We all have read many articles to try and give us guidance on recovery strategies right now; being adaptive, embracing the change, seeking out innovation and digital solutions, surviving the 4th industrial revolution, and many more topics like these. Each and every one is packed with advice that really makes sense, and all with an underlying theme of it will never be the same again, and be bold with your choices because everybody’s changing!
For one moment, I want to highlight a diamond in the rough and one, you will be thankful to hear, entrepreneurs are already very good at.
I’m referring to purpose-led companies.
The good news…
They are thriving because business owners are now seeing the benefits of “defining their purpose and role within society, and using it as a ‘North Star.’” [1] This, in turn helps to “create connections with their customers…customers don’t buy from these companies. They buy into what these companies are about” as so nicely articulated by Forbes. [2].
It’s been well researched…
The case for purpose-led companies is far from a new way of thinking. The proven research of the strength it brings came long before Covid-19. Back in 2016 EY The Business Case For Purpose [3] still stands as one of the clearest research documents: “Purpose driven companies make more money, have more engaged employees and more loyal customers, and are even better at innovation and transformational change.”
The evidence is clear…
The theory of purpose-led as “the decision to infuse a higher purpose into the culture, one that guides strategic decisions and gives clarity to everyday tasks, that has propelled these companies to success” is also highlighted in The Top 20 Business Transformations of the Last Decade (HBR) [4]
I know it’s true…
Changing our success measure from sales to customer loyalty and experience (our purpose!), took us from a place of “nothing seems to be working” to creating a relationship with our customers that achieved a growth rate far above any of the previous years. It shifted us forward into being a challenger for market leadership. Julie Perkins, The best year of her working life 2008: The great EU recession
I don’t think I could have listed many more of the great educational, research and report writing institutions in one introduction. I placed my purpose-led journey as part of the list, not to be arrogant in my association with this established listing but to prove my earlier statement – this diamond in the rough recovery strategy is something that entrepreneurs are already very good at – being purpose-led. Whatever the size of your company, being able to create strength from being purpose-led offers an equal playing field. If it is played well, you have every right (and chance) to be included in the same hall of fame as the organisations that were referenced in the articles of EY, HBR, KPMG and more.
The best case studies of purpose-led organisations right now should be coming from the entrepreneurial business sector. What creates “the power in purpose-led” reflects the exact mentality of the business owner and culture of the organisation they created. As an entrepreneur, by understanding how these approaches are effective and why this is required in any successful recovery strategy, you can hopefully gain confidence in this being an opportunity for you too.
What makes a purpose-led company?
First off, by understanding what it is, we can begin to place it correctly into our thinking. This is the way we look at purpose at Wyseminds: a personal mission that identifies the impact you want to make, translating it for the customer and into the society you want to transform/ improve for the better
From the reading I’ve done and from my own experience, purpose-led companies depend on the company’s higher purpose being defined, known and measured. This creates a conscious drive to make something better, to improve the lives of the customer and their community.
Below are some examples of companies who have a clear, higher purpose:
- Patagonia: Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis
- Airbnb: Belong Anywhere
- Tesla: To accelerate the world’s transition to sustainable energy
- Google: To organize the world’s information and make it universally accessible and useful
- TED: Spread ideas
- Which ones am I missing? We’d love to hear your thoughts
On the journey I found myself on, I learnt that supporting this higher purpose requires three further pillars: a team that is truly connected to it, business processes and a value-creation process that are defined by enabling it to come to fruition, and finally, through the customer and their feedback to ensure that this purpose is measured and having the effect we intended. And if it isn’t, you can evolve, adjust and innovate.
Together, these pillars enable connection, contribution and collaboration, with an energy that is unified in one, purpose-led direction and (referring back to the original case for purpose HBR 2016 [4]) the benefits are measurable:
- 53% of purpose-led company executives said they were able to innovate more, compared to 31% from non-purpose-led businesses
- 15% of purpose-led companies reported declining revenue over the past 3 years compared to 42% of non-purpose-led
- 52% of purpose-led companies said they were successful at transformations of business models/operations versus 16% of non-purpose led
Why being purpose-led is so important today
2 of the main reasons for this is that the consumer has changed and the new norm, in many ways, is yet to be fully understood.
According to the European Journal of Psychology it takes 66 days on average to change a behaviour and with lockdown, in whatever form we experienced or are still, it extends far beyond this time period. The consumer, within their own household ecosystem, created a new way of thinking about the value they wanted and what was useful to them and what was not.
What are consumers asking for now?
