Does your business have a purpose? Of course it does. You sell stuff or services to people that need it (mostly) that make money for yourself, or for shareholders.
For many organisations it’s as simple as that. It’s about what you do, the function, the rational outcome that forms the basis of strategy and tactical outcomes.
It’s pretty uninspiring stuff and it’s also a mistake.
Instead you should be asking, not just what you do, but why you do it. Your Purpose for being.
Defining a Purpose that addresses the motivations and ideals of your organisation and how it can contribute to society, is not just on-trend consultancy bullshit, it’s proven to deliver improved commercial outcomes and a better customer and employee experience.
Just more jargon?
You may think that ‘Purpose’ is just another piece of jargon. Who needs a Purpose when you already have a strategy, a mission or values?
If you have those defined, it’s a great start to better understanding and defining your Purpose, but limits your thinking to the functional.
This is because your mission states what your organisation does (function), your strategy is your plan to achieve your (mostly) short-term goals (tactics) and your values guide the way both are executed.
For most people in an organisation these statements are often abstract, detached from meaning beyond a senior management level.
While values can elevate the conversation away from purely functional, most values come from the same core, safe set of adjectives – trust, innovation, customer-focused, teamwork, integrity etc.
Overused and uninspiring, it’s hard to build a differentiated story that attracts your customers or inspires your employees using mission and those same old values.
This is why purpose is so important. Defining a Purpose aligns your business and its employees behind your unique reason for being and their contribution to achieving it. If done right, it’s tangible, emotive and commercial.
How we define Purpose
As your Purpose is your organisation’s reason for being, it does not change over time, although it may inspire change.
EY states that a Purpose is “an aspirational reason for being that is grounded in humanity and inspires a call to action.”
What I love about this definition is that it talks to a dynamic statement, addressing the human need your business aspires to meet and engaging your employees to constantly strive to achieve it.
It is big picture and long-term – and it allows an organisation to create value beyond financial metrics.
Where has the focus on Purpose come from?
After the GFC, we’ve seen a gradual cultural shift in focus from a product-centric to a customer-centric approach, however, it’s fair to say that took the Hayne Royal Commission to make the Australian financial industry truly bring this into focus.
We’re at a time in the Australian financial services market where consumer trust in the industry has taken a significant knock, and I’m convinced that it’s a result of many organisations’ cultures being focused on the wrong things – short-term targets and personal incentives, rather than how an individual can help their organisation contribute to society.
This obviously needs to change if our industry is going to rebuild the trust that has been lost and ensure that we’re contributing positively to society. As an industry, we need to ensure that our Purpose – to provide services that meet the economic needs of society – are placed above short-term profits and bonuses, with new products and interactions developed to contribute to this.
However, that doesn’t mean you have to sacrifice growth.
How Purpose drives commercial success
As with most firms that truly focus on meeting a customer need through a customer-centric culture, having a Purpose delivers positive commercial outcomes.
Don’t just take our word for it. Former P&G global marketing director Jim Stengel collected 10 years of data across 50,000 brands, where he identified that brands aligned with serving a higher purpose delivered stronger financial outcomes.
Those firms with ‘higher ideals’ – with a purpose focused on improving people’s lives – grew three times faster than their competitors. Stengel even claimed that investing in his resulting ‘Stengel 50’ over that decade would have outperformed the S&P 500 by 400%.
How Purpose drives culture.
For employees, a sense that they are contributing to society is proven to inspire ongoing commitment and improved engagement, regardless of timing, circumstance or other pressures.
With employee experience increasingly being identified as the key to delivering an exceptional customer experience, empowering individuals to act in-line with purpose creates accountability and helps build a consistent and ethical culture.
As financial products have become commoditised and digital experiences become easier to replicate due to advancements in technology, Purpose and an inspiring employee culture can be a key differentiator, creating business opportunities and attracting talent. Young people in particular are not only looking for security and income from their jobs, but also purpose and meaning.
Purpose in action
ANZ’s defined purpose is: “to shape a world where people and communities thrive.”
We can see this in action in a recent decision to ensure that its services are not contributing to organisations which don’t align with their purpose.
CEO Shayne Elliott asked ANZ’s institutional team how providing banking to tobacco manufacturers aligns with their purpose. After some debate, the decision was made that ANZ would no longer be involved in tobacco manufacturing, regardless of the returns. ANZ
ANZ is now looking at other, more complicated issues, such as credit cards being used for gambling, to ensure that the services they are providing all contribute to delivering on its purpose.
By creating an organisation with a defined purpose that empowers individuals to contribute towards it, ANZ is creating a culture where it’s not acceptable to just ‘extract value’ from customers, and everyone benefits.
Top 5 things to know about Purpose
1. Purpose isn’t something you can just talk about. “A company’s structure, measurements, and incentives need to align with that purpose as well for it to truly resonate with your people, your customers, and other stakeholders.” – PwC Global Chairman Bob Moritz
2. Purpose is essential to engage younger workers – a strong purpose and culture, and the resultant impact on the world is frequently cited as a core requirement for Millenials when assessing employment.
3. Purpose doesn’t have to be at the expense of profit – “Profitability is really important – if we don’t make a profit we don’t survive. But what we’re saying is it’s not purely about maximizing profit – it’s to make a return but to do it the right way.” ANZ CEO Shayne Elliot.
4. Purpose ensures that innovation and profit do not occur at the customer’s expense.
5. It’s hard to succeed at purpose – embedding purpose and values can be difficult. Short-term business pressures, size, legacy and complexity can all get in the way, but for those that have succeeded, these factors become assets, not liabilities.
If you’d like to talk about how your organisation can find its purpose, and build a culture that supports it, then we’d love to chat. Email Nigel on email@example.com, or call him on 0488 614571.