Purpose has become a buzzword, with many organizations only paying lip service to the idea without putting any real effort into fulfilling it. Purpose is simply an intent, and without action to back it up it’s not enough to create real change. The problem with solely focusing on purpose is that it misses the point of what really matters: impact. Companies need to find a way to translate their purpose into action, and the best way to do that is through their business strategy.
One reason why purpose has become so diluted is that it is often viewed as just another marketing tool, rather than a legitimate reason for an organization’s existence. The reality is that consumers, employees, and investors can easily see through these empty statements and know when companies are not serious about making a difference. For an organization’s purpose to have meaning, it must go beyond simply making money or providing jobs.
The Coca-Cola Company provides a prime example of how purpose can be misguided. Despite having a purpose statement of “Refresh the world. Make a difference.”, the company has been criticized for being the world’s top plastic polluter, despite its partnership with the World Wildlife Fund on water stewardship. The company’s efforts are commendable, but they are not enough to make a real difference at scale.
Moving from Purpose to Impact by Asking ‘Why not?’
The question of whether purpose is the right concept for organizations is a valid one. Purpose has many different layers of meaning, and it may not resonate with everyone in an organization. To address this, companies need to find a new concept that can provide unity and direction. The answer to this challenge lies in shifting the focus from purpose to impact.
Instead of starting with a search for their ‘why’, companies should start by asking “why not?” Why not do the right thing now? Why not put people first and profit second? Why not use the company’s position and purchasing power to positively impact social standards, protect the environment, and stand up for a good cause?
Any reputable company should consider revising its business strategy to create tangible impact, for various reasons. Not only is it the ethical thing to do in terms of sustainability, but it can also lead to financial gains. Companies that prioritize impact are likely to attract more customers and employees, and improve their financial performance in the long run.
Impact Creates Profits
Unilever, for example, grew their profit considerably from Lipton tea after establishing more sustainable environmental and social practices throughout their supply chain. This attracted a whole new group of consumers that are becoming more conscious of the impact their purchases have on the world and are looking for companies that share their values.
An Axios Harris poll in 2021 revealed the public perception of different brands based on their impact on society. The results showed that Coca-Cola’s reputation took a significant hit, falling from 41st to 58th place. On the other hand, Patagonia saw a significant increase in its popularity, moving from 32nd to the top of the list due to its unwavering commitment to the environment.
Patagonia’s success can be attributed to its strong values, which it has consistently translated into meaningful action. Conversely, Coca-Cola’s reputation has suffered due to its lack of consistency between its words and actions.
The bigger a company, the higher they should aim with their “why not?”. The more money a corporation makes, the greater the responsibility to offset its negative impact. Companies must take their “why not” seriously and reflect it in their sustainability and ESG practices, not just to reduce risk exposure.
Impact is the True Measure of a Leader’s Legacy
In August 2022, Yvon Chouinard, the founder of Patagonia, took the concept of impact to the next level: he transferred ownership of the company to the Patagonia Purpose Trust and the Holdfast Collective, directing all profits towards fighting climate change and preserving the natural environment. This is a major accomplishment and an excellent example of the positive impact a company can make.
Creating a living legacy – as a business leader and for the company they represent –
and having a positive impact on the world requires more than just talking about purpose. Companies need to focus on making a difference and implementing actions that align with their values and beliefs. This can be done by setting clear sustainability goals, working with stakeholders to create positive change, and engaging employees in the process to make them feel like they are making a difference.
No one cares about your purpose, but everyone cares about your impact.
Written by Alex Brueckmann.
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