Purpose Is The New Competitive Advantage
By Caroline Castrillon l Forbes Contributor
Do you feel a sense of meaning or purpose in your work?
The need for purpose is one of the defining characteristics of human beings.
Yet, only about 30% of the U.S. workforce reports being actively involved, enthusiastic and committed to their jobs. Employees want to feel a sense of purpose at work and know how their contribution makes a difference. As Nicholas Pearce, author of The Purpose Path: A Guide to Pursuing Your Authentic Life’s Work and professor at Kellogg School of Management says, “It is engaging in the radical act of connecting our souls with our roles.” There is a movement happening where employees want a job that gives them a sense of purpose and customers want to buy from companies whose brands are based on values that they identify with. Whether viewed from the employee or consumer perspective, purpose has become a powerful force giving companies a competitive advantage.
Purpose is fundamental
Purpose is the central component of a fulfilling life. Living with purpose has been linked to many aspects of well-being like living longer, lower risk of disease and better sleep. One study even revealed that having a purpose in life may help people maintain their function and independence as they get older. A compelling example of the power of purpose comes from Victor Frankl’s famous book, Man’s Search for Meaning, in which he describes his experiences in concentration camps during World War II. Frankl observed that the inmates who were most likely to survive were those who felt they had a goal or purpose. Frankl himself spent a lot of time focused on reconstructing a manuscript he had lost on his journey to the camp. Others held on to a vision of being reunited with their families once they were free. A quote from Friedrich Nietzsche describes it best, "He who has a ‘why' to live can bear almost any ‘how.'"
Purpose inspires employees
Purpose attracts, motivates and retains employees. Mike Marcellin, CMO of Juniper, says “Purpose has an impact on the kind of people we’ve been able to attract. People are looking for a worthy purpose or vision they can believe in. The more inspired your employees are, the better the work they are going to do.” LinkedIn conducted the most extensive global study on the role of purpose in the workforce. Their findings revealed that purpose-oriented employees have higher levels of engagement and fulfillment with their work and outperform their peers in every indicator, including expected tenure and leadership competencies like self-advocacy and comfort with senior leadership. These results were reinforced by another recent study which found that employees who find work meaningful are 69% less likely to quit their jobs within the next six months and have job tenures that are 7.4 months longer on average than employees who find work lacking in meaning. Purpose-driven employees are also a company's most influential brand ambassadors. According to research by Accenture, 65% of consumers are influenced to buy a brand, product or service by the words, actions, values and beliefs of a company’s employees—not just the CEO or marketing spokesperson. There is no more authentic way to promote an organization than through employees who are truly aligned with a company’s mission.
Purpose attracts customers
Purpose-led brands have the potential to forge stronger customer relationships which translates into more sales and greater customer loyalty. For companies today, price, quality and customer experience are table stakes. Consumers are increasingly making purchase decisions based on what a brand stands for. They expect brands to align with their own personal values. According to the Accenture study, nearly two-thirds (63%) of surveyed global consumers prefer to purchase products from companies that stand for a purpose that reflects their own values, and will avoid companies that don't. Larry Fink, Chairman and CEO of BlackRock, Inc. says, “The public expectations of your company have never been greater. Every company must not only deliver financial performance but also show how it makes a positive contribution to society. Without a sense of purpose, no company, either public or private, can achieve its full potential."
Purpose leads to profit
Companies that ignore purpose are becoming irrelevant. There is a new breed of company that understands purpose is a must have to remain competitive. These companies recognize that purpose not only inspires employees and attracts customers, it ultimately improves the bottom line. Unilever is one example of a company whose focus on purpose has led to profit. Nearly half of the company’s top 40 brands focus on sustainability. These “Sustainable Living” brands, including Knorr, Dove and Lipton, are growing 50% faster than the company’s other brands and delivering more than 60% of the company’s growth. One of the most important studies around purpose and profit was developed by two researchers, Millward Brown and Jim Stengel. They created a list of the world's 50 fastest-growing brands based on ten years of empirical research involving 50,000 companies. Known as the Stengel 50, they found that these purpose-driven companies saw 400% more returns on the stock market than the S&P 500. The book Corporate Culture And Performance also supports the idea that purpose leads to profit. The authors, Harvard professors John Kotter and James Heskett, showed that over ten years, purpose-led companies outperformed their counterparts in stock price by a factor of twelve.
Leading with purpose is clearly a powerful competitive differentiator. As bestselling author, Dr. John Izzo says, “Winning in the purpose revolution requires authenticity.” Customers can see through superficial “feel good” campaigns. For companies to succeed, it requires defining purpose upfront and embedding it into every aspect of the organization. Fusing purpose and profit results in a winning formula that benefits companies, customers and employees—the perfect trifecta.