Public businesses are owned by shareholders and the job of every business is to return profits to those shareholders. It is really simple. Or at least that’s what the industrial revolution and the shareholder primacy era effected into reality. But what if we reframed and refocused on creating value for stakeholders? What would be the effect of creating real purpose and value by taking initiative in areas of social justice and environmental protection? Taking either a theoretical or a linear glance, the effect is positive. This is my message to fellow business owners.
Today, it is becoming customary to see consumers holding businesses accountable. Is Nike paying their employees fairly? From where does In-N-Out source their materials? Which values does Microsoft talk about, and which do they act on? The consumers are asking these questions and embossing their purchase behaviour on the answers they come across.
It goes further, though. These values are also shifting the workforce. According to Deloitte, up to 77% of millennials and gen x attribute company values as a primary decision-maker in where they choose to work and by 2030, these generations will make up over three-quarters of the working class. Behavioural science has long told us that people buy things that make them feel good about themselves and do business with businesses they trust – we now know that this translates to where they spend their human capital too.
So, what the future of business is looking at is stakeholder buy-in and to achieve that, we need to cultivate purpose-driven businesses. A stakeholder is any significant branch of a business – from employees to customers, and executives to distribution partners. If your business relies on a certain entity, that entity is a stakeholder. A purpose-driven business is one that fixes its core values around creating meaningful impact – it helps create buy-in from the stakeholders by associating them with more than just a product or a service but a brand that can tell a positive story.
Take a look at Patagonia, they are on a mission to “build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis”. Over the last five years, they have experienced a 400% revenue growth while being unwaveringly committed to environmental protection – it is argued that this growth is not despite that purpose but because of it. Do you know Ben and Jerry's? The delicious little pint-sized ice-cream break-up necessity? They actually look at themselves as a social justice company that sells ice cream to empower their purpose. Both of these companies are very clear about what their purpose is and because of it, their stakeholders remain happy and loyal.
Since the year 2000, 50% of Fortune 500 companies have vanished, and this is expected to continue unless we begin identifying and effecting purpose into our businesses. It is no longer enough to sell the workforce on the “dream” of climbing the corporate ladder and nor is it sufficient to sell great products. The bottom line is this: the future of business success is not just about maximizing profit, it is about maximizing value to all of the stakeholders.
In the words of my beloved artist Rihanna: "what now?" Start by getting deeply involved. Identify your values and ethics and then centralize them and build from there. Raise the bar, set expectations and inspire all of your stakeholders to take part in your vision. The goal is complete stakeholder buy-in. Once you know it, do a fantastic job of telling your story and do it as often as you can. It is no secret that people are taking on more screen time than ever before – take advantage of this to get your brand out there by spreading a positive story about what makes you unique. Tell the world your purpose for doing business. Most importantly, if you want the best employees and most devoted consumers, have a purpose worth preaching.