Are businesses ditching purpose post-Covid?
From a research by ABA
We are living in the age of purpose. It increasingly drives consumer preference, influences jobseekers’ choices, and gets the credit for business growth. But then came COVID-19 and the economic fallout. What impact will the crisis have on organisational purpose? Will SMEs continue to embrace it, or deem it a luxury they can no longer afford?
Research with 250+ business leaders, entrepreneurs and influencers aims to uncover the answers. Some findings are as follows:
1. Small and medium-sized enterprises have bought into purpose in a big way.
Whether by dint of their size or origins as owner-led or family-run, a common view emerged that SMEs are often more inherently ‘purposeful’ than their larger, corporate counterparts. A surprisingly high number of survey respondents were willing to refer to their business as ‘purpose-led’ - with an even higher number (86%) confirming their own understanding of organisational purpose was in line with the definition that shared. What’s more, it appears that it pays to be purposeful - with 2 out of 3 respondents agreeing that their purpose gave them a competitive advantage in the market.
2. When it comes to purpose, there are ‘creationists’ and ‘evolutionists’.
There appears to be two distinct ‘camps’ when it comes to the origins of purpose; Evolutionists - purpose that evolved over time and Creationists - had a purpose from the beginning. With the numbers fairly even, there should be room for both - as long as the end result is a purpose that is both sincerely held and authentically lived.
3. Most businesses are struggling to communicate their purpose clearly.
When it comes to SMEs and their purpose, there seems to be a gap between aspiration and communication. Few leaders are willing to claim they have this area nailed down. A common understanding is often assumed when it comes to an organisation’s purpose (and more widely to its core values), but communicating them in a way that is intentional, clear and compelling…that is an altogether more challenging proposition.
4. Purpose-led businesses are more profitable than their counterparts.
While this research may not be the first to draw correlations between purpose and profitability/growth, it serves as another reminder that the two appear to be good bedfellows. Of the survey respondents who were willing to disclose their pre-tax profit margin (at the end of the last financial year), a clear picture emerged; businesses who claimed to be purpose-led were, on average, 23% more profitable than their counterparts (be they non purpose-led or ‘unsure’ businesses).
5. The crisis has been a ‘wake up call’ for businesses to seize the moment.
Leaders have been challenged to their core about the impact that their businesses can – and should – be having on workers, customers and the wider world. The recent crisis – in particular the early months – prompted much soul searching amongst business leaders when it comes to their purpose and the impact they can have on the world.
6. Businesses of all shapes and sizes see purpose as key to future growth.
When it comes to the question of whether business leaders will hit the accelerator or the brakes on purpose, the answer is clear: they’re looking to floor it. Across every forward-looking survey question, and throughout the interviews conducted, the overwhelming majority of respondents were clear about this: ‘Now is not the time to be dialing back on purpose.’. Not only was there a 50% increase in the number of leaders viewing purpose as ‘very important’ to the future of the business, this same audience was nearly 3 times more likely to feel confident about the future (compared to those who didn’t see purpose as ‘very important’ moving forward).
7. Leaders are prepared to sacrifice profit to stay true to their purpose.
It seems the old adage of ‘put your money where your mouth is’ cannot be held against businesses who claim to care about purpose. A remarkable 52% of all leaders are prepared to sacrifice profit to stay true to their purpose – rising to 70% amongst the purpose-led crowd.
8. Post-Covid, it could become harder to spot the wood from the trees.
In spite of the enthusiasm and high levels of commitment to purpose, a number of leaders expressed concerns around two potentially worrying trends:
An influx of purpose ‘imposters’ claiming to be something they really aren’t.
The muddying of the waters in the market, with customers struggling to spot the real deal.
9. Those who haven’t yet bought into purpose are the ones most eager to play catch-up.
Perhaps the most interesting finding of our research was that businesses who have not been overtly purpose-led in the past are the ones most eager to increase their focus on purpose in the future. It would seem that a purpose ‘leveling up’ is underway.
The research provides a whole bunch of reasons for hope. In years to come, we could well look back on this period as a time when purpose exploded amongst SMEs - becoming the defining idea for modern-day business.
Read the full report here.
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