During the COVID-19 lockdown, I had a conversation with a CEO whose national education business had been closed for four weeks due to social distancing restrictions. While he was frustrated with the uncertainty regarding the length and cost of closure, he had spent this down time reflecting on his business, which he had started to teach children a basic skill. It was evident that this reflection had resulted in a renewed passion for his business and a clear re-focusing on its purpose.
This made me reflect on the importance of purpose and management’s role of stewarding organisational purpose.
I would argue that “purpose” is simultaneously widely used and often misunderstood. The fundamental misunderstanding is that purpose is not defined by a response to a specific event. For example, a distillery that switches to making hand sanitizer is not by definition a purpose-driven company. Rather, it is a company doing a decent thing, but decency is not purpose. At best, decency is a symptom of purpose. Purpose is the system of values that defines a company’s reason for being, or as I like to think of it the answer to “why do you do what you do?”.
Companies that have a defined and shared purpose are well placed to not only survive the COVID-19 fallout, but to thrive through COVID-19 and beyond.
The research is clear – purpose driven companies perform better! Former P&G Marketing Director Jim Stengel collected data on 50,000 brands over a 10-year period, and his analysis showed there was clear and direct positive relationship between a brand’s ability to serve a higher purpose and its financial performance. He found that businesses with “higher ideals”, i.e. those focused on improving people’s lives, grew three times fast than their competitors. This should not be a surprise as a shared purpose should create strategic clarity. This allows organisations to focus on what really matters and in doing so boosts productivity, performance, loyalty and the bottom line.
COVID-19 has highlighted how interconnected business is with society, and society is with business. No organisation has been immune to the damage caused by this pandemic. There is a clear flaw in the “profits first” strategy – as profits are an outcome, not a purpose, and cannot protect a business in the face of this or other global disruptions.
For many, this crisis has given the chance to pause and reflect. As Mark Twain said, “The two most important days in your life are the day you are born and the day you find out why”. A silver lining of COVID-19 might be that some organisations (and individuals) are refocused on or discover their why!
You can read more on individuals and businesses reviving and thriving through COVID19 and beyond in William Buck’s COVID19 Resource Centre here: https://www.williambuck.com/covid-19-revive-and-thrive-beyond/.