First published in Society Matters magazine, by Lucy Traynor, Director, Deloitte.
What does "purpose" mean? We define purpose as "an organisation's explicit drive to create value beyond profit, specifically for our planet and the people on it".
To break this definition down, we believe it is important for every organisation to have a clear articulation of its purpose, one that is easy to understand, not generic or fluffy, and that is clearly linked to the business itself - this is the "explicit drive". We also believe that purpose should drive "value beyond profit" - meaning that purpose should drive value for the business - such as increased market share or improved attraction and retention of diverse talent but also drive value for our planet and society, such as reduction in waste and carbon emissions, and greater inclusivity of products and services. Therefore, we expect there to be a strong link between an organisation's purpose and specific sustainability goals.
Is purpose just a fad?
When it comes to social and environmental impact, customers, employees and investors all expect more than they did 10 years ago, and this is a trend we expect to see continue. Increasingly, people choose to buy from, work for, and invest in organisations that fit with their personal values. Employees and customers increasingly use the power of social media to call out organisations that fail to meet their expectations.
Are purpose and profit mutually exclusive?
When embedded holistically across the core business, purpose can drive financial value as well as social and environmental value. However, many organisations still think about purpose as separate from the core business, similar to the way many approached "corporate social responsibility" (CSR) in the late 1990s and early 2000s. Tackling this misconception about purpose often requires a significant mindset shift.
Is our purpose under-leveraged?
Most organisations these days have a purpose statement; but fewer than half have actually embedded that purpose into their core business, meaning for many organisations, purpose has been reduced to a 'tick box' activity that isn't driving value, and may risk a negative response from stakeholders and brand-damaging allegations of "purpose-washing".
What are the challenges of embedding purpose?
From interviewing organisations across different sectors, we learned that many struggle with embedding purpose. Key challenges we heard included: that the purpose itself was not tangible enough to be embedded; that the business was not sure how to measure purpose; and that senior leaders saw purpose as something separate from, rather than fundamental to, the core business.
How can we unlock the value of purpose?
We have learned that purpose only delivers value when it is embedded into the core business, with both an internal and external perspective. Having developed an approach to support organisations with this challenge, we've learned that there are six dimensions of a business in which it is crucial to embed purpose:
- Organisation (e.g. structures, networks, decision-making and accountability)
- Role models and leadership
- Products and services
- Stakeholder relationships
The optimal approach to embedding purpose involved first assessing the extent to which purpose is found in these six areas today, to establish a baseline and identify the business areas which need the greatest attention. The organisation then needs to develop an action plan and define how it will measure the impact of purpose activation in terms of value creation for the business, the planet and society.
For more information contact Lucy Traynor