All the cool kids have purpose. Or so it seems. As more organizations begin to adopt corporate purpose statements, we see announcements on social media, a push for purpose-driven hiring, and CEOs deliver inspirational townhalls.
Yet for many front-line leaders, keeping an aspirational purpose alive in the cadence of daily business is challenging. Much like keeping your fitness goals or parenting aspirations front and center during a pandemic, an inspirational purpose sounds great on your best day, but in the face of stress and uncertainty, it often falls by the wayside.
The economics of pointing an organization towards a higher purpose have been well documented. Aligning your team around a noble purpose bigger than money drives greater employee engagement, better customer retention, and improved competitive differentiation, all of which translate into better financial performance.
After working in the purpose space for over decade, helping more than 200 firms and authoring the two seminal books about Noble Purpose in business, I’ve observed two common misperceptions that keep organizations from reaping financial and emotional rewards of purpose.
1. Purpose is purely about philanthropy
Yes, you can and should use your purpose to make the world a better place. Yet, if your team thinks your purpose is about charity or simply doing good in your community, it will get sidelined. Fast. To ensure that your purpose drives your organization, it must sit at the center of your commercial model.
For example, when a banking client of ours landed on the purpose “We improve financial health,” one of their first actions was to create tools to help their customers assess their baseline financial health and harness their analytics to help their customers anticipate roadblocks that may hinder their financial health. This tells the team, and their customers: Our purpose, the impact we have on customers, is the foundation of every action we take.
We trained their sales team to focus on the customer’s financial health during sales calls, and managers, even if they never interacted with customers directly, were trained to identify the impact their team had on the customer’s financial health.
This ensures that everyone in the organization understands their role in delivering the purpose. Our counsel to clients is, activate your purpose with your customers and employees before zooming in on philanthropy. You want to ensure you have concrete methods for delivering on your purpose inside your business model.
ACTION: Train your sales team and front-line employees to activate your purpose with customers.
2. Purpose can’t be measured
Revenue and profit are front and center metrics, but they’re actually lagging indicators. They’re the results of the beliefs, behaviors, and words many months ago. To assess a more qualitative pillar like purpose, organizations must look towards leading indicators. You want to add metrics that help you predict the future, not just measure the past.
You can measure progress against your strategic purpose by assessing your impact on customers and employees. The World Economic Forum recently released a comprehensive set of 21 Stakeholder Capitalism Metrics firms can incorporate into their scorecard.
In our experience with clients, we find that layering on even a single metric for purpose can shift your strategic north. One of our clients is an IT firm whose purpose is simply, “We help make small businesses more successful.” When they began measuring how much time they were saving their clients, team performance soared. Instead focusing internally, on their own results, the team focused outwards, on how they made a difference to clients. The leading indicator – time we saved clients – helped them both predict and influence the lagging indicators, like productivity, and ultimately revenue.
ACTION: Choose one simple metric to assess progress against your purpose, even if it’s imperfect and anecdotal.
The world is changing. Brian Stafford, host of the recent World Economic Forum: Measuring Stakeholder Capitalism and CEO of Diligent says, “There’s an evolution towards stakeholder capitalism, when the business round table shifted and made that part of their stated purpose, it allowed CEO’s and boards, to put a different framing from around what the goals are. “
The way we measured success in the past will not be how we measure success in the future. If you want to reap the reward of purpose, make it the center of your business and measure your progress.