How a Clear Sense of Why Your Organization Exists Drives Business Success
In today's ever-changing business landscape, having a clear sense of purpose is essential for companies that want to stay ahead of the curve. Purpose-driven companies had higher employee engagement, customer loyalty, and higher levels of innovation, according to a study by Harvard Business Review. Purpose-driven companies also had higher revenue growth, higher profit margins, and were more likely to attract and retain talent, based on the findings from a Deloitte study. A well-articulated and activated Purpose across the organization gives businesses a reason for being and is a powerful driver for success.
There are many brands we admire in this realm, but two in particular stand out for us:
Warby Parker, an eyewear company, has a stated purpose to "provide affordable eyewear to everyone." This purpose has helped the company attract customers who want quality eyewear at a reasonable price and has motivated employees who are passionate about making a difference. As a result, Warby Parker has become a leading eyewear brand with a loyal customer base.
Allbirds, a shoe company has made sustainability a core part of its business. Allbirds' purpose is to "create better things in a better way." This purpose has guided the company's decision-making, from the materials it uses to the way it designs and produces its shoes. The result has been a more engaged workforce, increased brand loyalty from consumers, and improved financial performance.
Even SMEs (small and medium-sized enterprises) can benefit from having a clear sense of purpose. A fun example is Tony's Chocolonely, a Dutch chocolate company that aims to end illegal child labor and forced labor in the chocolate industry. The company works directly with cocoa farmers in Ghana and Ivory Coast, paying them a higher price for their cocoa and helping them improve their farming practices. Tony's Chocolonely has helped to reduce the number of child laborers in the cocoa industry by 30% in just four years and has established direct relationships with cocoa farmers to pay them a living income. The company has achieved strong financial performance, with revenues growing at a rate of over 50% per year. Tony's Chocolonely has been able to attract and retain loyal customers who share its values and are willing to pay a premium for its chocolate. The company has received recognition for its purpose-driven business model, including being named one of the world's most innovative companies by Fast Company.
Having a clear purpose can also help businesses navigate difficult times. During the COVID-19 pandemic, the travel industry was severely impacted, and many people were no longer able to travel or had to cancel their travel plans. Airbnb's purpose is to "create a world where anyone can belong anywhere," and they were able to pivot their business model to accommodate the changing needs of their customers. Airbnb launched a new feature called "Online Experiences," which allowed hosts to offer virtual experiences such as cooking classes, meditation sessions, and dance parties to guests who were unable to travel. This new offering not only helped Airbnb continue to provide value to its customers during a difficult time, but it also provided a new source of income for hosts who were no longer able to offer in-person experiences. Additionally, Airbnb partnered with local governments and organizations to provide emergency housing to frontline workers and people who were displaced due to the pandemic. This initiative further reinforced Airbnb's purpose of creating a world where anyone can belong anywhere by providing a sense of community and support to those who needed it most during a challenging time.
Unlocking your organization's purpose is essential for building resilience, charting a new course, and creating a better future. Purpose can serve as your guiding north star, enabling you to make long-term strategic decisions and navigate through turbulent times. Purpose-driven companies don't just attract customers; they inspire loyalty and engagement among employees, set themselves apart from the competition, and outperform their peers. Purpose is not a nice-to-have or a buzzword. It is the foundation upon which great companies are built. So let us not just talk about purpose, but let us live it every day internally and externally. Now is the time to act.