Irecently wrote about the drive among millennial entrepreneurs to start companies that don't just seek profit, but to achieve a higher purpose. This sort of purpose-driven entrepreneurship isn't just a millennial fad, but an important way to transform your business regardless of generational identity.
Purpose driven organizations are getting a lot of buzz these days. Purely financial measures of success like profit and shareholder value are, after all, not the only measure of success for a company. They may not even be the best measures. After all, profit doesn't define a company. It isn't a very good guide for developing a product or strategy, nor does it inspire passion in employees or loyalty among consumers. Purpose and values, on the other hand, are at the core of your company's identity.
Purpose is a broader way of looking at what differentiates a company. Your purpose could be to surprise and delight your customers, do good in your community or find more sustainable or transparent ways to do business. It could be as lofty as finding new ways to explore the reaches of space or as down to earth as giving a child a new pair of shoes.
So if it's not a new idea, why should you let purpose drive your company?
1) Purpose transforms culture
Every company exists for a reason or purpose. The problem is that not every company is clear about what that reason is, or has a purpose that is deeply engrained in its culture. Sure, your company might exist to make widgets, but why do you make them? What do they allow you to do? What do those widgets allow your customers or community to do? What brings your team to work every day?
Purpose is the difference between companies that manage resources, and those that mobilize them. Your purpose should drive decision-making, from hiring decisions to how profits are invested or reinvested. In purpose-driven companies, employees are hired based on not just of whether they can do the job, but whether they fit your purpose. Profits might be invested in improving local communities, or finding ways to do business in a way that is more environmentally friendly.
When purpose and culture are in alignment, everything a company does is focused in some way on the broader good, and that gives both employees and customers a reason to care about your company at a deeper level than a paycheck or a low price. And this purpose pays off: studies show that focus on some sort of social good can increase employee productivity by up to 30%.
2) Purpose transforms industries
Any industry where the purpose of a company aligns with a consumer need is ripe for transformation, especially when technology combines with purpose. Twenty years ago, Amazon transformed the once-staid book-selling industry by making books available over the internet; now that same company is transforming how books, music and video, and many other products are published and consumed with Kindle and Amazon Prime.
Another industry where technology and purpose are transforming the way people do business is real estate. For more than a decade, companies like Zillow and Redfin have sought to change the relationship between consumers and their real estate agents. These companies were formed specifically in response to consumer complaints about lack of transparency and high agent fees. Since then, dozens of real estate tech startups have entered the fray, seeking to make buying and selling real estate less confusing and costly. Inspired by the success of companies like Uber and Airbnb, many are part of the sharing economy.
Sharing economy businesses like feeDuck are especially popular with Millennials, for whom sharing and frugality are generational values. Sharing companies have a purpose that goes beyond lower cost; it's about putting unused resources to work and putting more decisions in the hands of consumers.
"Heading a company today means more than just bringing in revenue, it's about impacting customer families and the communities around us," said feeDuck Co-founder Sharn Kandola. "Customers and clients are looking at the world from a social perspective. Token efforts made by a company that do not seem genuine, will definitely be noticed."
Focusing on purpose has helped feeDuck grow quickly. The company is currently working closely with Arizona Governor Doug Ducey'sCouncil on the Sharing Economy to bring it's Uber-style real estate services to that state.
3) Purpose transforms the world
Simon Sinek talks about "finding your why" and it is a transformative idea, especially when your why, or purpose, aligns with a need.
A hundred years ago, as the United States became an industrialized nation, the companies that became great were those with a purpose that changed people's lives: think Ford putting a car in every garage and Boeing bringing the world together through flight. Even more recently, the rise of tech industry giants like Apple and Microsoft came about because they were offering something that transformed lives in some remarkable way.
But sometimes, changing the world starts with something as simple as a pair of shoes or a new pair of glasses. TOMS Shoes rose to prominence and a market valuation ofmore than $625 million with its "one for one" promise, that for each pair of shoes sold it would deliver another pair to a child in a third world country. Now the company has expanded its commitment to giving to include delivering access to clean water, vision care, safe birth, and bullying prevention for people and communities in need.
Purpose is simply the reason why you do what you do. Whether it's investing in local or global communities or changing how people shop for the products and services they buy, purpose has always been the driver behind the world's great companies.