Why does your business exist?
In the past, the answer was to generate financial returns for shareholders.
Today, it’s about so much more. It’s about finding purpose. It’s about making the world a better place by supporting noble causes. It’s about inspiring customers, employees, and the world at large by committing your company to important social issues that affect us all.
In Billion Dollar Business: Driving Profit from Purpose, the latest episode of Game-Changing Conversations, presented by SAP, our panel of experts discussed how your enterprise can become purpose-driven – and how embracing purpose can drive profits.
Framed by several inspiring quotes, these thought leaders offered listeners three key pieces of advice for getting started:
1. Adopt a can-do attitude: Everything seems impossible until it’s done
Addressing complex societal issues through business can feel overwhelming.
In fact, you’re probably asking yourself how your company can prioritize things like sustainability, human rights, and climate change while driving profits and keeping consumers, employees, shareholders, and stakeholders happy.
The first step is to shift your perspective. Stop viewing purpose as a box to check off your to-do list. Instead, see it as an opportunity to improve the world, inspire consumer loyalty, and drive profits.
As panelist Freya Williams, CEO of Futerra North America, explained, the purpose-led organization is the “business model of the future,” and what seems to be impossible today will be “business as usual tomorrow.”
“[There is a] huge opportunity to monetize this big pivot to sustainable and purpose-led business in society,” she said. “There are many companies out there that have a billion dollars or more in annual revenue from products and services that align with sustainability or have social good at their core.”
Today, building a billion-dollar business doesn’t require compromising on your beliefs. You can drive profitable growth while proudly standing up for and supporting meaningful issues.
2. Take a long-term view: Intend to live forever
A major challenge of investing in purpose is longevity. Judging your business by next week’s or next quarter’s projected performance doesn’t capture everything. You need to take a long-term view of purpose – and that will lead to business results.
Panelist Jim Sullivan, vice president of Sustainability Management & Strategy at SAP, cited a 2017 McKinsey study that proved this point.
McKinsey found that firms with more long-term views exhibited stronger financial performance. These organizations increased their market capitalization by an average of $7 billion more than companies with short-term approaches to purpose.
On top of that, long-term firms added 12,000 more jobs, on average, than their short-term peers. If all 615 companies McKinsey studied had a more long-term view of purpose, the U.S. economy would have benefited from the addition of over 5 million jobs between 2001 and 2015.
Rome wasn’t built in a day. Building a billion-dollar business takes time. So, practice patience. Take a long-term view and assume you’ll live forever so you can better weather changes and stay the course in your pursuit of building a purpose-driven, billion-dollar business.
3. Focus on conservation, not consumption: The world owes you nothing
“As we take from the world,” said panelist Padmini Ranganathan, global vice president of SAP Ariba, “we have to give back to it.”
Purpose-driven companies are increasingly putting nature at the core of their decision-making processes. Issues like preservation and sustainability are growing in importance to businesses, consumers, and employees alike.
In the past, organizations were driven by bottom lines. They aimed to reduce production costs to increase profitability. Today, purpose drives profitability, and companies take great care to ensure their products are ethically sourced and produced.
Consumers naturally respond to this. Buyers are proud to support brands that avoid chopping down rainforests or give back to communities where they operate.
This devotion to purpose also attracts staff. Prospective employees are more likely to join your company and current workers are more likely to be passionate about their jobs when they identify with your organization’s values.
While millennial consumers and employees may have fueled this interest in purpose-led organizations, they’re not the only generation that recognizes the importance of purpose.
Baby boomers and Generation X grew up in different worlds. But they understand the value of supporting noble causes – and they’ve embraced this shift toward a better, more sustainable future.
Unilever, Tesla, Chipotle, and Everlane are just a few examples of purpose-driven businesses. Some are “born good,” as Freya Williams explains, meaning they were founded with a purpose built into their philosophy. Others are “born again,” meaning they reinvented themselves by introducing sustainability into their businesses.
However your purpose originates, it’s crucial to have one.
The final word
No commentary on purpose-driven businesses would be complete without an outlook of the future. As the Game-Changing Conversations show wound down, host Bonnie D. Graham asked her panelists for predictions on what lies ahead with purpose in the business world.
Freya Williams hopes that by 2030 all companies will have met their sustainable development goals, and purpose-driven businesses will be viewed as the new normal.
Jim Sullivan believes new companies that fail to embrace a purpose won’t last long – and they’ll never stand a chance of becoming billion-dollar businesses.
Padmini Ranganathan expects companies to focus on eradicating human rights violations or cutting ties with suppliers that are guilty of them. She also predicts that businesses will begin emphasizing data and technology to increase supply chain transparency.
Whatever the future holds, one thing is clear: Purpose deserves a place in your business. In fact, it should be one of the core reasons your company exists in the first place.
Game-Changing Conversations, presented by SAP, is an online radio series focused on co-innovation, purpose, partnership, and collaboration. To learn more, listen to the episode.