Why every company needs a purpose (Just as every human does)

In one of then-United States Senator and eventual President John F. Kennedy’s campaign speeches in 1960, he said,“(but) efforts and courage are not enough without purpose and direction.” At that time, he was appealing to all Americans to help the country rebuild its strength and become the catalyst for peace and progress in the world. Several decades later, this idea of purpose and direction still resonates as one of the most important foundations for businesses.

Nike is best known for making sports apparel, Google for running a search engine and Coca-Cola for producing the most popular carbonated drink. But that is only their “what.” These companies succeeded and continue to thrive not by selling their “what” but by coming out with a clear and defined “why.” If you take a closer look at each of these companies’ mission statements, you will find out they convey a deeper reason for their existence.

For Nike, it is: “To bring inspiration and innovation to every athlete in the world” and the qualifying: “If you have a body, you are an athlete.” For Google, it is: “To organize the world’s information and make it universally accessible and useful.” Coca-Cola’s mission is, “To inspire moments of happiness and provide optimism.”

The “what” attracts the ordinary consumer but the “why” sustains their loyalty and the business.

All companies reject mediocrity and promise something better. When they sell their “what,” they may be able to push their profits up but it is the “why” that will provide them growth. Businesses need to start with and focus on the “why.”

Linking purpose with growth and performance

People who are passionate about something would sometimes dive into decisions that others might consider too risky. Instead of being scared, they make difficult decisions aligned with the purpose that excites them. A purpose may push a person to make tough decisions and teach them to stand firm. Comparably, the company histories of global brands such as Nike, Google and Coke attest to the growing belief that there is a link between purpose and growth in business.

Recent findings by Grant Thornton’s International Business Report revealed that 70.5 percent of dynamic – or high-growth – companies across the world have a clearly defined non-financial purpose, compared with 52.2 percent of all companies. Having a purpose is deemed as ‘very important’ to 44.1 percent of dynamic companies, compared with 40 percent of all companies.

Researchers also found that companies, high-growth ones in particular, overwhelmingly prioritized non-financial business objectives (e.g. making a positive difference to their customers, developing skills of their people, bringing innovative products and/or services to the market) over financial objectives.

In addition, a US consultancy firm describes workers who identify with their employer’s purpose as “purpose-oriented employees,” which means, workers prioritize “meaning and fulfillment” over money and status.
Consequently, another research says that purpose-oriented employees are 54 percent more likely to stay at a company for five or more years and are 30 percent more likely to be high performers.

Finding your North Star

Your purpose is your North Star, which guides you in making decisions. Knowing where you want to go narrows your options. Whenever you are confused and lost, always go back to your “why” and look up to your North Star.

Grant Thornton UK CEO Sacha Romanovitch shares her thoughts about “the true North Star.” As a global network of member firms, Grant Thornton’s purpose is to help dynamic organizations unlock their potential for growth. That is because we understand that these companies are the engines of the global economy.

At Grant Thornton, that purpose has evolved into shaping a vibrant economy because high-growth firms cannot thrive in a vacuum. “We know that businesses that outperform the market stand for something; they have a clarity of purpose,” said Romanovitch recently in the Grant Thornton UK’s Alumni Magazine.

“Ours is clear: to shape a vibrant economy where there is trust and integrity in markets; a business and social environment where business and people can thrive; and dynamic organizations unlocking their potential for growth. This informs the stakeholders who we work with, what we do for them, what we speak out on and how we are as a business. It’s our North Star,” she added.

Answering why you need a ‘why’

A person needs the “why” because it’s that thing that makes one move, create and change the world. Companies need it more because they’re in a better position to move, create and change the world. Dynamic organizations that can identify the thing they want to change, and articulate their “why” could create greater loyalty and growth, as employees and customers would rather rally around the purpose rather than the profit.

Sheng Llovido is a partner at Audit & Assurance of P&A Grant Thornton. P&A Grant Thornton is one of the leading audit, tax, advisory and outsourcing firms in the Philippines, with 21 partners and more than 850 staff members. For your comments, please email sheng.llovido @ph.gt.com or
PAGrantThornton.marketscomm@ph.gt.com. For more information about P&A Grant Thornton, visit our website www.grantthornton.com.ph.

As published in The Manila Times, dated on 21 June 2017