“Corporations must think holistically about all the ways in which purpose can create value, prioritize, and drive the right dimensions across all relevant stakeholder groups.”
What is purpose? There are many words for purpose.
A company’s purpose is the differentiated role it serves in society connected to long-term value, including the differentiated needs it addresses for all its stakeholders (shareholders, customers, employees, suppliers, environment, and communities) and the consistency with which it delivers on these needs through management systems, processes, and behaviors.
Purpose-driven companies outperform across 6 key value drivers
Deloitte identified six key drivers of corporate value creation when companies integrate purpose into core business strategy: brand and reputation; sales and innovation; capital access; operational efficiency; talent; and risk mitigation.
Key Data (see report for ample research, here is a small sample of standout statistics):
- Stronger Protection - Brands with strong purpose were 6X to be protected on the face of negative publicity
- Improved Performance - A 10% improvement in an employees connection with the organizations mission or purpose was associated with 12.7% decrease in safety incidents, 8.1% decrease in turnover, 4.4% increase in profitability
- Entry into new markets - 53% of surveyed CXO’s reported new revenue streams from socially conscious offerings
Four key components of a measurement approach for purpose-driven companies
Emerging themes on measuring the purpose premium
• The value of incorporating both survey data and ESG data (even though there are known limitations to ESG data)
• Hybrid metrics offer an avenue for companies to link purpose, strategic investments, and comparative advantage
Inspired Companies Insights
Truly embedding purpose is becoming more and more valuable to companies. They outperform their peers on many different key value drivers – this article outlines 6 of them. In order to show how purpose links to the bottom line, hybrid metrics are emerging as a necessity to track this, but there is not yet an approach that measures the widespread positive impact of a purpose-led business holistically.
The opportunity:
- Now more than ever, relevant stakeholders must come together to develop and adopt a consistent methodology to rank and analyze companies’ comparative financial performance tied to purpose
- to create a measurement framework based of IC’s theory of value creation – which is cantered around The new C.E.O.s and their impact on four key pillars of Resilience, trust, advocacy and inspired sustainable growth
