Milton Friedman’s ideology that the sole purpose of a company is to generate a profit for its executives and shareholders is being challenged by brands like Starbucks, Tesla, and TOMS, which leverage their social contributions to do good while doing well.
The key to becoming a purpose-driven business leader is to hone in on solving social crises. By using your business as a means to overcome challenging problems, you can not only increase consumer goodwill, loyalty, and trust, but also position your brand as an indispensable influencer catalyzing true social progress.
Let’s look at a few ways your business can leverage social impact to carve out a competitive advantage:
Invest in employee culture and practice socially responsible hiring: Your employees are the backbone of your company who not only interact with customers, but can also determine your profitability.
In fact, Gallup Poll found that companies with high levels of employee engagement, on average, receive 10% better customer reviews, are 21% more productive, and are 22% more profitable than the competition. Therefore, building a strong employee community is essential to business success.
A company that stands out as a leader in fostering internal culture and creating jobs for at-risk communities is Starbucks. The coffee seller deliberately hires veterans, at-risk youth, and refugees to create jobs in communities with limited employment opportunities.
Starbucks does a great job of making employees feel like they are part of something that goes beyond making a paycheck. The employee community showcased their solidarity by defending the brand’s commitment to America after it received criticism on social media for committing to hire 10,000 refugees in response to the Immigration Ban.
What’s more, the brand is expanding in impoverished communities — like Ferguson, Missouri – with the hopes of inspiring other companies to invest in downtrodden regions, too. The expansion is also part of Starbucks’ strategic push to open 3,400 new stores in the U.S. by 2021.
“For all the critics out there who say we shouldn’t get involved with this or that, I think we have been able to prove that while we learn along the way and, yes, we make mistakes, at the end of the day we are a company that lives its values, and that has been key to helping us drive our business,” John Kelly, Starbucks’ Chief of Global Responsibility, told Fast Company.
The key takeaway is that building strong internal communities is paramount to driving business growth. Happy employees make happy customers, productive work environments and awesome brand ambassadors.
Create products that advance global movements: Using your business as a tool to solve a global crisis is an powerful way to generate consumer advocacy, earned media, and open doors to otherwise unavailable partnerships. In other words, be a mission with a company, not a company with a mission.
A champion of purpose-driven business is Tesla. The company’s mission is “to accelerate the world’s transition to sustainable energy,” which it does by selling electric vehicles, deploying electric vehicle charging stations, and selling solar panels and batteries called ‘Power Walls’.
The mission-first approach, which supports the global movement towards a clean energy future, is the key to Tesla’s success. It has catapulted the brand into the media spotlight, mobilized billions in shareholder investment — despite the fact that the corporation has only experienced profit in 1 out of the last 10 quarters — and created fans the world over.
Ultimately, despite longstanding economic principles, business for good is good business.
Empower consumers to be part of the solution: Today’s consumers want to feel like they are making the world a better place and they reward companies that inspire contributory consumption.
The recent Cone Communications study found that roughly 90% of people expect companies to have an impact that goes beyond profit. Further, within the past year, 55% of respondents made a purchase that advanced a social or environmental cause, 52% bought a product or service because the brand promoted something they value, and 45% advocated for a brand to friends or family because of its social mission. This clearly shows that impact influences key performance metrics.
TOMS is a company that’s leading the way in contributory consumption by making consumers feel like their purchases build a better world. In its branding, TOMS illustrates how each purchase helps people in need by providing them with shoes, creating fair-trade employment opportunities and strengthening. As a result, TOMS experienced impressive growth of 300% for five years in a row, much of which was sustained by consumer advocacy.
The takeaway is that consumers want to contribute to the planet and companies that help their customers help the world will be rewarded with affinity.
In today’s digitally connected and socially conscious world, purpose drives profits. Companies that change the definition of what it means to do business by addressing issues bigger than their brand or industry, will not only strengthen their image but increase consumer loyalty and ultimately boost long-term sales.
Title image via Flickr courtesy of user HAO XING at https://flic.kr/p/qRp9i6.