{"id":15147,"date":"2023-09-25T05:05:13","date_gmt":"2023-09-25T05:05:13","guid":{"rendered":"https:\/\/mysourcefunding.com\/leadership\/why-being-purpose-driven-can-be-painful-but-the-alternative-is-worse\/"},"modified":"2023-09-25T05:05:14","modified_gmt":"2023-09-25T05:05:14","slug":"why-being-purpose-driven-can-be-painful-but-the-alternative-is-worse","status":"publish","type":"post","link":"https:\/\/mysourcefunding.com\/?p=15147","title":{"rendered":"Why Being Purpose-Driven Can Be Painful, But the Alternative Is Worse."},"content":{"rendered":"
\n

If there\u2019s one thing corporate leaders hate, it\u2019s the prospect of losing money. And loss is what they see when they survey the recent wreckage of companies that took a stance on social or political issues.<\/p>\n

First, there was Bud Light, whose recruitment of a transgender social media influencer backfired spectacularly. A consumer boycott cost it almost $400 million in sales and its throne as the No. 1 beer in America. Then, Target faced a backlash over its Pride Month collection that featured LGBTQ+ merchandise, contributing to a $1.25 billion sales drop from a year earlier. And let\u2019s not forget how Disney got caught in the crossfire over Florida\u2019s \u201cDon\u2019t Say Gay\u201d bill, first getting slammed by progressives for its silence and then getting slammed by conservatives for opposing the law.<\/p>\n

Behind closed doors, executives have confided to me they feel anxious and exhausted. While their employees increasingly demand that they take a stand, the market has demonstrated the danger of doing it poorly. For many leaders, trying to be a purpose-driven company offers nothing to gain and everything to lose. Their natural conclusion is that they should just batten down the hatches and focus on the business of doing business.<\/p>\n

Unfortunately, that\u2019s no longer an option.<\/p>\n

In an increasingly polarized world, customers want the products, services, and experiences they\u2019re buying to reflect their values. They\u2019re not just buying things, they\u2019re buying into <\/em>things. Similarly, employees want to work at companies that share their core beliefs, and they\u2019re getting more vocal and rebellious when that isn\u2019t the case.<\/p>\n

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In the age of transparency and authenticity, it\u2019s more critical than ever to know what you stand for. And here\u2019s the beautiful little secret: when you do it right, it\u2019s actually more profitable, too. Forthcoming research by my colleagues at Jump Associates shows that purpose-driven companies have achieved vastly superior stock market returns in the first 20 years of this century compared to less purposeful (but still great) industry peers. The results are astounding\u2014purpose-driven firms achieved a 5x return advantage over the S&P 500 index and a 3x premium over leading peers.<\/p>\n

So why are so many companies running into trouble?<\/p>\n

It\u2019s because many fundamentally misunderstand what being purpose-driven means. And when folks in the organization are left to their own devices or unclear on what\u2019s most important, it\u2019s no wonder we\u2019re all one misjudged tweet or ill-advised marketing campaign from getting canceled.<\/p>\n

Let\u2019s start with what purpose-driven is not. First, being purpose-driven isn\u2019t always about saving the planet or feeding the children. Either may be the greater cause of some companies\u2014Patagonia comes to mind\u2014but they need not be the purpose of every company.<\/p>\n

Being purpose-driven also isn\u2019t just about adopting environmental, social, and governance (ESG) or diversity goals. To be sure, it\u2019s a good thing to not pollute the groundwater around your factory or only promote white men. But such initiatives are increasingly table stakes. They provide little in the way of a real payback beyond risk mitigation.<\/p>\n

Nor is being purpose-driven the same as customer loyalty or purpose-driven branding as some past studies have contended. Branding is only skin deep and customer love means little if a company is disliked by its employees, suppliers and communities. Just ask Amazon.<\/p>\n

And finally, being purpose-driven isn\u2019t about being \u201cwoke.\u201d Truly purpose-driven companies fall all along the political spectrum, from more progressive companies like Starbucks to more conservative ones like Chick-fil-A. It\u2019s not about trying to stand for progressive ideals if they\u2019re not authentic to the organization or its core customers. John Mackey, the founder of Whole Foods, has a strongly Libertarian streak to him. And Whole Foods reflects that mindset, or at least it did before he sold it.<\/p>\n

Truly purpose-driven companies are so much more. They have activated their purpose\u2014a clear and expansive reason to exist beyond making money that is unique to them\u2014so it\u2019s a guide for decision-making and not just words on a wall. They have an aligned culture of beliefs and behaviors so that people inside and outside the company know what they can count on. They have a mindset for creating value for all stakeholders, not just providing a return to investors. They have robust systems for developing their next generation of leaders. And they\u2019re focused on the future, not just living quarter to quarter.<\/p>\n

But it does all start with discovering your organization\u2019s purpose.<\/p>\n

So the real question is: why does your company deserve to exist, beyond providing jobs and a return to shareholders? Put another way, if your company disappeared tomorrow\u2026why would anyone miss you?<\/p>\n

Maybe that\u2019s about curing cancer. Or maybe that\u2019s about the thousand little deaths that we all face every day. Target\u2019s purpose is \u201cTo help all families discover the joy of everyday life.\u201d Because, it turns out, it\u2019s tough to raise a family these days. And if they can help you find joy in that\u2026well, in a country where rates of depression and anxiety are skyrocketing, that\u2019s a lot.<\/p>\n

My friend Carolyn Sakstrup, the Chief Growth and Generosity Officer at Thrivent, once said that a great purpose acts like both a beacon and a filter. It attracts people and opportunities that align with your core reason for being. And it helps you eliminate the distractions.<\/p>\n

Does being purpose-driven get you in trouble? Sometimes. Usually, that happens when a company doesn\u2019t live up to its own ideals. That\u2019s what happened at Starbucks when their own employees (Starbucks calls them partners!) decided they needed to unionize.<\/p>\n

More often than not, though, our research suggests that being purpose-driven actually reduces the likelihood of making unforced errors like Bud Light. Aligning your customers, employees and other stakeholders around your purpose helps you stay focused on what\u2019s important to you. Patagonia is super clear that they\u2019re about saving the planet. That doesn\u2019t mean that they don\u2019t care about issues like income inequality or systemic racism. But if I was particularly passionate about one of those issues, I might go work somewhere else instead. And that\u2019s a good thing.<\/p>\n

The world is changing. People want to know what your company stands for. Employees are demanding it. Just offering vague platitudes about \u201cbuilding a better world\u201d or \u201cbeing the most admired supplier of widgets\u201d just doesn\u2019t cut it anymore. Having a clear purpose can no doubt set you up to be measured by a higher standard. But the alternative is even more dangerous.<\/p>\n

Dev Patnaik<\/em> is the CEO of Jump Associates<\/em>.<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

If there\u2019s one thing corporate leaders hate, it\u2019s the prospect of losing money. And loss is what they see when they survey the recent wreckage of companies that took a stance on social or political issues. First, there was Bud Light, whose recruitment of a transgender social media influencer backfired spectacularly. A consumer boycott cost […]<\/p>\n","protected":false},"author":1,"featured_media":15148,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[76],"tags":[],"class_list":{"0":"post-15147","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-leadership"},"yoast_head":"\nWhy Being Purpose-Driven Can Be Painful, But the Alternative Is Worse. | Brandiary<\/title>\n<meta name=\"description\" content=\"If there\u2019s one thing corporate leaders hate, it\u2019s the prospect of losing money. 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