Purpose is more relevant than ever
Sarah Gillard is chief executive of A Blueprint For Better Business, a charity with a purpose to create a better society through better business, and she passionately believes that time is running out for business to take corporate purpose seriously.
In fact, Gillard predicts that any business that is not either purpose-led, or on its way to becoming so within the next decade, is ultimately doomed to failure.
What is a purpose-led business?
A purpose-led business primarily sees its role as creating value for society and, if it does that well, then profit is an outcome of that and a necessary condition for it to continue. But its primary purpose is to create value for people and planet in some way.
The second thing is that purpose-led businesses see themselves as a series of relationships with humans, both inside and outside the business, and believe that all humans have an inherent dignity and should be treated with respect. How the organisation creates value for society is transformed by the understanding that humans have inherent dignity and the quality of relationships matter.
I don’t think anybody would look around now and say I think we’ve got it nailed, we’re winning
It doesn’t mean that you never make difficult decisions that impact humans, but that you’re always thinking about the human at the end of that decision: how would they want to be treated, how to bring them into the conversation, things like that. It’s got strategy and cultural elements.
What has changed? Why is the focus now on purpose-led business?
Before 1970, the idea of business was pretty much to create value for society. It was seen as such an obvious idea that it almost didn’t need explaining, but for the past 50 years, particularly in the UK and US economies, we’ve had a different paradigm, where business has had a sole responsibility to make profits while the markets, regulation and governments can take care of all the rest.
For a while, that probably worked. But what we’ve been seeing over the past few years, is the negative externalities of business solely pursuing profit. So, you see, of course, environmental breakdown, climate change, loss of biodiversity and all that stuff, and the societal impacts, with huge and rising social inequality and social injustice.
But there is a sense that business is just swimming in its lane, making money and ignoring that stuff, that business is somehow outside of society. And it isn’t. I mean, it’s part of society. It relies on these things – human value, social capital, environmental capital, for example – to survive.
This narrow focus on We’re here to make profit and everything else is taken care of by someone else has been exposed as a limited, narrow view that isn’t panning out well. I don’t think anybody would look around now and say I think we’ve got it nailed, we’re winning.
But being a purpose-led business does not mean ignoring profits?
Profit is good. It is critical for business. It’s the lifeblood. But it’s like breathing to a human. You don’t say I exist in order to continue to breathe, hopefully your life is richer than that and you live for all sorts of things. The idea that profit is the primary goal of a business is like saying breathing is the primary goal of a human. It is a really limited misunderstanding.
Why does it matter so much to Millennials and Gen Z?
You might pretend that it is nothing to do with you, but it is not like anyone is unaware of the environmental and social problems that exist in the world today. That acute awareness is not likely to go away.
We’ve had this extraordinary 50-year period of stable politics, stable climate, rising house prices, so that if you carried on doing your own thing you could make your own life a little bit better. We had the luxury of being atomised individuals saying We’re alright.
Scoot forward ten, 15, 20 years, and we know climate change is going to be worse than it is now. If you look at the trends in society, in terms of physical inequality and polarisation, political instability and the undermining of democratic institutions, it does not look like there will be another 50-year period of stability.
The next generation will not have that luxury, that luxury of cynicism, to insulate themselves against what is happening, and say I’ll just live my life, mow my lawn and the rest of the world can take care of itself.
Is that why we’re at a crossroads?
This is arguably the first generation in humanity where, in trying to make our own lives better, we are knowingly making the lives of the next generation worse. That has never happened before. It is why I am so dramatic about this choice.
This crossroads that we are now at hasn’t really occurred before. As a generation of people with extraordinary skills and resources, expertise and knowledge, information about what is happening in the world, and the ability to look at what’s going to happen in the future, we’ve now got a choice. We can actively say: we don’t like the way this is heading, and we’re going to try to do something about it, and try to create a more positive future. Or we don’t.
It’s binary. That passive acceptance of this thing that is just going to roll on and get a bit worse, that’s still a choice. And that is, I think, where a lot of organisations are. They think We’ll just carry on because the status quo is going to remain. But the status quo is not going to remain.
