Purpose Needs to Grow Up
To earn its place in the boardroom, purpose must finally live up to its potential to deliver not just societal impact, but business growth.
By Philipp Reker
As the global economy has moved into the post-pandemic era, where AI disruption, ever-increasing global competition, and mounting societal and environmental pressures are challenging companies, every corporation faces a dual challenge: economic survival and ethical relevance.
The big misunderstanding
Against this backdrop, the concept of 'purpose' in business is widely misunderstood, and often seen as a nice-to-have, not a must-have, and confused with ideas like philanthropy, CSR (Corporate Social Responsibility), ESG (Environmental, Social, and Governance) programs and DEI (Diversity, Equity, and Inclusion). We work with these functions every day, and we appreciate the passion and aspiration for the impact they have, but often they haven't had the opportunity to materially demonstrate their impact on the real game in business: growth.
There is only one corporate agenda item that will never change: The desire for growth
Based on everything from the latest Gartner CEO Survey to my work for and with companies like Mattel, Pepsico, Adidas, Sephora, and Gap Inc., the growth game is more present than ever:
To maintain access to fresh capital, CEOs need to grow the market capitalization of their companies, which gets cascaded down into their organizations in the form of growth targets.
This results in intense pressure on CMOs to demonstrate financial contribution, unlock new markets, and grow their organizations’ brands, especially with the next generation of increasingly demanding consumers. In some cases, this results in misguided responses in the form of ‘brand activism’, that have not only failed to drive growth but actually harmed brand value and disengaged or needlessly polarized consumers in the process (Bud Light anyone?).
HR leaders feel the pressure to grow high-performing organizational cultures and acquire, retain, and engage the best possible talent, in order to demonstrate that they can drive business outcomes.
ESG, sustainability, corporate social responsibility, and most recently, DEI leaders feel the pressure to demonstrate how their functions can contribute to company growth.
Investor Relations and Corporate Communications teams need to develop new narratives that convey the future relevance and growth potential of the companies they represent.
Purpose needs to grow up
Given all of this, it's no surprise that we are experiencing a pushback against any definitions of purpose that feel non-essential to sustained, profitable growth, and witnessing the unfortunate and ill-advised reduction of DEI departments, increasing scrutiny of ESG programs, a withdrawal of ‘purpose marketing’ and growing investor skepticism.
The good news: Real Purpose is not just a nice-to-have, it’s the engine-room of new growth.
“PURPOSE ARTICULATES WHY AN ORGANIZATION EXISTS, BUT MORE IMPORTANTLY, IT FORCEFULLY ANIMATES HOW IT CAN LEVERAGE ITS UNIQUE ‘SUPERPOWERS’ TO CREATE MEANINGFUL GROWTH BY ADDING POSITIVE IMPACT AND NEW VALUE VALUE TO SOCIETY. THIS IS WHAT I CALL PURPOSEFUL GROWTH.”
While many leaders still see purpose as an ornament at the periphery of the business, true Purpose, with a capital ‘P’, as I define it, is a much bigger idea that sits at the heart of economic activity. Yes, it articulates why an organization exists, but more importantly, it forcefully animates how it can leverage its unique ‘superpowers’ to create meaningful growth by adding positive impact and new value to society. This is what I call Purposeful Growth.
The data on how Purpose can create growth across all areas of business is clear and compelling:
Purposeful Growth is the CMO’s best friend
We know that by almost every measure, consumers are more likely to purchase from companies with an authentic Purpose that is meaningful to them. The unbelievable success story of Barbie’s comeback as a cultural icon and brand that inspires the limitless potential in every girl is just one example of the brand power that Purpose can unlock.
