Last week I posted this article in The Times on Linked which reported that the governance regulator The Financial Reporting Council has warned companies attempting to meet its new guidelines against using marketing slogans and ‘other marketing gimmicks’ when they were supposed to be reporting on their values and purpose. The point made was that many companies are confusing purpose with the traditional ‘vision’ or ‘mission’ statements that companies have been used to sharing on their websites and reports for many years.
A conversation with a client during a workshop I recently ran on business purpose revealed that the difference between these two things was far from clear to many people, so I felt prompted to try and clarify it.
A mission statement traditionally aims to answer the question – why are we here? For many years Google’s stated mission “to organise the world’s information and make it accessible to everyone” resonated strongly with its audiences, and was often held up by marketers and business strategists as a shining exemplar of a visionary company.
So why does that statement not serve so well as a business purpose? For me, in the context of today’s universal quintessential twin challenges – which are climate change, and sustainable development, having a mission which is focused narrowly on making life easier for their customers, is just not enough to justify a business’ existence. So, whilst Google’s aim is clear, valuable, aligned with its core competency, and useful to the customers that use it, it does nothing to address any of the significant social, environmental or economic challenges of our time. The question companies need to answer is no longer just ‘why are we here?’ but rather ‘what role can we play in solving the world’s most urgent and important problems’?
So, why is it that we are suddenly expecting business to solve the world’s woes?
It has become apparent in the last few years in particular that businesses are one of the largest drains on the world’s resources. They use natural resources, from which they manufacture products. In the vast majority of cases, they don’t make a payment for those resources which is commensurate with their value to the continuation of our global ecosystem.
Businesses also take up space, in terms of the factories and offices they build in which to house themselves and make their products. This changes the physical and sociographic nature of the communities in which they operate, bringing in noise, people and sometimes changing views or landscapes. But there is no obligation on a business once planning is obtained to make recompense for this or to consult with their neighbours about the impact they are making to see how it can be made more positive.
Businesses and brands also take up our time and attention as consumers – through their marketing and advertising efforts which interrupt our leisure time as well as our work. Increasingly, they also pass on or use our data to help themselves and other companies sell us more stuff. We are certainly not compensated for this.
And naturally, they use up our money.
Of course, businesses also provide valuable services, some of which we actually need in order to survive – heating, lighting, food, for example. Although the number of companies providing vital services is just a tiny percentage of all commerce.
The traditional view of capitalism says that in return for all of that, businesses deliver value for their shareholders and also importantly provide employment. But in recent times, we have come to realise that it is not just shareholders or investors in a business who need to benefit from the company’s efforts. As social and environmental pressures increase all around us, business must now satisfy a much broader range of stakeholders in its activities and strategy.
Traditionally, outside of profit and employment, what is it that business really gives back? Occasionally, and at their discretion, companies choose to give back some of their profits in the form of philanthropic giving. But in a year when profits are down, and shareholders receive less, it is their prerogative to reduce or forfeit such gifts.
Increasingly, society and government is becoming concerned with unleashing the potential societal and environmental benefits that business could be endowing with world, much of which are lost today. The net impact of most businesses on society and the planet is largely a negative one.
What a purposeful business does is to turn the very role of business on its head. The question to answer is no longer – why are we here and what do we bring to the world? But rather – what social or environment challenge are we here to solve, and how can we make a profit from that to enable us to keep solving it?
Or as the British Academy put it in their recent report Principles for Purposeful Business “the purpose of business is to solve the problems of people and planet profitably, and not profit from causing problems.”