Navigating conversations
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In discussing purpose and the case for change with colleagues be mindful to avoid two extremes:
A “frictionless win/win” business case for purpose …
the idea that with “added purpose”, everything else carries on as before and we simply get a purpose dividend. Beware reducing the purpose challenge to saying this is the way to increase profits – such an ‘Enlighted Shareholder Value’ business case justifies the need to invest in stakeholders solely because it will create higher shareholder value in the long run.
The idea that there is always some kind of enduring trade-off…
i.e. “purpose always means accepting lower performance”. Creating value by serving society isn’t just a worthy ideal – it can make good business sense and the evidence for this is growing. Purpose and performance can – and need – to go hand in hand.
Both extremes should, if possible, be avoided. But it is not easy. Navigating these conversations needs to be guided by a deep belief about what you think makes for a successful business that serves society in the long term.
Some considerations to bear in mind when engaging with specific functions:
Finance: Don’t make shareholders/investors or profit the enemy. If a company delivers value to stakeholders entirely as a result of sacrificing profitability, it will cease to exist. Profit is still an important outcome, it is just not the goal. Explore with Finance how they see the relationship between purpose and profit. This is discussed in detail here: Exploring the relationship between profit and purpose.
Strategy: A common temptation is to think of purpose as “social purpose”, distinct from the core business and manifesting only in tangential social goals. The impact of persistent siloed thinking is that purpose gets stuck as a bridge between business as usual and legacy CSR or sustainability programmes. With siloed thinking, the purpose may supercharge a company’s CSR initiatives but fail to realise the full potential value a truly purpose-led organisation can create for society and all stakeholders. To help avoid siloed thinking engage early with those people/teams in the business who have a key role in setting the strategy for a company. Explore with them how purpose (once articulated) can direct and shape the business model and the strategy, what products and services are provided, to whom and how? And how the commitment to become a purpose-led business may change how strategy is developed and executed.
HR: Be mindful that purpose doesn’t become a HR initiative. A key merit of becoming purpose-led is that done well it switches on the latent potential in people to commit to a shared worthwhile endeavour. But if the motivation is just to use purpose to drive employee engagement, it will not deliver. Explore with HR how best to avoid this and what role they can play in cultivating an environment in which purpose comes to life? To explore this further see our course: A purpose-led culture
Marketing and Comms: Explore with marketing and comms how best to avoid ‘purpose-wash’. Interestingly the FRC in their January 2020 report on early adoption of the 2018 corporate governance code makes just this criticism of many FTSE 100 companies. If purpose is just new ‘wallpaper’ it will not change anything fundamental, and at worst will simply create cognitive dissonance. This is discussed in: What is purpose wash? How can you avoid it?
CSR/Sustainability: The expertise and experience of CSR and/or Sustainability teams will be critical in supporting an organisation on the journey to becoming purpose-led, but integrating purpose into the day-to-day running of the business has to be led by business/sector leaders. Explore how to avoid siloed thinking and the pigeonholing of purpose within their function? What role can they play in enabling (rather than doing) and building the expertise across the organisation? Another point to pick up is the consistent use of terms. There can be confusion about the meaning and difference between purpose-led, responsible and sustainable business and also the relationship between ESG and purpose. This is discussed further in: The relationship between purpose, CSR, sustainability and ESG. It is helpful to be consistent and agree the meanings attached to each within the company. Doing this may help avoid the potential for siloed thinking. Whilst this cannot be done overnight, the long term goal is of course complete integration so that CSR and sustainability become integral aspects of the core business strategy.
Be mindful not to jump straight into ‘persuading’ people:
When engaging with colleagues, it’s important that people feel they can raise their concerns and tensions about the challenges they see in becoming purpose-led. If there is strong resistance, stay curious, seek to understand why there is resistance and be open to and challenged by what can emerge. Perhaps draw on some of the questions in this: Exploring Assumptions and Beliefs using the A-F model exercise
Being purpose-led is both an organisational and a personal challenge. Creating a shared understanding of what being purpose-led means is critical in creating a purpose-led organisation. Our course on Challenging assumptions and beliefs should help you look at how these are at play in your organisation and help equip you to start to challenge them.