Looking to Differentiate Your Business from Competitors? Consider Purpose-Driven Strategy.
Do Good; Do Well. ETSY. Salesforce. TerraCycle. Method Home. Boll & Branch. Zago Manufacturing. What do these mega, mid-size and small companies have in common? They all practice purpose-driven strategy. And, they are all poised for long-term growth.
While business leaders generally understand the value of crafting, sharing, fulfilling and upholding visions and missions with staff, customers, and prospects, there is a third component that is often overlooked and essential to the longevity of the business: Purpose.
What is Purpose?
Purpose differs from mission. Purpose transcends the question of what a company does. It asks why an organization truly exists – above making a profit. Purpose is transformative and expansive. It means standing for and taking action around something bigger than the products and services provided.
For example, the purpose of New Jersey-based TerraCycle, a waste management company, is to “eliminate the idea of waste” by “recycling the non-recyclable.” Anything is game for recycling, and adopting this viewpoint enables TerraCycle to be highly creative, innovative and flexible in its problem-solving and design. For instance, the company is tackling Philadelphia’s cigarette butt problem by doing more than just collecting them in receptacles, they are turning them into park benches that beautify the city.
For TerraCycle, purpose pays. The past 15 months (as of March 27, 2018) have been the most successful in TerraCycle’s 15-year history. It has increased staff by 50% and qualified by the U.S. Securities and Exchange Commission (SEC), to issue shares in its $25 million Regulation A offering. TerraCycle Australia is working with Procter & Gamble to create a recycling program that transforms its brands of empty dish and air care products into sustainable raw materials.
Once you hear about TerraCycle and its unique approach to recycling, it is hard to recall any other waste management provider by name. By focusing on a higher purpose (preserving our planet), TerraCycle leaves a lasting impression.
How Does Purpose-Driven Strategy Differ from Conventional Business Strategy?
In addition to purpose, there is one key difference between conventional and purpose-driven strategy: stakeholders. Conventional business strategies are concerned with meeting the needs of one stakeholder: shareholders. The goal of the business is to increase profitability and return financial value to investors, above all else.
While businesses must be profitable to exist, shareholders are not the only stakeholders. There are multiple stakeholders who touch and are touched by a business, and there is interdependency between them. Stakeholders may include: customers (existing, potential), team members, vendors, distributors, suppliers, investors, citizens, community, media, academia, government and the environment, among others.
While it may prove financially fruitful in the short-term for companies to ignore multiple stakeholders and focus on profit, ultimately, it undermines the ability to create lasting value and profits over the long-term.
When a business adopts purpose-driven strategy, it thinks in terms of creating value for all stakeholders. Its perspective shifts from being product-oriented to stakeholder-oriented. The stakeholder relationship extends far beyond the transactional role between buyer and seller, which often diminishes at the point of purchase.
The purpose-driven organization takes into account the whole context of its stakeholders, ranging from industry trends, competition, challenges, opportunities, objectives. With a purpose-driven approach, the possibility to serve and develop value-based solutions for multi-faceted stakeholders is limitless. The purpose-driven company engages with its stakeholders on a deeper, more meaningful level than the product-oriented one.
As David Clarke, global chief experience officer, PwC explains, “Successful companies transcend being a product or service and instead become platforms that foster communities of like-minded people. Smart brands will think about ways to capitalize on the relationship opportunity to drive loyalty.”
Purpose as Competitive Advantage
When a company embraces its purpose, that purpose can be integrated into the heart of its business strategy, positively impacting creativity, innovation, decision-making, long-term value and, yes – sales. Embracing purpose is especially advantageous for companies that create products or provide services in industries that are perceived as “provincial,” or not especially known for their “customer-focused” abilities (i.e. industrial manufacturers, distributors; contractors). Here, adopting a stakeholder perspective can serve as a key differentiator in and of itself, as stakeholders gravitate to companies that are mindful of their needs while doing good in the communities they serve. The audiences of stakeholder companies often generate more positive word of mouth and referrals, as these companies leave longer lasting impressions. And, this type of publicity is authentic, reliable and free.
Where to Begin
Becoming a purpose-driven company, like everything else in business and life, takes commitment, focus and time, but the rewards are plentiful and sustainable over the long term. Start by asking your customers, employees, investors, community members, suppliers and affiliate partners what is important to them, why they come to work every day, invest in your company, buy your goods or services, or work with you, and you will be well on your way to finding your answer.
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Kim Keating is the founder and CEO of GIVE Marketing, a purpose-driven business consulting and marketing firm. For more information, contact Kim at 908-451-1295 or firstname.lastname@example.org.