The limits of purpose-led business
As the idea of purpose-led business gains traction, it opens up a new vista where business can be seen as the key to solving the endemic problems of society, and where their reach and responsibility knows no hard boundaries. There are indeed amazing opportunities ahead, but there are also some risks here which need to be recognised and addressed at an early stage.
Corporate activism is not an answer to government paralysis
In his book “Winners Take All” Anand Giridharadas warns about the danger of business over-reach and the lack of democratic accountability of business. The social and cultural context in which purpose-led businesses thrive is where there are also strong countervailing powers, and there is a widespread shared agreement about the role and limits of business in society. A good example today for this need is the unaccountable power of tech companies relative to government and the need for better regulation.
Business cannot and should not try to be all things to all people
Whilst in Blueprint’s thinking (reflected in the Blueprint Principles) a purpose-led business thinks about its impact on all those touched by the business, a business also has to prioritise, and will properly focus most attention and investment in those relationships which are material to its long term success in pursuing its purpose as a business. In his book Grow the Pie, Alex Edmans states:
A purpose that tries to be all things to all people offers little practical guidance because it sweeps the harsh reality of trade-offs under the carpet.
Businesses will always only ever meet some needs
Charities, NGOs, families and other institutions alongside government will always also be needed. Purpose-led businesses see themselves as using the market mechanism to help foster and grow the common good of society, alongside and supporting other actors in society who are using other means to do the same thing. This mindset fosters an attitude of co-operation as equals between business and others.