How do you plan to grow your business? There are many tried and tested strategies: new markets, new products, M&A and new partnerships. But there is one powerful strategy that sits above them all: a strategy that can truly unleash your full growth potential.
The evidence shows that the best growth strategy is to develop your vision, culture, products and services around a clearly defined purpose.
What do we mean by purpose?
Purpose, is the deeper connection between your business and your customers’ lives and needs. It’s about how your business makes a positive difference – not through CSR, cause marketing or managing your environmental footprint, but through your core strategy and business model.
Purpose comes from asking yourself the big, scary question: why are you in business other than to make money? What is your purpose beyond profit?
Purpose vs. ambition
As such, purpose is about more than ‘mission’ or ‘ambition’.
Doubling the size of your business is an ambition. “Making sustainable living commonplace” is a purpose: one which has led consumer goods giant Unilever to adopt the vision of doubling its business while reducing its environmental impact and promoting positive social outcomes.
Increasing market share in the baby food sector is an ambition. “Developing healthy eating habits that last a lifetime” is the purpose that drove Ella’s Kitchen to become the UK’s best-selling baby food in less than a decade. Firms like Patagonia and Tesla have all shown that having a purpose that connects to a greater good goes hand-in-hand with growth and commercial success.
Purpose is a growth strategy
For most SMEs, profit is a daily battle: how can you possibly justify investing time in finding and articulating your purpose beyond profit?
Simple: because purpose works. The evidence shows that purpose-led brands outperform – that purpose actually powers growth.
Jim Stengel’s seminal book Grow studied 50,000 brands over a ten-year period and showed conclusively that brands that centre their business on improving people’s lives outperform their competitors. A 2015 study from Havas Media Group, meanwhile, found that the 25 most ‘meaningful’ brands outperformed the global stock market by 133% from 2007 to 2015.
Purpose widens your field of vision by allowing you to look beyond the immediate product – the ‘what’ - and focus instead on the underlying ‘why’.
To pick some concrete examples, Unilever announced earlier this year that its purpose-led brands, such as Ben & Jerry’s and Dove, were growing at twice the speed of the rest of its portfolio.
Ethical bank Triodos saw customer accounts grow 144% in 2014, far outpacing the rest of the struggling retail banking sector. And, of course, a clear sense of purpose and social values has powered brands like Innocent Smoothies to grow from small businesses to global concerns.
Why is purpose such a powerful growth driver? We think there are three main reasons.
1) Purpose is a powerful lens for innovation
When it comes to innovating new products and services, purpose lets you widen your horizons while still keeping your focus. Purpose widens your field of vision by allowing you to look beyond the immediate product – the ‘what’ - and focus instead on the underlying ‘why’.
Let’s say you make affordable school shoes for children. If you see yourself as a shoe manufacturer (the ‘what’), your R&D will be about more shoes. If you see your purpose (the ‘why’) as making sure children are ready and equipped for the school day a whole new world of possibility opens up for your product innovation strategy.
The lens metaphor is apt. Purpose doesn’t just open up more possibilities, it also narrows your innovation strategy into a laser-like focus. Like all companies, growth-stage businesses can be easily pulled into opportunistic expansions that have no underlying logic, making short-term gains, but ultimately stretching themselves too thin. Purpose gives you permission to ask: is this new opportunity really in line with what our business is ultimately about?
2) Purpose drives investment (and makes you more investible)
The evidence shows that having a clearly communicated sense of purpose builds business confidence, drives business investment and can attract new investors.
It starts from the inside. Deloitte’s 2014 Culture of Purpose Report compared the attitudes of executives who felt their firm was purposeful with those who didn’t.
Purpose gives you permission to ask: is this new opportunity really in line with what our business is ultimately about?
Executives at purposeful firms were much more confident in their companies’ long-term prospects: more believed that their firm would deliver strong growth and returns over the long-term (83% vs 49%); they were much more optimistic about their ability to stay ahead of industry disruptions (83% vs 42%); and remain or become market leaders (80% vs 48%) than those at non-purposeful firms.
The report found that this internal, purpose-led confidence tended to drive greater investment in new technologies, expanding into new markets, developing new products and services, and employee development and training.
Purpose can also help you find new sources of investment. SMEs with a clear social purpose can access diverse funding sources from the booming social impact investment sector, a market estimated at £3.5bn by crowdfunding platform Ethex. A growing movement of both retail and institutional investors are increasingly using platforms like Ethex and the Social Stock Exchange to make purpose-driven investments in firms that make a difference.
3) Purpose puts the wind behind your sails (and sales)
It’s not only investors who are drawn to purposeful brands. Customers and employees are also inspired by purpose.
Purpose is a purchase trigger. A 2012 Edelman survey revealed that over half of consumers will pick the purposeful brand when price and quality are the same. And, customers don’t just buy from purposeful companies: they become advocates. The same survey showed that 72% of global consumers would recommend a company with purpose to others, a 39% increase from 2008.
As the business thinker Simon Sinek, says: “People don’t buy what you do, they buy why you do it.”
The same is true when it comes to attracting and retaining the talent you need to grow. Research consultancy Global Tolerance found that 62% of UK under-35s want to work at an organisation that makes a positive difference, and that 53% would work harder if they felt their organisation delivered a social benefit.
The future belongs to businesses with purpose
Since embracing the purpose imperative in our own agency almost ten years ago, we have repeatedly seen how businesses of any size and sector can flourish by putting purpose at the heart of their strategy, culture and operations.
Purpose is not just for the Unilevers and Teslas of the world – if anything, small businesses will find fewer barriers and more immediate benefits to putting purpose at the heart of their business.
As you grow, your purpose is both your engine and your compass: can you afford not to build your business on purpose?