Has your business got a purpose?
The idea of purpose is a growing trend in businesses nowadays. It wasn’t so long ago that many organisations felt that just ‘delivering shareholder value’ was purpose enough.
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 an increase in shareholder value as a purpose is that it is only really motivating to one group of stakeholders.
These stakeholders might include some of the senior management but it rarely focuses on the staff who are most in need of motivating. This group will certainly not include most customers, suppliers, partners or other stakeholders. Few, if any, of these stakeholders are going to be motivated to make another group of stakeholders richer than they already are.
With the shift away from business purpose being concentrated just in shareholder value, companies are recognising that they need a focus that will engage and motivate a far broader group of stakeholders. A purpose that will help build relations with everyone involved in that business: customers, staff, partners, suppliers, regulators, media.
The problem is, that in most cases, even businesses with a purpose or mission statement that is inspiring to all stakeholders, still run that company based mostly on financial measurements. They still set targets and set rewards and recognition anchored on their revenue or profit.
Using revenue and profits as the key metrics to judge the health of your business are important, but they offer very little by way of understanding its relationships with your customers, how effective the business is or many other key measures. It’s like trying to race a car while only looking at the speedometer.
A truly purpose-led business could make all the difference; one where the focus is on inspiring and delivers value to all stakeholders, which is profound and meaningful for people within the business, and delivering it is one of the key metrics of success and reward.
Changing your business purpose can be transformational. It significantly reduces your reputational risk, increases staff motivation and customer loyalty. It may even have a knock-on effect on your revenue and profits, shareholder returns and even the share price.
What do you think? Have you found your business changing its purpose in recent years? Drop us a line on email@example.com or leave a comment below with your thoughts.