Purpose, not profit, is the key to success in a turbulent global economy but international business leaders must back words with deeds, says the latest research by EY.
Almost three-quarters (73%) of respondents said embracing and integrating corporate purpose in their organisation was vital in flourishing prosperity despite uncertain economic conditions.
Two-thirds (66%) said they were “profoundly rethinking” the purpose of their organisation as a result of disruption. A mere 15% admitted the main purpose of their company was to maximise shareholder value.
The findings were based on a survey of 1,470 global leaders representing companies across various industries in developed and emerging markets around the world. The respondents included 500 businesses with annual revenues of $2.5 billion or more.
The EY report How Can Purpose Reveal a Path Through Disruption? Mapping the Journey from Rhetoric to Reality found purpose meant different things to different companies.
Although 95% of leaders said their organisation had a purpose, 33% said it was bringing value to customers, 15% said it was boosting their share price and 11% said it was bringing value to customers to their employees, while 40% said it was creating value for multiple stakeholders or offering an aspirational reason for being.
“But our research has revealed a significant new group that defines purpose as something greater: a human-centred, socially-engaged conception of purpose that seeks to create value for a broad set of stakeholders,” the report said.
“We have labelled this definition as capital P 'Purpose'.”
The survey found 97% of companies which deeply integrated a broader sense of purpose into their DNA reported a good or great deal of incremental value from doing so.
Just over half (52%) said Purpose helped build customer loyalty; 51% said it preserved brand value and reputation; 42% said it helped them attract and retain staff; and 40% attributed the ability to develop new and innovative products to the presence of Purpose within their business.
Valerie Keller, global lead at the EY Beacon Institute and EY Global Markets, said the research showed the real advantages companies gained when going on an “authentic purpose journey”.
“The data also busts the myth of purpose versus profit,” Keller said.
“Seventy-five percent of purposeful companies involved in our survey tell us that the integration of purpose creates value in the short-term, as well as over the long run. They also report that being purposeful gives them greater agility to innovate in the face of disruption and uncertainty.
“But you have to walk the talk in your strategy, products and services, and customer and employee experiences. A purpose patina of words without action runs the risk of unmet stakeholder expectations, decreased trust and missed opportunities.”
The report urged leaders need to turn their purpose rhetoric into business reality and offered four steps to help organisations reach their purpose goals.
· Clearly articulate a purpose that responds to the needs of their stakeholders and is grounded in what an organisation does
· Embed purpose into their strategy and operations, and align their decision-making with that purpose
· Constantly evaluate where they are in their journey and what needs to change
· Accelerate the journey by placing purpose at the centre of their culture and ensuring it is owned by their people
“All the disruption geopolitically, economically and technologically is a catalyst for a new evolution in business,” Keller said.
“Those most able to thrive in this new world are focused on their impact on the humans they touch – the customers, the employees and the wider society.”