We need purpose as much as profit
Today, companies are expected to have a purpose beyond profit, to be part of the solution to the world’s problems, not the cause. The story of how value creation is achieved and sustained is important, not only for executives, but for a wider range of stakeholders.
As discussed in The Times in June Dave Lewis, Chief Executive of Tesco, said leaders had to balance achieving short-term value for investors against a sustainable long-term future. People are looking towards business over other institutions to drive change, and this is changing the way leaders govern and manage their corporations.
At Black Sun, we are seeing this issue rise up the corporate agenda. Our latest research Purpose & Profit suggests that we are witnessing a change in how businesses think about, act upon and communicate their reason for being. Companies are leveraging their societal purpose to open up commercial opportunities, create value and drive sustainable growth, moving forward in a world where ‘business as usual’ is no longer enough to be a trusted commercial partner.
There are distinct reasons as to why this. Firstly there is the Gen Z and millennial workforce who are now moving into more senior management positions. There is a wider interest beyond purely financial information and an appetite to see a more complete picture of how a company creates value. This includes things like articulating a clear statement of purpose, mission and values and impact on climate change.
Secondly social media has created an environment where companies can no longer control the message. A dialogue has been opened where stakeholders can hold companies to account, and publically question policies, diversity issues or how environmentally efficient a supply chain is.
The integrity of a purpose is paramount, and many companies are already responding to the challenge, yet some struggle to demonstrate how strategic outcomes flow from their purpose. Our latest research into FTSE 100 reporting trends ‘The Ecosystem of Authenticity’, highlights that 72% of companies are now setting out their purpose, compared to 35% from 2014. Although not all are doing this in a meaningful way, it reiterates the fact it’s very much on the Board agenda.
The story also needs to be fed throughout the year, building advocacy both within the organisation and to the world beyond. External communication can start with traditional channels such as the annual report, corporate presentation and investor outreach collateral. The real opportunity however, is to amplify the message digitally, via a content distribution ecosystem that might include website updates, careers site content, employee Apps and social media.
At Black Sun we help our clients tell the story of how they create value for the people that matter to them – investors, employees, customers and society.
If you are facing challenges identifying or communicating your purpose, contact Amanda Alexander.