Deloitte recently came out with its annual Core Beliefs & Culture survey that polls more than 1,000 executives and employees. The key takeaway was that 82% of respondents working at an organization that has a strong sense of purpose believe the organization will grow. Only 48% of those working for companies without a sense of purpose are hopeful about growth prospects.
Given the strong belief in the connection between purpose and growth, why do so many companies still hold such a narrow definition of purpose? And why do so many still think in charitable terms, framing their community activities separately from their core money-making interests?
Because most companies still believe charitable activity should not be connected to bottom line growth and see it as unseemly to link social purpose and profit.
It’s time to get over that. The world has moved past charity to contemplate more meaningful metrics around social impact. And perhaps most importantly, it no longer makes sense to separate profit and purpose.
This new approach is called “profitable good” and it involves shifting from the current mindset of “doing charity” (because that’s what good corporate citizens do) to thinking about social impact that has a direct positive impact on bottom line results.
History shows us there is no way executives are going to spend more money on social change programs and initiatives if they take away from achieving business metrics. So the answer lies in merging the two. Namely, thinking about the social impact your company wants to create in its community and then aligning it with business objectives (increasing sales, attracting and retaining customers, increasing employee and consumer loyalty) so that both money and impact are generated.
Ultimately, profitable good is no different than what is happening in the area of sustainability, where companies improve their environmental footprint while making money. Walmart is the largest seller of organic food not because they are do-gooders, but because they see the opportunity to merge healthy food choices with profit.
Profitable good is no different than what is happening in the area of sustainability, where companies improve their environmental footprint while making money.
Here’s the good news about profitable good. Your employees love it and are asking for it. What’s more, millennials — the generation that will represent 40% of the workforce by 2020 and a whopping 75% by 2030 — expect it. Your customers, meanwhile, keep telling pollsters they’ll reward companies that make positive contributions to community.
Following are four categories of business that have embraced profitable good with success:
Good Product Companies
These are companies that create products inherently designed to improve people’s lives and make the world a better place. They’re the ones getting a lot of attention and money from venture capitalists. They range from cool upstart Uncharted Play Inc. – which prototyped the Soccket, a soccer ball that generates electricity that can then be used to light lanterns in refugee camps — to eSight Eyewear, which created a product that helps the legally blind see.
Social Purpose Brands
These are companies that have woven social purpose and impact into their brand DNA, to engage their customers and tell their story to the marketplace. An increasing number of companies fall in this category, starting with pioneers such as Patagonia and Ben & Jerry’s to the upstarts such as TOMS, Warby Parker, Local Buttons, PUBLIC and FEED.
Creators of Social Purpose Goods
These are companies that have created business lines or divisions to either create social purpose products or use purpose to sell their brand. Unilever’s Lifebuoy is a case in point, a soap designed to improve hygiene and reduce illness in the developing world.
Purpose as the 5th P
Finally, we have companies that use social purpose or cause to generate sales and attract customers….essentially purpose is used as a marketing tool. This is increasingly being used by brands such as Kraft, Telus and P&G.
Each of the above examples has found a unique way to meld profit with purpose. They’ve proven profitable good is smart business and a worthy step forward in their corporate strategy.
In the coming weeks and months I will use examples and first-hand conversations to showcase these different types of companies, highlighting the challenges and opportunities they face using purpose to drive bottom-line results.
For your part, think about ways you can introduce purpose into your business and don’t feel bad if you make money doing it.
This article was originally published in the National Post
Phillip Haid is co-founder and chief executive of PUBLIC, a cause marketing agency and innovation lab designed to create large-scale social impact through the merger of profit and purpose. You can follow Phillip on twitter by clicking here @philhaid