A lot of people have the misconception that all you need to do to have a successful business is money. While financing is important, there’s a lot more to creating, building, sustaining, and growing a business — especially in the kind of dynamic global market we have today. Audiences and customers are changing, and along with that are their tastes, priorities, and preferences. A company cannot just blindly charge into all that without some sort of standard, a kind of rallying point that its employees can rely on; as well as a means to stand out and define itself in a highly competitive market.
That’s where a company’s guiding principles and tenets come in. A company’s mission, vision, values, culture and whatnot seek to anchor the organization, providing stability and consistency in an otherwise choppy sea of change and unpredictable market forces. A business purpose goes along with those things, adding to the identity of the company and making it more than just another faceless corporate entity. A business purpose, along with the rest, are integral to a company’s success, especially in the long run.
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What makes a business purpose different
It’s one thing to have a company mission, vision, values, principles, and culture. A business purpose is different and more profound. But before we get into that, let’s begin defining the others first.
According to experience corporate guru Graham Kenny, in an article for the Harvard Business Review, a company’s mission is a definition of what that company is and will be in the future. Sort of like a job description, but one for companies and businesses. A mission provides clarity, direction, and focus for all members of the organization. For example, a clothing or fashion company’s mission would be to provide high quality and fashionable clothing to its clients.
On the other hand, the company’s vision tells you what a company wants to be. It describes a broader goal — for example, part of a delivery / parcel company’s mission might be to make timely and excellent deliveries of goods to customers, but its vision could be to provide that service to all nations of the world. Mission statements are a little more detailed and specific, while a vision describes a larger loftier goal that fulfilling the company’s mission will help accomplish.
Company values and culture are usually two peas in a pod, so to speak. The former promotes the kind of culture a company wants to have. An advertising agency might have values that allow employees to work freely and independently, so that they have more space to be creative and think. As opposed to a data collection company that promotes values like honesty and discretion, which in turn encourages a stricter, more security-conscious culture.
Principles closely follow a company’s values, but these are more for internal use only. Business principles are a guide for employees on how to project and represent the company. Principles would be things like providing excellent and efficient customer service (regardless of the industry the business is in), or establishing genuine rapport with customers and clients.
And so we come to business purpose. Business purpose is sort of a mesh of a company’s principles and its values. Not only that, but it also elevates them. An automated online insurance company, for example might have the business purpose of making the application, claims and other insurance-related processes much more efficient and streamlined.
A budget clothing brand may have the business purpose of delivering highly-fashionable pieces at affordable prices so that everyone can have access to fashionable and high quality clothes and accessories. A business purpose is set apart from something like passion (although also an important part of doing business) because passion doesn’t necessarily require any purpose. Purpose, and a business purpose at that, is to see the big picture, to be a part of something larger. Put together and harnessed well, business purpose and business passion can make an organization unstoppable in its growth and success.
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Why is a business purpose important?
A business purpose is important because it provides further direction for the company. And further direction is always a good thing. It helps develop better strategies and it helps decision-makers have a better scope and better parameters of the business, which is essential in making informed decisions about a company’s direction going forward.
By extension, a business purpose helps the company have more impact with its employees and customers, as well as to the industry it belongs to. While several companies have jumped on the trend of a business purpose today, it’s noteworthy to mention that there are tangible benefits to having a business purpose, when it’s done in earnest. Successful tech entrepreneur Hayley Leibson, writing for Forbes, says that “When we build or join purpose-driven companies that inspire, the potential to improve the world is limitless,” and “True fulfillment comes not only from doing what you enjoy, but also serving a bigger mission.”
Business purpose increases motivation and drive towards excellence
Especially if you’re talking about the millennial workforce, a lot of them seek more purpose and meaning in their work. A Gallup study showed that more than 70% of millennials feel a disconnect and a lack of purpose in the work they do. Another study, this time by Deloitte, also shows that millennials actually prioritize a sense of purpose over simple career growth or profit, an attitude that makes them restless and in turn, eventually prompts them to bring their talents elsewhere.
But once a company has a business purpose, that number changes, and employees feel significantly more motivated to work and excel in what they do.
An article by the New York Times reported that “Employees who derive meaning and significance from their work were more than three times as likely to stay with their organizations — the highest single impact of any variable in our survey. These employees also reported 1.7 times higher job satisfaction and they were 1.4 times more engaged at work.” So in sum, a purpose not only gives direction, but it encourages people to work better, work at higher level of excellence, and stay and continue to contribute to the company.
Business purpose makes customers (and even investors!) happier and more satisfied
Millennials really are starting to become a bigger and more powerful driver of market forces. Millennial customers, especially, are seen to be much more satisfied and happy supporting brands and companies that have a business purpose. Another Forbes article says that 71% of customers would “help a brand promote their products or services if there is a good cause behind them.” That’s essentially not only 100% free advertising, but the kind of word-of-mouth referral and advocacy that’s genuine, sincere, and priceless. And that is the best kind of advertising. You’ve heard of “influencers” who are usually paid handsomely, but an army of regular customers who sincerely have a brand advocacy are much more effective — not to mention less expensive.
The article goes on to show that even investors are more inclined to put their money in companies that have a solid and positive business purpose. And even stronger argument in favor of the business purpose is that a whopping 91% of customers globally would switch to a brand (given that the price and quality is more or less the same) if it was supporting or if it had a good cause.
Business purpose leads to success
Harvard Business School professors John Kotter and James Heskett published a book called Corporate Culture and Performance where it says that “We know, for example, that engaged managers and employees are much more likely to remain in an organization, leading directly to fewer hires from outside the organization. This, in turn, results in lower wage costs for talent; lower recruiting, hiring, and training costs; and higher productivity (fewer lost sales and higher sales per employee). Higher employee continuity leads to better customer relationships that contribute to greater customer loyalty, lower marketing costs, and enhanced sales.” The book also shows that this benefit is long-term, with many companies consistently outperforming less purpose-driven peers over time.
Given all the benefits of having a business purpose, it’s safe to say that it does have a tangible effect — a positive one — on the bottom line. Companies with a solid and positive business purpose will tend to have better employees who are also motivated to contribute more and do more, as well as more satisfied customers who will not hesitate to do repeat business and even recruit others to do the same.
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Equipping the right instruments to make the business purpose a reality
Part of developing and fulfilling the business purpose is having the right tools for the job. Runrun.it’s, for example, enables leaders and managers to better manage time, as they are given real-time access to data that among others, can indicate the time spent on a particular project/s or task/s, which in turn allow them to intervene when needed to offer support, or help troubleshoot or even prevent any untoward issues. The Dashboard tool, on the other hand, provides access to even more real-time data, giving a more concrete, updated, and concise overview of what’s happening in the organization at the moment. These are just some of the tools that can be at your disposal in order to help see your business purpose through. To find out how Runrun.it’s customizable and unique tools can impact your organization for the better, check out the free trial here.