I am delighted to say that the idea of purpose is becoming more fashionable among businesses these days. Historically many businesses, especially corporations, felt that “Delivering Shareholder Value” was sufficient purpose.
More and more companies are realising that while this has the benefit of simplicity it is not necessarily the most effective way to achieve it. The problem with having “delivering shareholder value” as a purpose is that it is only really motivating to one group of stakeholders. And while this might include some of the senior management, it rarely includes the staff who are most in need of motivating. It will not include most customers, suppliers, partners or other stakeholders. Few if any of these stakeholders, if any, will be significantly motivated by making another group of stakeholders, who are probably richer than they are, even richer.
What these companies are recognising is that they need a purpose that will engage and motivate a far broader group of stakeholders. A purpose that will help build relations with customers, regulators, media, staff, partners, suppliers etc.
The problem is that in most cases, even businesses with a purpose statement that is inspiring to all stakeholders, still run the business based mostly on measurements of revenue. They still set targets and base rewards and recognition on the basis of revenue or profit.
This is like trying to drive a racing car in a race while only looking at the speedometer. Sure revenue and profits are key metrics to use to judge the health of the business, but they offer very little by way of understanding its relationships with customers, its effectiveness as a business or many other key measures.
Imagine the difference if your business was truly purpose lead. The business has a purpose which is inspiring and delivers value to all stakeholders. The purpose is profound and meaningful for people within the business and delivering on purpose is one of the key metrics of success and reward.
I believe being truly purpose led is transformational for business. It significantly reduces reputational risk, increases staff motivation and customer loyalty.
It might even increase revenue and profits, returns to shareholders and even the share price.
What do you think? Please comment and discuss here – click on the blog title and scroll to the bottom to find the comment box.
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