But do Millennials and Gen Z say they care, but then do something else? Like buying fast fashion while saying they care about the environment?
That looks like a massive business opportunity. What that smacks of to me is an unmet business need. If people are saying they want one thing but are then getting served another in the market, there is clearly a gap between what they want to do and what they are able to do. It is more convenient to do the thing that they don’t really want to.
There is a huge opportunity for organisations who recognise that these people genuinely want to interact with organisations that care about the same things as they do but find it difficult to do so. Well, make it easier. That’s the biggest business opportunity in the next ten years that the world has ever seen.
Some businesses think We’ll just carry on because the status quo is going to remain. But the status quo is not going to remain
What about companies who are trying to change, but for whom it will take time?
I don’t think it is particularly useful to throw rocks. Typically, people are trying to do their best in the circumstances in which they feel constrained by. I am interested in how you begin to unlock some of those circumstances so that it becomes easier for people and organisations to do the right thing. There are some pioneering leaders who are trying to demonstrate that it is possible to run organisations in a different way, and to lobby for the system to begin to shift, so that it becomes easier to do so. Those people who are genuinely trying should be celebrated.
Of course, there’s always more than people can do. But hopefully, we’re beginning to celebrate those who are saying I’m going to give it a shot and try to make things better. Those who throw their hands up and say Not for us to do are, I think, beginning to see it’s a struggle to get talent. Consumers are beginning to say That doesn’t smell so great. Investors are beginning to question a little bit harder, and the regulation is going to come.
If I was sitting on a board of an organisation right now, I would be asking What’s the right thing to do to get this company on a trajectory of resilience and sustainability, in the broadest sense, so that in ten years’ time, people still want us to be around? It’s about working out how to create value for society and to make money in doing so, and then working out how to get from where you are now to where you want to be in ten years’ time.
But that could be an expensive process?
It’s less expensive than bankruptcy. If you’re driven by How do we create value for society, how do we profitably solve the problems of people and planet, how do we create positive impacts for all the people that our organisation touches? then you do things for which there is not an immediate direct line, but if the case is We do this and our bottom line is going to go up by X, then you’re still in that paradigm. You’re in, at best, enlightened shareholder value. Anything you do is basically for the long-term interests of financial capital, rather than the long-term interests of people and planet.
There is a fundamental difference at the very heart of [a purpose-led] organisation, which is genuinely there to serve society, because you do things where you cannot necessarily prove the business case, but you do them because it is going to further your purpose.
In many cases, and the academic studies are piling up to prove this, that turns out to be the way to make more profits. But you’re not aiming at that. It’s a happy consequence because people start innovating in your organisation, they find meaning in doing so because they believe the mission. Customers start noticing. Things start snowballing because, funnily enough, we are all humans with emotions who are seeking meaning, who want relationships and collaboration and community rather then financially-driven, rational, atomised, self-interested individuals.
There is a fundamental difference at the very heart of [a purpose-led] organisation, which is genuinely there to serve society, because you do things where you cannot necessarily prove the business case
Is business overtaking policymakers in terms of driving the agenda forward?
Policy and regulation are important tools, not just in signalling where the market is going to be, but also in creating a floor – a minimum. Business responds to regulation, of course, but that doesn’t catalyse innovation in the way that sensing an opportunity does.
That’s why whenever I talk about purpose, I try to frame it in terms of potential and opportunity. This just transition, which if we’re going to survive as a human race, and most people agree we need to go on, is the biggest opportunity for business that probably we have ever seen. If businesses can sense that opportunity, they respond in ways where they are harnessing all the human creativity and energy, and skills and expertise and enthusiasm and passion, and so on, to something that’s really positive.
Regulation and policy have a role, and often that role is to make all this stuff easier, because the environment has changed, and to bring up the laggards. But I think that it is the sense of possibility that really drives people and innovators within business.
This interview is a summary of a fireside chat hosted by Helen Dunne at the Corporate Purpose Summit