A majority (73%) of business leader respondents believe in the value of a strong corporate purpose, and only a minority (15%) say their company’s main purpose is to maximize shareholder value, according to the EY report, How can purpose reveal a path through disruption? Mapping the journey from rhetoric to reality.
Based on a survey of 1,470 global leaders representing companies across various industries in developed and emerging markets around the world, the respondents include 500 businesses with annual revenues of US$2.5b or more.
The report reveals that purpose means different things to different companies. When asked to characterize their organization’s purpose, 33% of those surveyed cite bringing value to customers, 15% of global organizations say boosting their share price and 11% cite bringing value to their employees, all focusing on a single stakeholder group.
Others have a different conception: 40% of respondents say their organization’s purpose is aimed at creating value for multiple stakeholders or offering an aspirational reason for being.
In addition, two-thirds of executives (66%) are profoundly rethinking their organizations’ purpose as a result of the disrupted environment, and 52% of those are moving in the direction of this wider concept of purpose.
Sixty-eight percent of companies that broadly define purpose and integrated it into their organizations say purpose gives them the agility to innovate in times of disruption.
The survey finds that 97% of companies that deeply integrate a broader sense of purpose into their DNA report a good or great deal of incremental value from doing so.
Companies that have deeply embedded an aspirational and human-centric definition of purpose cite specific ways in which embedding their purpose across activities creates value.
Fifty-two percent said say that it helps build customer loyalty; 51% report that it preserves brand value and reputation; 42% cite that it helps them attract and retain staff; and 40% attribute the ability to develop new and innovative products to the presence of purpose within their business.
“Our research shows the real advantages companies gain when going on an authentic purpose journey,” says Valerie Keller, EY Global Leader, Beacon Institute and Executive Director, Markets, Ernst & Young LLP.
The data also busts the myth of purpose versus profit. Seventy-five percent of purposeful companies involved in the survey indicated that the integration of purpose creates value in the short-term, as well as over the long run. They also report that being purposeful gives them greater agility to innovate in the face of disruption and uncertainty.
“But you have to walk the talk in your strategy, products and services, and customer and employee experiences. A purpose patina of words without action runs the risk of unmet stakeholder expectations, decreased trust and missed opportunities,” says Keller.
Leaders need to turn their purpose rhetoric into business reality
In order to help businesses understand the pathway to turning the purpose rhetoric into reality, the report identified four steps that can help every organization reach their purpose goals:
- Clearly articulate a purpose that responds to the needs of their stakeholders and is grounded in what an organization does
- Embed purpose into their strategy and operations, and align their decision-making with that purpose
- Constantly evaluate where they are in their journey and what needs to change
- Accelerate the journey by placing purpose at the center of their culture and ensuring it is owned by their people
Keller adds: “All the disruption geopolitically, economically and technologically is a catalyst for a new evolution in business. Those most able to thrive in this new world are focused on their impact on the humans they touch – the customers, the employees and the wider society.”