As usual, it has been a while since the last post. Meanwhile, the Davos crowds set their sights on ‘Creating a Shared Future in a Divided World‘, major companies like Coca Cola revealed ambitious purpose+profit visions for the world, the CEO of BlackRock posted a note on the front page of the Financial Times on the need for purpose and long termism in organizational management and HBR has published a multitude of articles (here are some: 1, 2, 3, 4). To summarize, promote, and highlight the importance of this trend, I wrote a book called Purpose+Profit which launched this Christmas. For those of you for whom time is in limited supply, here is a summary.
To understand the need for purpose-driven organizations, a global overview of trends is critical. I have provided today’s 30 megatrends in my book, and all graphs can be downloaded for free here (under downloads). Many of the most worrying trends are widely known, like the rising global inequality, the alarming levels of waste/pollution, climate change, the philosophical void in the political arena, and the digitization/automation/robotization of work and corresponding projected job losses. Critically, many of these challenges are collective ones that we face as a species, leaving the old ‘not my backyard’ logic senseless. What’s more, these challenges are generally not addressed effectively and timely by governments. Instead, most of these collective challenges call for a more agile response, which can only be delivered by for-profitorganizations. To be precise: of all players analysed in the book (e.g. governments, individuals, non-profits, for-profits, individuals), for-profit organizations are the key players to drive progression as they control most investments, are relatively free to move. Additionally, they tend to care about how they are perceived by their stakeholders in an increasingly transparent world, and there is money to be made in the purpose+profit space (for how much, read on). Said simply, new corporate strategy should aim to combine ambitions of making money with doing the right thing for the long term.
But there is more to the story. For many of the relevant trends (e.g. climate change, inequality), organizations can simply not afford to neglect the implications. Companies that fail to do the right thing will inevitably see regulations coming their way, and face a harder judgement from the new generation of workers, their customers and/or potential investors. Volkswagen’s diesel scandal is such an example. Although such companies can aim to ‘milk the cow’ as long as it will last, this is an increasingly risky strategy in an ultra-transparent world where new workers increasingly care about values more than money. To make things even more challenging: just putting up red tape inside is not cutting it. Outside commitments, products that breath the new purpose, and a marketing strategy that is aligned with the key message is key. Companies that succeed in this will shape the century, they’ll put the dent in the universe that Steve Jobs was talking about.
The final straw is about financial reasoning. Clarifying a purpose, or ‘managing for the long term’, has obvious benefits when it comes to ‘managing the ethical downsides’ of business. But there are also lots of additional upsides to thinking this way, linked to branding, people engagement, innovation, talent attraction and investments. Although I’ve explained the business case in more detail in the book, the short story is that having a clear purpose can pay the bill. The UN SDGs, a great starting point for many purpose-driven strategy discussions, are believed to represent an opportunity of ~2.5 trillion USD a year. In the words of Achim Steiner, Head of the UN Development Programme, the UN SDGs simply represent the markets of the future.
That’s it for now. Wishing you all thought-filled and productive days!