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Research Centre

The 5th P: Purpose Driven Businesses

By September 3, 2020September 16th, 2020No Comments

Although purpose and value are increasingly important, embedding them into business practice remains a challenge, yet it clearly can be done.

Why purpose?

While profit will likely remain the key driver for most businesses, the past decade has seen a shift with more business leaders and employees trying to find purpose and value in their work.

Though meaning in the day to day is important for employees, for business leaders, commercial accomplishment is a key motivator with 79% acknowledging that purpose is a central component of achieving success.  According to Harvard Business Review, 84% of business leaders believe that a company with shared purpose will be more successful at transformational change. They believe that purpose will lead to increased employee satisfaction, better quality product releases and increased customer loyalty. 

In support of that, the review confirmed that those companies who prioritised purpose in terms of articulation and understanding saw more growth in revenue. But what is it about a shared sense of purpose that drives this?

“The sense of being part of something greater than yourself can lead to high levels of engagement, high levels of creativity, and the willingness to partner across functional and product boundaries within a company, which are hugely powerful.” 

Professor Rebecca Henderson – Harvard Business School

Consistently honing in on the bigger picture of preventing ocean plastic is what drives Raffi Schieir, and his business forward. The director of Bantam Materials UK validates: 

“When the struggle of a business is founded on a clear ‘why’ there is meaning and even joy in that struggle, often, leading to authentic innovation, implemented with organisational speed.”

Yet embedding purpose into daily business practice isn’t always that straightforward.

Embedding purpose in practice

While an open dialogue needs to exist between business leaders, employees and customers to ensure that purpose is shared, when it comes to the organisation, just over a third of business leaders indicate that their business model is aligned with purpose.

Oftentimes there remains a focus on short term financial performance which prevents long term value creation, as well as a lack of purpose integrated in operations and incentives. In some cases, businesses have either lost or never developed their understanding of how value is created. 

However, for Robert Goodwin, co-founder of OceanCycle, embedding purpose into their business is a key priority. ‘I constantly ask why we exist’ he explains. The conversations that follow are electric and drive the way he organises and measures results. OceanCycle’s clear purpose is to stop plastic from going into the ocean and his measures of success are aligned with that purpose. Their main metrics include annual tonnages of plastic prevented from going into the ocean and income generated for coastline plastic collectors, along with clear financial indicators of performance.  The focus is always on how to best tackle the problem by either doing the same better or innovating to address the complexity of the problem. Raffi Schieir adds:  

“Aligning company culture with meaningful focus on long term value is an active decision. Although the type of decision may be easier to make and implement in private businesses, the value created by purpose should be clear to public company leaders, their workforce, and their customers.”

He reflects on the early days of his career and concludes that every marketing class which covers the 4 P’s of Product, Price, Place, and Promotion, are in reality very much incomplete. “Why the business exists is the most important question of all – that is, the 5th P – it’s Purpose.”