August 3, 2017
by Carla Johnson
Ancient mariners learned how to navigate by the stars for one important reason – when there was nothing else to guide their path, the stars provided an unwavering anchor against which they made decisions. Decisions that led them to destinations that took months or even years to reach. For sailors in the Northern hemisphere, the North Star was the most critical.
Using stars for navigation was quicker, easier and more reliable than grabbing a compass. You knew exactly where you were, even in times of uncertainty – the middle of the night when there were no landmarks in any direction for reference. And using the North Star as a reference, you could point yourself in the right direction even if you were a quarter of the globe away.
For organizations, brand purpose serves as that same North Star. And more companies are starting to understand the power of purpose as a guide during times of uncertainty. A new report from the EY Beacon Institute shares the results of its survey of 1,470 global leaders representing companies across various industries in developed and emerging marketers around the world. The report, How Can Purpose Reveal a Path Through Disruption? reveals that purpose, not profit, is the key to success amid a turbulent global economy.
According to the report, there’s a big shift taking place in how organizations perceive purpose. Of the respondents, 45 percent said their organization directs their purpose at creating value for multiple (important…) stakeholders or offering an aspirational reason for being. Compare that to those who focus on bring value to customers (33 percent), boosting share price (15 percent) and bringing value to employees (11 percent). All of these focus on a single stakeholder group, which means two others lose in the long run.
Why the change in perspective? Resilience.
When asked, 68 percent of the companies that broadly define purpose and integrate it into their organizations say that purpose gives them the ability to innovate in times of disruption. This is key, because when markets fill with uncertainty, the last thing most companies want to do is add to it by trying to innovate. There are too many unknowns and executives don’t believe they have control over anything.
The survey also found that 97 percent of companies that deeply integrate a broader sense of purpose report a good or great deal of incremental value from doing so. Whether they’re building customer loyalty, preserving brand value and reputation or driving innovation across the company, embedding purpose across everything employees think and do lets companies stay competitive and generate value even in the toughest economic times.
“Today’s leading companies stand out by standing for something greater than themselves; transcending paradoxes of shareholder vs. stakeholder, efficiency vs. experiences, profits vs. purpose. In short, a new breed of business is evolving,” said Valerie Keller, Global Lead, EY Beacon Institute and EY Global Markets.
But touting a purpose-based narrative without follow-through causes more harm than good. It means failing the expectations of shareholder, customers and employees and losing their trust. And that, in the long run, means missing opportunities and losing big revenues.
“In an external world where there is so much volatility, you’ve got employees as well as different stakeholders who want to make sure that you know where you’re taking the ship and the direction that it’s being navigated for the long term. That conviction has to come through in the purpose.”
Lorenzo Simonelli, President & CEO, GE Oil & Gas
For companies that what to move from talking the talk to walking the walk, EY identifies four steps to help organizations reach their purpose goals:
1. Articulate purpose.
Identify your specific human-centered purpose and communicate it over and over andoverandover to your audiences. I can’t stress this enough. Companies habitually launch and leave ideas…they make a big to-do about something they claim is significant to the core of their business and then leave it. They don’t embed it within the ethos of the company. Ninety percent of purposeful companies say it’s fairly or extremely critical that purpose is articulated in terms of the value that it creates for key stakeholder. And 86 percent say that it’s fairly or extremely critical that purpose is linked to a business’s most material long-term value drivers.
2. Embed the pursuit of purpose.
A bully embedded culture of purpose doesn’t just ‘happen.’ It comes from detailed, strategic planning and a commitment to consistent delivery. Ninety percent of respondents said that it’s fairly or extremely critical for purpose to be build-into strategic planning processes at all levels of the company. Along with that, it’s key to use purpose to inform decisions about transformational change. Executives at purposeful companies say that the more they embed purpose, the more areas they see that require attention.
3. Evaluating progress
Purposeful companies take stock along the way – they measure organizational performance against their purpose. They’re realistic in what it takes to become a purposeful organization. With this attitude, they continually evaluate how far they’ve come and actively look for feedback from customers, employees and investors along the way. They also use KPIs and metrics related to purpose and embed those into business incentives.
4. Accelerating the journey
Once they’ve started the work, the best companies understand that they need to integrate the process of purpose as fast as possible. The more thoroughly they embed purpose within their culture, the sooner it will create value. This means making sure that every employee lives and demonstrates their commitment to purpose, from the C-suite to the front-line employees.
“How do you integrate it day to day? We all take the time to think about it from a big picture standpoint. But how do you carry that through day to day? Not only myself as a leader, but how do you get it to resonate with all of your employees?”
Robin Washington, Executive Vice President and Chief Financial Officer, Gilead
Download the full report.
Are you interested in identifying or better communicating your organization’s purpose? Contact me and let’s talk about how we can make purpose the foundation of how your organization delivers value. Or follow me on LinkedIn, and Twitter, and if you like what you see, Subscribe here for regular updates.
Photo credit: Flickr user Viri G
