The 3 mistakes companies make in trying to become purpose-driven enterprises
Over the last decade, we’ve witnessed a revolution in the business world as many more companies prioritize purpose as a core pillar. I have interviewed over 1,000 top CEOs–and seen their sentiment and priorities change over time.
The movement is mainly driven by the widespread transparency enabled by social media and a passionate younger generation who are committed to building a better world. And while purpose-driven companies have existed for well over a century, the second wave of purpose-committed companies, “Purpose 2.0,” is now becoming central.
We know the benefits of being a purpose-driven business: galvanizing the employee and company alumni bases while speaking to all stakeholders who increasingly care about our impact on the world. As Deepak Chopra recently once shared with me, “Today’s CEOs must be part of our global ecosystem.”
Here are three common mistakes that can turn the rush for purpose into fool’s gold.
Don’t follow the crowd because it’s fashionable
I majored in environmental studies undergrad in 1983. And although sustainability is a viscerally important issue to me, it does not have to be the focus of every purpose-driven company. Instead, businesses must ensure the issue is aligned with the brand and the employees. Every brand has its own purpose. What is important is to be authentic and involve the entire enterprise.
Aflac found what is important to them–and that is helping childhood cancer. Since 1995, they have contributed more than $160 million to childhood cancer causes. This was corporate social responsibility–long before CSR became an acronym.
Aflac CEO Dan Amos told me, “When I became CEO in 1990, giving back to the community wasn’t a strategy, it was just the right thing to do–and we rarely talked about it. Today, consumers and investors want to know about a company’s purpose before making decisions. We’ve always given back, but now it is also important to proactively share information about how your company is involved in the community.”
The concept of purpose has been through a fascinating journey.
“Purpose wasn’t a common element of corporate strategy 10 years ago but organizations are now seeing the invaluable role of purpose, so it has become a centerpiece on leadership agendas. As organizations turn their focus to measuring the outcomes of their purpose goals, they’re seeing the importance of embedding purpose into everything they do to ensure their efforts can weather macro conditions and create lasting impact felt by their people, clients, and communities,” Kwasi Mitchell, Deloitte’s Chief Purpose Officer, explained.
Don’t underestimate accountability
One of the biggest breakthroughs in Purpose 2.0 is transparency. Johanna (José) Zeilstra, the CEO of Gender Fair outlines, “The most purposeful companies rely on data to quantify and measure progress, and then share this publicly to keep themselves accountable. For example, a recent study of the largest companies in the U.S. uncovered that 47% publicly disclose their full, or a summary of, their EEO-1 reports–an annual data collection requirement for all employers with 100 or more employees to submit demographic workforce data, including data by race/ethnicity, sex, and job categories.”
Businesses have also been increasingly measuring their indirect impact on communities. Teresa “Terry” Rasmussen, CEO of Thrivent, a Fortune 500 diversified financial service company shared, “ We have deep expertise and experience mobilizing our employees and our clients to make a positive impact in their communities and in the world. Specifically, in 2021, through our generosity programs, 1.9 million clients and others volunteered 10.7 million hours within their communities.”
And it’s not enough just to measure, companies need to communicate. Four in five Americans agree companies should speak out on key issues, according to Purple Strategies CEO research. However they differ on when: 39% say they should speak out on any issue that aligns or conflicts with their company values, while 39% say they should speak out only on those issues connected to their business or brand.
“We know that it’s no longer an option to sit on the sidelines–Americans’ expectations of companies have shifted drastically, and companies’ and leaders’ reputations are impacted by what they say as much as what they don’t. A company’s purpose is one important decision-making lens and compass in navigating the boundaries of where they should and should not engage,” Chris Durlak, a partner and strategist at Purple Strategies, said.
Purpose is more than a ‘nice’ initiative
Edie Fraser, the CEO of WBC, Women’s Business Collaborative, (where in full disclosure I am a board member), says CEOs are now making purpose part of he DNA of an organization. “Today’s CEO leadership is all about purpose and authentic and transparent leadership.”
Newman’s Own, Inc. is a food company with a radical legacy of “giving it all away”–100% of its profits going to Newman’s Own Foundation, which helps children who face adversity.
“Paul Newman pioneered the unique practice of “giving it all away” with 100% of our profits going to help make the world a better place. Selling products that not only taste good but do good is a legacy that we are proud to carry on,” David Best, the CEO and president of Newman’s Own, Inc. explains.
The magic of being a purpose-driven company is you don’t have to consider what others want you to be. Instead, you can decide what unique value and model you believe your company can bring to society.
Authenticity is key. Any organization can become a company of purpose–the secret sauce is just finding what’s genuinely important to you and determining how you can amplify it to make the world a better place.
Robert Reiss is the founder and CEO of The CEO Forum Group.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
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This story was originally featured on Fortune.com
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