Mind the purpose gap
Most companies experience a gap between the potential impact of their purpose and current performance. Bridging this gap therefore represents a substantial opportunity to progress the business, says Iain Buswell, Director at Cognosis.
This is the era of purpose-led business. Over the past two decades, Purpose has moved from a fringe idea to the mainstream. The chances are that your organisation already has a well-worded purpose that articulates the reason you exist and the key customer problem you address. If not, then it’s worth investing in one. Research shows that purpose is a critical driver of long-term sustainable growth in a fast-evolving environment.
Those businesses that use their purpose as a coherent and consistent narrative to guide them through constant change will outperform their peers by +32% earnings, +47% revenue and +56% market cap. A good purpose will unlock incremental success by better serving internal and external stakeholders. It will provide strategic clarity, acting as a north star to guide all long-term strategic decision making.
Always aspired to, but never quite reached, a good purpose will be relevant for the next 10 years and beyond. Your company will gain agility by setting a clear direction, whilst giving teams space to flex, adapt and develop. You will empower action with a common goal and shared trajectory, increase engagement and motivation, and also drive competitive advantage, by understanding who you exist to serve and why. The result is deeper customer connections and a powerful innovation platform on which to shape winning value propositions.
For every 10% increase of purposefulness at work, organisations experience 8.1% reduced turnover.
Take a stand
A good purpose is the glue that holds a state of constant progress and evolution together. It's worth stressing that ‘good’ here means ‘effective’ rather than exclusively ‘responsible’, in an ESG or CSR sense. However, company purposes increasingly encompass an aspiration to contribute towards a greater good, beyond bottom line sales targets. The positive impact of your company on people and the planet may already be incorporated into your purpose, as ‘doing the right thing’ increasingly matters to employees, customers and shareholders.
Indeed, two-thirds of global customers want companies to speak out on issues they care about, while more than half will buy from brands that stand for something bigger than selling their products and services.
In the dogfight to seek and retain talent, a responsible purpose can also give you superiority. Only 34% of workers in the US are enthusiastic about the place they work, yet 74% of LinkedIn members want jobs that offer a sense of purpose. In companies that clearly define and communicate how they create value, 63% of employees say they’re motivated to perform, versus 31% elsewhere.
Younger people are especially scrutinous of the footprint of their preferred brands, whether as customers or employees. 85% of Gen Z customers will share their positive opinion about a company that is doing good, while 83% of Gen Z in the US will consider a company’s purpose when deciding where to work.
Not fit for purpose?
Businesses understand that a good purpose is a good thing to have in their locker. But many just leave it there. They don’t use it properly. 79% of business leaders believe their purpose is central to success, yet less than half of employees could answer what their organisation actually stands for and what makes it different.
This represents a ‘purpose gap’ between the statement on paper and the everyday actions throughout the business. The potential benefits of a good purpose are therefore lost in execution.
On the plus side, the gap leaves plenty of room to improve the direction of the business, with a view to long-term growth. Re-articulating your purpose could transform it from an isolated tactic into a business-led strategic driver.
Self-diagnose your purpose authenticity and performance by asking these five questions.
- Do you have absolute clarity on the customer problem(s) our business exists to solve?
- Will your purpose be relevant over the next 10 - 15 years, and so guide your long-term strategy?
- Are you effective at communicating and building belief in your purpose and long-term direction across internal and external stakeholder groups (Investors / Regulators / Board / Customers / Partners / Employees)?
- Does your purpose set a clear direction but give the business space to flex, adapt and develop?
- Empowered by your purpose, do you feel highly motivated to turn it into reality?
Cognosis helps leading companies to bridge the purpose gap. We believe that Purpose is the critical starting point for successful strategy. That’s why it’s the first step within our Strategy Toolkit. We work with companies to unleash the power of purpose in three simple steps:
1. UNCOVER the truth about your organisation, through employee interviews, surveys and research
2. ARTICULATE your timeless purpose based on the insights uncovered in stage
3.EMBED new purpose. Bring it to life across the organisation.
Contact us to find out more; Iain.Buswell@cognosis.co.uk