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It’s happening. Customers are demanding more from organisations — they’ve stopped making decisions based solely on range or price, but rather asking if their values align with those of the organisations with whom they choose to spend their money.

This is, in part, due to the realisation that financial performance and continued growth can no longer be the only metrics by which we measure the success of organisations, and that doing the right thing for stakeholders can no longer stand in opposition to doing the right thing for shareholders.

Sometimes referred to as a ‘true north’, an organisation’s purpose plays a key role in defining strategy, communication and messaging, and value alignment for both employees and customers.

In the first episode of season 2 of One More Question, Ross sat down with Louis Janse van Rensburg, CEO at Glengarry Capital and Chairman of the Heavy Chef Foundation. Ross and Louis spoke about how clarity of purpose can be a powerful tool in business, the challenge of scaling purpose alongside the organisation, how Heavy Chef got started and its purpose in the entrepreneurial space — from research to inspiration and education.

Some leaders have long embraced the power of purpose in guiding an organisation to success, but until fairly recently, making that idea a reality has proved challenging. This could be because purpose has been previously been regarded as marketing fluff — attempting to make organisations feel like living beings as opposed to entities that exist to make a profit — or for the fact that it has been difficult to prove that a focus on purpose had any effect on an organisation’s bottom line. We are, however, seeing shifts in recognising the importance of purpose and how beneficial it can be when brought to the core of an organisation’s strategy.

The point of purpose

Purpose is the reason for which something exists, and from an organisational standpoint, it should be the essence of everything that an organisation does. It doesn’t focus on the economics of a business, but rather provides an actionable and aspirational statement for leadership and employees alike.

Using purpose as a central part of your strategy allows you to:

Align values and connect on a deeper level

Organisations that understand the value of paying attention to their wider ecosystem instead of just their products and shareholders are able to better align their values and beliefs with that of their customers and employees. This creates a stronger emotional connection that runs deeper than the product or service being offered.

Create a filter for decisions

Whether it’s a business opportunity or a potential hire, purpose allows you to weigh decisions at hand against your organisation’s core mission. In the case of Zappos, founder Tony Hsieh, uses his company’s ten core values to assess job applicants and whether they will be able to live Zappos’ culture.

What you may notice is the close relationship between their Purpose (to live and deliver wow) and first value (Deliver wow through service).
Ross on how Robbie Brozin (Nando’s) has used clarity of purpose to empower employees.

Focus on building a community

Finding and keeping customers that share your values requires constant engagement — if time and money are invested finding customers, only to ignore their feedback and suggestions, you stand to lose an engaged community that could have been loyal and engaged brand advocates.

Building loyal, engaged brand communities can help ensure that there’s less pressure to compete on price. More on building communities, here.

The business case for purpose

As mentioned earlier, though some leaders may have seen the value in bringing purpose to the core of their strategy, making a business case for doing so would have been challenging as it had no proven effect on a business’ bottom line.

This is no longer be the case — with customers expecting brands to take a stand for what they believe in, there’s never been a better time for businesses to double down on clarifying their purpose and using it to find new customers and deepen relationships with existing customers.

Aside from building and maintaining relationships with customers, purpose enhances the positioning of an organisation and can be extremely valuable when backed by the leadership of an organisation.

In a study that ran for 8 years, Harvard found that high-growth companies that had used their purpose in the core of their strategy had been able to generate sustained profitable growth and remain relevant in a world that is constantly (and rapidly) changing.

Unilever’s purpose-led Sustainable Living Brands — those that communicate a strong environmental or social purpose — are growing 69% faster than their other brands and delivering 75% of the company’s growth. Read more.

Clarity of purpose can bring value to an organisation in three ways:

It can help extend the parameters of your market

The biggest difference between low-growth and high-growth companies is the way in which they view themselves and their market.

Low-growth companies are less prepared to look outside of what would be considered their normal, established market which limits their growth potential.

High-growth companies, on the other hand, take a wider view of their ecosystem and their role in it — as a result, they see more opportunities of which to take advantage. That’s not to say that they don’t have a clearly defined strategy or take any opportunity that comes their way — they use their purpose as a filter and guide.

It can help you take a stand on issues affecting society — inside or outside of your market

Consumers are looking for brands that align with their beliefs. In a survey of 30 000 consumers, 62% of respondents expected brands to take a stand on current issues. If your brand’s views are misaligned or feel contrived, customers are less likely to want to spend money with you, nevermind the possibility of becoming loyal purchasers.

When using your purpose to stand for something bigger than just products you’re able to filter social issues and movements that align with your values. Any engagements thereafter can be traced back to what your organisation believes in, showing genuine interest in the issues or social movements you choose to tackle.

It allows you to think about your core offering in a different way

When more competitors enter a market or when companies see their profit margins slipping, one of the first things to do is to start innovating — whether it’s bringing a new product to market or changing business functions to maintain profits. A constant bias to innovation, however, is often not sustainable in the long term.

Taking a step back, and defining your purpose in a wider, more aspirational way can change the way you look at your business and its core offering and can allow you to create change on a scale greater than just your core offering — whether it’s developing new departments or services that align with your purpose, partnering with other organisations to increase the value of your offering, or finding pain points to answer to in a wider market.

Though it can place you in a wider ecosystem, purpose also acts as a filter for opportunities, ensuring you don’t chase two rabbits but catch none.

“We believe the evidence is clear and compelling that brands with purpose grow. Purpose creates relevance for a brand, it drives talkability, builds penetration and reduces price elasticity.”

Alan Jope, Unilever CEO

A well-crafted purpose should tick three boxes:

  1. It should clarify what your organisation stands for or what it aims to achieve
  2. It must be actionable — employees should be able to use it as a yardstick for their activities and know that what they are doing is contributing to achieving the organisation’s (or department’s) purpose
  3. It must be aspirational — whether it’s extending your market or having a greater impact on society, if it only speaks to what you are and what you do today, there’s no motivation striving for more

It’s a fine balance — your purpose shouldn’t be so generic that it could fit any company or industry and it shouldn’t be so specific that it keeps you boxed in your current market. It should also be actionable — lest it becomes a mural in the passageway of your office — and to do this, the leadership of an organisation needs to commit to clearly communicating and living your organisation’s stated purpose.

Do you need help clarifying your organisation’s purpose, or do you have a purpose that you need to share with the world? Tell us about it.

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