, less than half thought it ran in a purpose-driven way. Why the discrepancy?
One of the paradoxes of business is that the most profitable companies are NOT those that are most profit-focused. But is it a paradox, really?
In a survey titled “The Business Case for Purpose”, a team from Harvard Business Review Analytics and professional services firm EY’s Beacon institute declares “a new leading edge: those companies able to harness the power of purpose to drive performance and profitability enjoy a distinct competitive advantage”. This is a support for the book by Raj Sisodia et al on "Firms of Endearment" and it's also consistent with the findings of Jim Collins and Jerry Porras, who in 1994’s Built to Last found 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. And Peter Drucker was clear about it a long time ago...profit is a measure that you are excelling at your purpose, it's not the goal.
Why are young people with amazing talent flocking to Tesla? It's the opportunity to advance something greater than the self, in this case to electrify the clean energy revolution and accelerate sustainable transport.
This new survey defines 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” — and others, like founder of Visa and former CEO Dee Hock define it like this: "a powerful purpose is something where at the end of my life I say to myself, My life had meaning, value and significance because I was a part of that enterprise." How many companies aspire to this standard?
The data says they should!