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Source Fast Company Blog By Sherry HakimiWhat makes some companies wildly successful while others flop?
Starting and surviving in today’s economy is hard, but the companies that figure it out have something in common: the pursuit of purpose, alongside the pursuit of profit. A purpose mobilizes people in a way that pursuing profits alone never will. For a company to thrive, it needs to infuse its purpose in all that it does.
An organization without purpose manages people and resources, while an organization with purpose mobilizes people and resources. Purpose is a key ingredient for a strong, sustainable, scalable organizational culture. It’s an unseen-yet-ever-present element that drives an organization. It can be a strategic starting point, a product differentiator, and an organic attractor of users and customers.
Here’s how a few organizations have used purpose to achieve great results, and what other organizations can learn from their success.
Ask a group of college graduates their plans after graduation, and chances are none will say: “I want to work for a household goods company.” Yet Seventh Generation, a household goods company, is a top employer of millennials. They manufacture seemingly unexciting products—dish soap, fabric softener, and toilet paper—but the company’s products are authentically imbued with a higher purpose: to inspire a consumer revolution that nurtures the health of the next seven generations.
A company’s purpose cannot simply be a pretty set of words. As the adage goes, actions speak louder than words. Seventh Generation walks the talk of its purpose—and its employees and customers notice. The company encourages consumers to line-dry clothes instead of machine drying, at the risk of cannibalizing its dryer sheet product. They are using their business to start a movement that will change an industry. This authenticity, potentially at the expense of their bottom line, inspires loyalty that no lip service will create.
As a company, it’s important to think about why you are in the business you’re in. What drives you? If your business succeeds, what would your ideal world look like? When a company demonstrates an authentic purpose, consumers feel a connection to the products and company. They will choose the authentically purposeful company’s products, even if it’s not the cheapest offering.
You can’t force employees to share your purpose. If they don’t, customers will know. It’s better to hire people with a shared sense of purpose. That gives everyone in the organization a common starting point.
Acumen, the non-profit investment fund, has designed a recruitment process that enables it to identify potential employees who share the organization’s purpose. The organization doesn’t simply ask interested candidates to submit a résumé and cover letter; Acumen also asks candidates for responses to a series of short-essay questions that relate to the position. For instance, “How would you describe your interest in ‘impact investing’ (which is what Acumen does) versus regular private equity or venture capital investing?” Anyone who doesn’t have a good answer for that probably would do better elsewhere.
Spend some time thinking about the range of values and purposes that fit into your company, and create a process that allows you to gather that data before making a hiring decision. Hiring is difficult; firing is even more difficult.
Economic value and social value are not mutually exclusive. Today’s sophisticated business leader recognizes the concept of shared value: creating economic value while addressing social needs and challenges. As Michael Porter and Mark Kramer wrote inHarvard Business Review in 2011: “Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success.”
There are many ways that today’s purpose-driven companies can incorporate shared value into the core of the business. One example is New York-based Etsy. Among its initiatives as a certified B-Corp, Etsy has collaborated with governments in Rockland, Illinois, as well as in New York to offer free entrepreneurship courses for underemployed and unemployed residents. Though it’s not mandatory, the course also includes assistance in setting up a store on Etsy’s platform. This is shared value at its best; Etsy adds more artists and artisan sellers to its platform while empowering underemployed and unemployed participants with the ability to generate supplemental income—or even a full-time job.
With out-of-the-box thinking, any company can move the needle on social challenges while creating economic value.
A compelling narrative eliminates a lot of the ambiguity that accompanies normal business functions—everything from creating a new product to onboarding a new hire.
While much has been written about Google’s perk-driven culture, a more significant ingredient of the company’s success is its clear mission: to organize the world’s information, and make it universally accessible and useful. Every product that Google has developed is intended to get it one step closer to fulfilling its purpose.
This purposeful narrative propels experimentation in new products, technologies, and services. In Google’s case, it also presents a continual challenge that talented Googlers strive to create solutions for. Information is power, and making information universally accessible is one way to achieve greater equality in the world. Seen through that lens, Google’s purpose is simultaneously a driver of strategy, a recruitment tool, and a way to make a difference in the world.
Given the success of these and other organizations, it’s clear that purpose is not a fluffy, new-age term. In the book Corporate Culture And Performance, John Kotter and James Heskett show that over a decade-long period, purposeful, value-driven companies outperform their counterparts in stock price by a factor of 12. In the absence of purpose, a company’s leadership is likely to have greater difficulty in motivating employees and putting the company on the course to success. Customers are likely to have difficulty connecting with the company. With purpose, a company can create positive value that is far greater than the sum of its parts.
In today’s technology driven, rapidly evolving economy, successful companies are built not from the ground up, but from the purpose up.