What do DC, Davos and Helsinki Have in Common? The Purpose Zeitgeist
Think about the “purpose” of business. Is it to make money? Satisfy market demand? Give dignity to workers? Make the world a better place?
The short answer is: yes. And whether it’s the boardroom of a global corporation in Washington, DC, the shared workspace of a startup hub in Helsinki, Finland, or the thin air of Davos, Switzerland, entrepreneurs and executives I’ve spoken with around the world agree purpose is an idea whose time has come.
Last year, nearly two-thirds of the 1,500 global executives and business leaders the EY Beacon Institute talked to said the disrupted and volatile environment is driving a profound rethink of their purpose. Most importantly, more than half are moving toward what we call “Capital P” Purpose: a human-centered, socially-engaged reason for being that serves a broad range of stakeholders. Why? Because as BlackRock CEO Larry Fink wrote in a January letter to CEOs that had conversations buzzing at the 2018 World Economic Forum, social purpose drives long-term value.
One of those conversations in Davos was a breakfast EY Beacon hosted for 80 CEOs, board chairs, and global leaders. We asked them, in today’s transformative age, is the business of business more than just business?
A decade ago, the answer might have been an easy no, but today there’s a movement underway toward purpose-driven business. This movement is unlocking new growth opportunities, sparking innovation, and helping firms attract and retain talent — all while leaving the planet and its people a bit better off. The business case is clear and the movement is accelerating. That’s the message I brought to the hundreds of companies gathered in Washington, DC, for the U.S. Chamber of Commerce Foundation’s last Corporate Citizenship Conference.
The ideas I discussed in DC’s Ronald Reagan Building resonated just as forcefully 4,300 miles away at the Musiikkitalo, a beautiful concert hall in Helsinki, Finland. I was there for the KASKI 2017 business forum, where I heard from local executives like Teresa Kemppi-Vasama, chairman of Kemppi, a family-owned welding firm. A year ago, Teresa decided to inspire an internal transformation by articulating Kemppi’s purpose more powerfully: to “enable the building of safe infrastructure around the world.” A year later, Kemppi’s employees are more motivated, and Teresa is working on ensuring the company’s long-term strategy is aligned to this purpose.
On both sides of the Atlantic, many businesses already know why purpose matters. They get this stuff. The harder challenge is how to turn purpose rhetoric into reality. These days we hear a lot of “purpose puffery” — lofty, high-minded language about changing the world that sounds dandy but isn’t reflected in what the business does day-to-day and does not show up in how it interacts with the human beings it collides with. What keeps firms from turning purpose puffery into purpose practice?
Short-term financial pressure certainly is one, which is why Larry Fink’s letter encourages boards and managers to focus on long-term value. Another is incentives. If company performance metrics and employee compensation aren’t tied to purpose — and are only tied to sales targets or profit — it sends a message that the purpose of the business really is just profit. We measure what we treasure. There’s little incentive for any higher purpose to be lived day-to-day if we aren’t measuring it. This is one reason EY Beacon Institute has found employees are less likely than bosses to believe their company is actually living its purpose. If executives don’t close this “say-do” gap, employees are left discontented, disheartened and possibly on the lookout for a new job.
Plenty of firms show that these obstacles aren’t insurmountable. At the U.S. Chamber Foundation’s Corporate Citizenship Conference, I shared the story of Murad Al-Katib, a Canadian entrepreneur who started AGT Food and Ingredients in 2003 with the purpose of bringing affordable protein (think beans, lentils and chickpeas) to the world. Since going public in 2007, AGT has grown to 2,000 employees spanning 47 countries across 5 continents, with revenues of nearly $1.5 billion. Murad, who was selected as EY World Entrepreneur Of The Year ™ 2017, says unequivocally that “corporate social purpose is a reality of what we as entrepreneurs must deliver.”
Throughout the Corporate Citizenship Conference, I was inspired to see executives share their own purpose commitments. BP America’s Ray Dempsey, Jr., said his firm does not see a trade-off between purpose and profit, telling the audience that “it is essential ... that the things we do to contribute to society are not seen as mutually exclusive to our ability to be profitable.” That message was echoed by Hilton Worldwide’s Katie Beirne Fallon, who argued that organizations “can do both at the same time: have a purpose-driven business model and still deliver profits.”
The purpose journey may not be easy, but overcoming the obstacles to make purpose real for every employee is worth it. It’s worth it in financial terms, for increasing trust and driving long-term value. And it’s worth it in human terms — because it’s more fun and fulfilling to do something that’s a bit bigger than short-term, selfish interest.
Purpose is as global as the world economy. Wherever we are, human beings seek a sense of dignity, meaning and fulfillment in our work. If we guide our organizations toward fulfilling that universal need, business can help solve global problems while driving that holy grail of growth.
But whether we do so is up to us. We, the people, are the organisms who comprise the organizations we lead. It starts by taking a stand for something greater than profits — some version of Capital P Purpose. And then making concrete commercial decisions about how to allocate money and time in service of that purpose. Every business leader can guide your team, your business unit and your organization toward the sustainable growth that exists at the intersection of profit and purpose.
The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.