The purpose of a business is to create a customer.
Who says so? The legendary business thinker Peter Drucker.
But this was 30, 40 years ago. It is the traditional way businesses used to see their reason for existence. Over the years, this definition evolved and took a different shape.
Businesses came to think of their reason for existence, something along the lines of this: the purpose of a business is to maximize shareholder returns long-term and if possible, forever.
In other words, the business should operate as a continuous moneymaker. A secondary but parallel purpose is that the business should also serve as a means of employment.
Things have changed since then. Business leaders and thinkers learned from the problems their own progress created, and their thinking has evolved further. There are a number of good reasons for this change.
- The planet is in environmental jeopardy.
- Employees produce outputs less by their hands and more with their brains. People need a different kind of encouragement, call it “motivation 3.0.”
- Society has the power to catalyze a business or in terms of how critics, customers, influencers, regulators, activists, investors, etc. react to anything: a product, a practice, and so on.
- Businesses are being held responsible for their social footprint. Does the business perpetuate inequalities and stereotypes? Create social, cultural or environmental damage? And so on. Call it “ESD.”
In essence, businesses create outcomes and not just outputs.
We’ve been hearing this word “purpose” in the last few years, but what is purpose? Do a Google search on the word and you will get 3.5 billion hits, an almost endless collection of definitions and nuances.
My definition of purpose is quite simple. Purpose is the impact we want our product or service to have on people’s lives.
For corporations, this definition means we must think well beyond the basic pursuit of profit. Instead, purpose is the trail we leave behind in the world and the new direction we want to nudge it towards.
My recent book, The Gift of Crisis is relevant to the circumstances we are now going through. In the book, I lay out a model for getting in front of social crises and accelerating the firm’s growth through the pursuit of a relevant, broader purpose. Just follow these six steps.
Step #1. A crisis can help you surface, recommit or reinvent your purpose.
Start the process by analyzing your impact, both positive and negative.
Try my exercise called, “lovers and haters.” Talk to all stakeholders, even the ones not in favor of your company. Compile a repository of potential directions, innovations and markets centered on that purpose.
Get a good understanding of your strengths, weaknesses, partners and potential threats.
Step #2. Go bigger than your company.
Look externally by focusing on global problems. Find the common themes that overlap with your business. How could your organization’s purpose reflect or address a global challenge?
Step #3. Integrate your new purpose with your strategy and business model.
This is absolutely essential. Be serious about it. Put actions and measures into place.
Align compensation with success at achieving that purpose.
Step #4. Communicate your purpose clearly with everybody.
Make people aware of what you’re trying to achieve and why. Explain thoroughly. Engage.
Step #5. Execute on your purpose.
Innovate in areas and ways that maybe nobody else has done before. Use the wealth of technology that exists in abundance today.
Step #6. Avoid purpose washing.
Let your board of directors regularly follow and monitor your actions. Use their guidance to avoid what we call “purpose washing.” Don’t allow your organization to stray from its purpose.
Consider these six steps to create a competitive advantage by attaining sustainable and exponential growth. Most important of all, you’ll be helping to create a better planet.
If you’d like to apply these seamless team principles to your company, please visit www.ChristosTsolkas.com to apply for a consultation with me.
Or, you can also purchase your copy of The Gift of Crisis: How Leaders Use Purpose to Renew their Lives, Change their Organizations, and Save the World.
Don’t climb this mountain alone. Let me show you the route towards business success.