Purposeful Growth can be a major springboard for innovation
Purpose, defined as above, is also a great springboard for innovation which can unlock new growth since it puts solving societal needs at the center of innovation efforts. For example, the UN estimates that achieving the Sustainable Development Goals opens up more than $12 trillion of new market opportunities. Microsoft for example is leveraging its purpose of ‘empowering every person and every organization on the planet to achieve more’ to inspire innovation through internal ‘hackathons’, resulting in breakthrough innovations such as its Seeing AI technology, driving disability inclusion while unlocking entirely new markets and use cases for their offerings.
Purposeful Growth is the HR team's secret weapon
There is overwhelming evidence that especially Gen Z and Millennial employees are now much more drawn to companies that can demonstrate a positive impact on society through their core business. This makes the kind of Purpose I am talking about a key driver in acquiring, engaging, and retaining top talent, and a vital force in the creation of healthy, resilient, and high-performing organizations. Google for example engages top talent in their purpose of organizing the world's information to make it universally accessible and useful through initiatives like their AI for Social Good program, which allows employees to apply their skills to solve significant global challenges, enhancing job satisfaction and loyalty.
Purposeful Growth unlocks the value of ‘business adjacent’ functions
Clarity of Purpose will enable ESG, Sustainability, CSR, and DEI leaders to better integrate their functions with the commercial objectives of the organizations they are a part of. By aligning their programmatic focus more intentionally with the overall company Purpose and strategic priorities, they are able to contribute to a broader Purposeful Growth agenda.
Purposeful Growth turns investors into believers
Investor Relations and Corporate Communication teams will be able to better articulate the value their organizations bring to the world, which in turn will help to engage investors, analysts, policymakers, NGOs, and the general public with a new, purpose-driven impact and growth narrative.
Purposeful Growth will unlock the next era of growth
“ PURPOSE-DRIVEN COMPANIES HAVE AND WILL CONTINUE TO OUTPERFORM THEIR PEERS WHEN IT COMES TO MARKET VALUATION AND YEAR-OVER-YEAR GROWTH.”
As a result of all the above, purpose-driven companies have and will continue to outperform their peers when it comes to market valuation and year-over-year growth. Recent research shows that over a 20-year period, purpose-driven companies generated an average compound annual growth rate of 13.6% in their stock prices, compared to 3.7% for their closest competitors and 5.5% for the S&P 500.
Integrating Purpose deeply across the business this way drives company culture, innovation, consumer love, and market leadership, along with tangible societal benefits. This can unlock the true transformative power of Purpose to grow businesses in a way that creates a positive impact on people and the planet.
Why this matters more than ever: The Growth Dilemma
While the pressure to grow is relentless, businesses increasingly realize that growth can no longer come at the expense of people and the planet. Mounting societal and planetary challenges create tension between companies’ desire for growth and the systems and societies in which they operate.
Growing by solving problems, instead of creating them
“SOLVING SOCIETAL PROBLEMS, INSTEAD OF CONTRIBUTING TO THEM, CAN UNLOCK MASSIVE NEW ECONOMIC VALUE.”
We believe that Purposeful Growth can help solve this dilemma, empowering corporate leaders across all functions and levels to unlock new ways to grow that aren’t at odds, but accelerated by positive societal and environmental impact. Solving societal problems, instead of contributing to them, can unlock massive new economic value. Here are just a few examples:
Investments in renewable energy, energy efficiency, and carbon capture technologies have created new industries and millions of jobs globally.
Adapting infrastructure and communities to climate change can create new markets for flood protection, drought-resistant agriculture, and sustainable building materials.
Addressing the challenges of an aging population, such as chronic diseases and long-term care, has created a growing market for healthcare services, pharmaceuticals, and medical devices.
Transitioning to a circular economy, where resources are reused and recycled, can create new markets for waste management, recycling technologies, and sustainable materials.
In our work at Conspiracy of Love, we have seen firsthand how purpose can be the main driver of thriving, innovative organizations and meaningful, differentiated, and highly relevant brands that create a lasting impact in the marketplace while building legacies as change agents for a better future.
It’s time for purpose to step up and show its true value in the boardroom and beyond. Because the world needs growth to be purposeful.
