What does it mean to be a business of purpose? In today’s world, what increasingly sets ‘mission-driven’ businesses apart from their traditional counterparts, is their focus on an end goal that doesn’t simply maximise profit and shareholder returns. The model of growth at all costs that still dominates much of the economic sphere is not only outdated, but has also proven unsustainable, as a model that consumes more than it contributes. We explore how asking the right questions to define an end goal that serves all of people, planet and profit in an era of exponential evolutionary change and uncertainty - often leads to greater profitability as a byproduct.
What does it mean to be a business of purpose? In today’s world, what increasingly sets ‘mission-driven’ businesses apart from their traditional counterparts, is their focus on an end goal that doesn’t simply maximise profit and shareholder returns. The model of growth at all costs that still dominates much of the economic sphere is not only outdated, but has also proven unsustainable, as a model that consumes more than it contributes. We explore how asking the right questions to define an end goal that serves all of people, planet and profit in an era of exponential evolutionary change and uncertainty - often leads to greater profitability as a byproduct.
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We are arguably at an interesting time or transitory inflection point in our economic cycle, with many businesses feeling the stretch. As the impact of the pandemic has forced many businesses to reconsider their models and best practices, and in the eyes of some, catalysed changes that were inevitable on the brink of an increasingly digital horizon - key themes such as purpose and wellbeing are being brought to the fore under the umbrella of sustainability and long-term resilience.
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Environmental Economics
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A false economy is when something seems like a great deal or good idea, or when price comparisons are few and far between, but the economics are not necessarily what they seem when viewed from a more holistic vantage point. This is usually a result of conglomerate monopolies or tensions between short and long term objectives: as value is constantly being traded between the two.
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In business, there are many factors that seem like they save money or create value, but in reality the true net economic value is substantially less. Identifying and navigating such systems requires considering the opportunities, impacts and trade-offs of decisions from multiple different vantage points, and these are not always immediately obvious or intuitive, as the results can be interpreted in many different ways.
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A recent example of this is the substantial difference between maximum capacity and optimal capacity, with many of the spending and business cuts caused by the pandemic pushing businesses to work at an unsustainable maximum to meet baseline demands. The net impacts are arguably negative as they meet a short-term demand to reduce spending, which has a knock-on effect on longer term processes, tools and other best practices which are disrupted.
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Ineffective capacity modelling based on short-term capital goals is just one example. However the age of purpose has increasingly driven consumer preference, influenced job seekers’ choices and been credited with sustainable business growth. Certified B Corporations are the golden beacon of what this means on the level of certification – bringing together a community of likeminded new businesses that are robustly internally and externally regulated to harmonise both purpose and profit, by considering the impact of their decisions on their workers, customers, suppliers, community and the environment. This is a network of leaders, driving a global movement of people using business as a force for good.
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Such businesses might employ some different steps when thinking through changes to the operating model. This might include scenario planning analysis - considering what might happen if key inputs or outputs change, which leads to more effective, well-rounded points of view, and therefore to improved decision quality. This involves analysing predictions and forecasts and also planning to both over or under deliver on demand, as well as weighing the impact on alternative resources and opportunity costs.
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What is unique about communities such as the B Corp network is that they also often collaborate to compete - sharing resources and insights in increasingly restricted or uncertain environments. Structurally, the notion of baking purpose into the ethos of an SME is explored in Simon Sinek’s ‘The Infinite Game’, whereby having a greater vision and being mission-lead, facilitates a company’s growth and survival through remaining existentially flexible and prioritising long-term over short-term decisions. An example would be the failure of Blockbuster to withstand the rise of competitors such as Netflix, because their greater vision to meet evolving customer demand was overshadowed by complacency, short-term profits and structural resistance to change.
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Nature And Nurture
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While some purpose-driven companies have baked their mission and end-goal into their DNA since inception, others are co-evolving and shapeshifting with the environment. Whereas the former have a clear vision that they believe should be uncompromisable, the latter takes a more flexible approach to growth - focusing on the journey as opposed to proving credentials from the outset. Neither method is substantially better or weaker than the other, and predominantly comes down to preference and contextual factors such as current resource limitation or market and environmental uncertainty. For example it is the difference between companies that register as B Corps from the outset, and those that take a more winding journey before reaching a stage where they will be eligible for registration and certification - this is especially common in new and emerging markets.
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Having a clear purpose beyond profit as the end goal acts as a North star in times of rapid change and flux, ensuring that the process of effectuation and bricolage is always geared towards a greater vision - greater profitability is often a byproduct of this approach. This is consistent with the findings of the B Corporation movement, who validate that in spite of the additional regulatory demands, SMEs who register with them become more profitable after completing the certification process.
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So what will be the ultimate end goal of your business? The pandemic has placed a great pause on much of the nation, instigating a lot of soul searching around our relationship to work and life. The founding ethic of a business is what determines its scaling goals and decisions moving forwards, which in turn affects the balance and management of short and long term trade-offs. At the heart of this lies hope and inspiration - for which nurture and environment play a key role. Co-working spaces such as x+why fan the flames of mission-driven businesses by proving that imagination has the power to shape the future and demonstrating that when people are brought together and united by a common aim, to make the world a better place, possibility knows no limits.
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Having an end goal in an increasingly uncertain world pulled forwards by exponential rates of progress is not necessarily about having a concrete vision - this could be more of a theme, but it needs to be one that helps us manage and balance the many factors vying for our most precious assets - our time and attention. Without planning and theory, we’re at sea without a sextant, relying on the chance currents of life to shift and guide us, instead of learning how to steer ourselves. While it may be fine not to know exactly where you’ll end up in 5 years time (as the pandemic proves - such predictions are often wrong), we do have to balance both direct and emergent opportunities and paths in life.
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Making direct decisions requires foresight and knowing the general theme of what we want at the time, whilst still remaining open to the emergent and unforeseen opportunities and obstacles that will cross our paths along the way. It’s akin to the existential flexibility based on purpose and fundamental principles presented by Simon Sinek in his Infinite Game. A systems based approach that looks at the bigger picture reminds us that in an arena of vast interdependence and complexity, it’s of greater value to ask better questions, as opposed to constantly trying to determine the right answers - something that still is not inherent or intuitive to many of us, who have grown up under the demands of an education system that seeks the opposite. For example, when it comes to your life path - is it what you want to be? Or who?
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Balancing individual purpose with that of the market we seek to serve involves recognising that there will often be more than one purpose, depending on the demographic. Many companies begin by launching the product they think customers want, and undergo a process of product modification based on exploration, feedback and constant iteration with the ever-changing needs of the consumer’s ‘jobs to be done’ (the multiple purposes that such a product serves).
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At it’s very core, this process begins with understanding your raison d’etre - asking yourself ‘why?’ When we start from first principles and ask ourselves why, we can better progress onto the who, what, where and how. Although it is possible for the ‘why’ to change at various points in our weeks, months, years and over the course of our lives, frequently returning to the question reminds us of what it is we truly value in a transient and temporary world, which enables us to better adapt to the circumstances around us.
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Some questions you could ask to get a better sense of what your innate core values are include: asking yourself what activities bring you the most joy, or what you couldn’t live without. What gives your life meaning and what do you want to achieve? Articulating these answers can help you identify a pattern that can be boiled down into a single concept, such as a consistently positive attitude, or using your creativity to make the world a better place.
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And remember, the best things in life are free. (+VAT)
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