Whether you’re a large corporation or start-up, there is a relentless pressure to become and remain profitable in the face of rising competition, ever-changing technology and new consumer expectations. That said, a sole focus on profit can cause you a huge disservice as it comes at the cost of your most valuable resource – human capital. Let’s examine each of those cost centers and what you can do to avoid crippling your business.
Leadership: Leadership is a timeless requirement for any business success, but its even more important given the accelerated pace at which the marketplace is changing today. A successful launch, growth and long-term success turn on whether a company’s leaders are sufficiently inspiring to rally their employees to make a product that people will want and to take it to market in a way that consumers will want to share it. Without the ability to inspire the odds of success for any company are sorely staked against you. The definition of ‘inspiration’ is ‘to breathe life into something’ and that is where purpose becomes so critical. The ability to motivate others turns on what you have in common and the values you share. Only when leadership identifies the purpose of what is in common and their own role in executing against that mission, can they communicate with employees, customers, consumers and the media in a way that will resonate on an emotional level and inspire them to build the business. To achieve this executives must do the work of identifying the purpose of their company and distilling it down to innately sharable language that will ensure that the business is not just profitable but sustainable. Often perceived as ‘nice to do’ rather than ‘must do’ work, this self-examination is key to discharging their responsibility to investors, employees and their consumers.
Employees: According to Gallup in 2015, over 70% of US employees are “not engaged” at work. This is a staggering number when you consider that salaries are typically the largest line item on any balance sheet. That engagement turns on the recognition that employees are in fact human beings seeking a sense of purpose on both personal and professional levels. In the absence of a clearly articulated company purpose, and the opportunity to place a distinct role in realizing it, employees are quick to lose interest in their work and seek employment elsewhere. The cost of finding and training a new employee far outweighs the costs of keeping and existing one. According the Deloitte’s ‘Core Beliefs and Culture Survey’, company’s with a strong sense of purpose experience higher levels of employee productivity, retention and satisfaction, all of which build the bottom of a business. As such, purpose places a critical role in shoring up the financial security of a company beyond a pure profit focus alone.
Consumers: Researchers from Havas Media, Cone Communications and Edelman attest to the fact that consumers, and especially younger demographics like Millennials and Gen Z, expect brands to be socially responsible and are willing to pay more for products and services from those that do. What’s more, a strong sense of purpose makes any marketing outreach far more effective because it facilitates the emotional connection between a brand and its customer far more effectively than messaging inspired by a pure profit focus. We see evidence of this in many leading brands today from global corporations like Unilever with their ‘Sustainable Living’ positioning, industry disruptors like Tesla with their commitment to sustainable mass transportation and countless start-ups, special enterprises and high-growth companies who are capturing the aspiration of consumers to work together to build a better world. Importantly, beyond the initial emotional connection with a consumer, a purpose focus enables companies to unlock the power of social media by inspiring customers to share the product and its purpose with others. A profit alone focus therefore, limits a businesses ability to tap into the social technologies that make today’s marketplace so exciting for growing companies.
Individuals: Whether you are the founder of a tiny start-up or the CEO of a multi-national corporation, each of us is looking for a sense of fulfillment and purpose in our lives. The business press is littered with stories of founders who jumped ship from previous employment to start a company and do work that was more meaningful to them, and employees are constantly in search of that delicate blend between security and fulfillment. Profit alone will never fill that void that only purposeful work can and a purposeless company can readily come unstuck when a CEO or founder becomes disillusioned or worse, when the media and marketplace turn on them. Instead, by allowing purpose to underscore profit, an individual in any role can find meaning in going to work each day and feeling that their efforts are making a tangible difference.
Some might object that as long as there is profit, a company can continue indefinitely, yet every obstacle listed above is a potential trapdoor through which any business or brand can disappear. Companies of all sizes have enough external challenges to deal with from new competitors, disruptive technology and inevitable downturns in the marketplace, without courting the risk of disintegrating from within. By ensuring purpose underpins their profit focus, companies can maximize their return on their human capital, sustain their profits and find greater fulfillment for all involved.