All businesses have to make profit. Without it, there can’t be investment or growth. But in a world facing existential crisis, pursuit of profit has become more complex.
Today’s interconnected, interdependent societies want and need more from business. More than ever before, they need it to be a force for good – embracing and becoming role models for the practices that will reverse climate change and promote greater equality.
And we should remember that societies today can hold businesses to account in ways that previous generations have been unable to do. Anyone with internet connectivity can quickly access information about organisations – and express dissatisfaction with them if they want to.
All of which means that organisations today have to think about more than protecting shareholder interests. Instead, they must consider a much wider stakeholder group – including customers, employees, communities and wider societies.
To achieve this, leaders must absolutely understand what the purpose of their organisation is. What problems is it there to solve? How can it improve society and the planet? What can it contribute?
And then this purpose and its multiple facets must become central to the organisation’s overarching strategy.
The European business community is leading the way
Within Europe, many organisations are already taking the lead in adopting purpose-driven approaches.
This is in no small part due to EU policy. The bloc sets clear expectations that businesses will strike a balance between generating profit and contributing to society. A powerful example of this was 2020’s European Green Deal – a set of policies that are designed to make Europe the first carbon neutral continent by 2050. The Green Deal encourages organisations to become active in tackling the challenges our societies are facing.
Another key stakeholder group for businesses are their empowered and often vocal customers and consumers. Consumers have more choice than ever before – and a greater ability to make informed choices.
Increasingly, consumers are turning their backs on brands and organisations whose behaviour does not align with their own values.
It’s easy for consumers to find out about how companies operate. It’s easy for them to express and share views on social media. And if they don’t like what they see, they can very easily switch to competitor organisations.
All of this means the customer voice can – and should – directly influence the way a company operates.
Gen Z is leading this shift. People born between the late 90s and early 2010s are the generation that will inherit the climate and inequality issues created by those that went before them. They want companies to take responsibility – and they’re prepared to leave behind brands that don’t share their values. In fact, 96% of Gen Zedders say they’d shift to brands that share their values.
Of course, older people are concerned about the planet too. Which makes a clearly articulated purpose all-the-more important.
Striking a balance between profit and purpose
Creating an organisation that is profitable and that simultaneously benefits society takes work.
Profitability is vitally important – but it needs to be accompanied by embedding sustainable values and approaches throughout the organisation.
To start, a company’s purpose needs to be clearly articulated and known and understood by everyone in the organisation. Then it needs to be built out into measurable cultural attributes and behaviours.
Everything from the way an organisation recruits and onboards new colleagues, through to its interior design, workplace policies, appraisal practices and more needs to be aligned with its core purpose.
This is because it’s not enough to go through the intellectual exercise of articulating a purpose that unites profit and positive impact. A statement of purpose is just the start.
A whole programme of work is then needed to make sure that everyone in the organisation uses this purpose as their North Star.
Remember – if your organisation is all talk and no action, you’ll be called out on it before too long.
Multiple benefits of purpose-driven business
In 2019, Larry Fink, the CEO of the investment powerhouse BlackRock, used his annual letter to business leaders to push the purpose agenda. He explained that unsustainable companies would become less and less likely to attract investment.
And he outlined a number of ways that purpose-driven business strategy is beneficial to organisations. These included attracting and retaining talent and providing the focus and strategic discipline to enhance productivity and profitability.
Research into the positive effects of purpose also point to increased levels of innovation.
How to make the transformation
The journey to becoming a purpose-driven organisation requires a deep shift in thinking, approach and actions. And it nearly always relies on teams developing new skills and gaining new insights and knowledge.
At Vlerick, we’re proud to empower new generations of European business leaders. We give them the knowledge, skills and mindset to make a positive impact – in their organisation and beyond.
Our hybrid European Executive MBA is a brilliant example of this. It’s a management programme with sustainable business practice at its heart – and it takes participants on a journey through Europe’s most innovative and purpose-driven cities and companies.
On this journey, they develop the insights, approaches and mindset they need to help their companies and organisations strike a true balance between profit and purpose.
It’s the perfect way to learn how to make profit a goal – and to develop purpose as a way to achieve it.
If you’d like to learn more about Vlerick’s European Executive MBA, take a look at the website, or get in touch for more information.
About the author
Marion Debruyne is the Dean of Vlerick Business School. Her background is in engineering and marketing – and her academic research focuses on the challenges companies face as they deal with fundamental industry shifts.
Outside her academic work, Marion is an independent director on several boards. She’s based in Brussels.
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