The perceived value of a product or service has shifted towards how the product is being used. Consumer needs are now all about convenience and how products and services make life simpler and more useful in the everyday. Different things have become more important to spend money on, compared to what we used to.
These changes in consumer behaviour are also supported by the fact that we do not yet know the new norm. Although trends are appearing, the chance of Covid-19 waves being in and out for the foreseeable future make it difficult to tell which consumer behavioural changes will remain and which ones will have been seen as a sticking habit, “because I had no other option.”
This is exactly why companies who are connected into their ‘reason for being’ – their customer – are better equipped to respond and redirect according to the positive impact they are having, creating a competitive advantage compared to those who drive change with old customer trends or a measure based on revenue recovery, profits or shareholder opinions.
Your diamond in the rough recovery strategy: the competitive advantage of a purpose-led company in the eyes of the changing consumer
Being purpose-led enables organisations to begin to forge the next steps of a strong short-term plan – to then evolve with their customer and their community to be in it for the long-term. If consumers are wanting to deal with the organisations that make a change and do the right thing, this connection and the relationship they create with your brand is the beginning of an ongoing foundation of loyalty that could create more immunity to the unknown forces that are yet to come.
What should you be considering right now?
- Create a stake in the moving sand. In times of uncertainty you need (more than ever) a clear direction to go forward, normally based on what you have achieved so far and the trends around you. With these changing trends being determined by external factors outside of your control, focus on connecting your direction to your customer and how you are delivering to the community. Keeping It as your north star will keep you moving with their changing needs, staying relevant to them as they navigate Covid-19 challenges, allowing you to make the change you want in the world, guided by the people who want you to do it.
- Purpose first, revenue recovery is the outcome. Your instinct will be revenue recovery and nobody can deny this need, cash is the oxygen of any business. However, if it becomes the constant background music in an organisation, it can promote reactionary decisions based on unfounded presumptions and panic. And, if it’s the only thing that you think about, demotivation will creep in. By being driven by something that runs deeper allows you to rediscover or maintain your internal drive – it gives you something that you can tangibly impact. In turn, this can create a much more positive culture, which is critical in such uncertain times.
- Stand in unity. There is certainly no doubt that people want to make a difference and be a part of that contribution to a new day when good news returns! I spoke to many furloughed people whose main frustration was how the furlough rules meant they were not allowed to contribute. In entrepreneurial companies – especially when they’re smaller – this loyalty can really be used as your edge. The power of collaboration in a purpose-led business allows everybody’s individual contribution to be channelled in one direction and because the measure of purpose is celebrated, it creates a playing field that’s equal and owned by everybody, rather than a functional or individual one.
Conclusion
I began this article explaining how that purpose-led hall of fame is built for entrepreneurs – the best-case studies of purpose-led organisations right now should be coming from the entrepreneurial business sector – and it couldn’t be more true. As an entrepreneur, you have the ability to get the consumer relationship right because you have probably not stopped listening to how their needs have changed. This, combined with your natural hunger and drive to make life better for them, let’s you be truly purpose-led. A very real competitive advantage, that’s for sure.
5 suggestions from me to get started
- If you’re not entirely sure how purpose-led your company is right now, our Wyseway questionnaire might be a good place to start – it’s intended to demonstrate the level of purpose that you and your team bring to your customer
- Create and update your purpose: Yes, it sounds obvious, however, over the past months it’s been pressurised and no doubt you have moved your focus to other areas. What do you know now about how your product/service is being viewed by the consumer, versus what you knew back in March?
- Create a measure for your purpose and relaunch it into the organisation: What did you set out to do and how do you measure whether this is being achieved? What has changed since Covid-19? Use this as a way of unifying thoughts into creating a direction going forward. As an example, I moved from revenue targets to volume of customer/percentage new customers and likelihood to return (loyalty) as a starting point, and from there, we asked the question for qualitative purposes “how are we making a difference for you?”
- As a company, discuss the individual’s contribution to that purpose, where they fit and the role they play in ensuring their gift is being used effectively in the organisation
- Relaunch the purpose and set goals on this, reviewing it with an agreed calendar and celebrate the measure consistently
References:
[1] PwC A purpose-led approach to navigating the crisis and beyond
[2] Forbes Forbes top 10 companies
[3] EY The business case for purpose 2016
[4] HBR The Top 20 Business Transformations of the Last Decade
Additional reading suggestions:
Buddha and the Badass by Vishen Lakhiani, who with clarity and an everyday tone, step by step supports evolving your purpose.
