GrowthiQ

Why every company needs a purpose

An increasing number of commentators and researchers think there might be a link between purpose and growth. So what does a purpose look like, and how can you define yours?

You might think that Nike makes running shoes, Google runs a search engine and Patagonia produces outdoor clothing. To an extent, they do. But take one look at each firm’s brand promise and you'll notice something else.

'To bring inspiration and innovation to every athlete* in the world… *If you have a body, you are an athlete.' 'To organise the world’s information and make it universally accessible and useful.' 'Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.'

Each company rejects mediocrity and promises something better. They have a goal that goes beyond the quest for profits and growth. They have a purpose.

This is, by no means, a new-fangled fad limited to glamorous technology and retail brands. Gränfors Bruk, a 113-year-old Sweden-based axe maker, hands out 20-year guarantees with its products. The company says that its high-quality, durable axes serve a three-pronged purpose: because there is no need to produce as many axes it uses fewer natural resources, it produces less waste and it does less, freeing up time for more important and enjoyable things.

As David Hieatt, author of Do Purpose: Why brands with a purpose do better and matter more, puts it: “They know why they are in business: to make axes that last. They want to change a society that thinks throwing away stuff is ok.”

Linking purpose and growth

The longevity of companies such as Gränfors Bruk and the profile of brands such as Nike, Google and Patagonia attest to the growing belief that there is a link between purpose and growth.

Recent findings from Grant Thornton’s International Business Report reveal that 70.5% of dynamic – or high-growth – companies across the world have a clearly defined non-financial purpose, versus 52.2% of all companies. Having a purpose is ‘very important’ to 44.1% of dynamic companies, compared to 40% of all companies.

Researchers also found that companies, and high-growth ones in particular, overwhelmingly prioritised non-financial over financial business objectives (see chart below).

Long-term business objective priorities (ranked 8-10 on scale of 1-10)

Purpose boosts performance

Having a purpose beyond profit can have a direct impact on employee behaviour too. When Reid Hoffman co-founded LinkedIn, his purpose was to “build a platform that creates economic opportunity for every member of the global workforce."

At every step in the company’s growth, that purpose served as what LinkedIn CEO Jeff Weiner describes as the firm’s “true north.” 

“In job interviews, and then again in new hire orientations, we always emphasised our guiding value: individual LinkedIn members always come first,” Hoffman wrote in a recent LinkedIn post. “Any addition or change we make to the platform must improve it in ways that help individual members increase their economic opportunities.”

Imperative, a US consultancy, describes workers who identify with their employer’s purpose as ‘purpose-oriented’; that is, they prioritise meaning and fulfillment over money and status.

When Imperative recently surveyed 2,000 LinkedIn employees, it found that 41% could be described as ‘purpose-oriented’. But what is the benefit for LinkedIn? Hoffman wrote: “According to Imperative’s research, purpose-oriented employees are 54% more likely to stay at a company for five-plus years and 30% more likely to be high performers.”

Finding your North Star

When Wiener talks about a “true north,” Grant Thornton UK CEO Sacha Romanovitch understands where he’s coming from. As a global network of member firms, Grant Thornton’s purpose is to help dynamic organisations unlock their potential for growth. That is because we understand that these companies are the engines of the global economy.

At Grant Thornton UK, that purpose has evolved into shaping a vibrant economy because high-growth firms cannot thrive in a vacuum. “We know that businesses that outperform the market stand for something; they have a clarity of purpose,” Romanovitch recently told Grant Thornton UK’s Alumni Magazine.

“Ours is clear: to shape a vibrant economy where there is trust and integrity in markets; a business and social environment where business and people can thrive; and dynamic organisations unlocking their potential for growth. This informs who we work with, what we do for them, what we speak out on and how we are as a business. It’s our North Star.”

Grant Thornton UK’s ‘Vision 2020’ strategy is a road map towards helping the firm to demonstrate its purpose in everything it does and says. As part of that road map, it is currently in discussions with its people about adopting a shared enterprise model. Under the model all 4,500 employees would share their ideas about how the firm can demonstrate its purpose, share in the responsibility for living it and share in the resulting superior rewards.

“It’s important for people to have meaningful work, which allows them to connect what they’re doing on a day-to-day level with something that actually matters to them on a personal level,” says Romanovitch. “Shared enterprise is about creating an environment where everybody’s got that clarity of purpose and we’re just creating space for people to ask how, how, how.”

Defining your social purpose

So how can companies define their purpose? Hieatt believes that once a company identifies its enemy – be that bad design, bad service, too much pollution or anything else – eliminating that enemy becomes the company’s purpose. Beyond that, he advises simplicity, consistency and a drive to change the thing you hate.

That ongoing quest for change, says Hieatt, is the secret to why brands with a purpose succeed. People instinctively want to be part of change and will gather around ideas that promise to change things for the better, be that helping people to be healthy, helping them to find what they need faster, or giving them guilt-free enjoyment of the great outdoors.

Leaders of dynamic organisations that can identify the thing they want to change and articulate the reasons why could enjoy greater engagement and growth as employees and customers rally around this purpose beyond profit.