Purpose supports the means in value-based businesses

Purpose supports the means in value-based businesses

Today everything is happening in the network. The interconnections between its nodes increase exponentially to the benefit of those who make it. Companies interested only to thank their shareholders miss the opportunity to connect to the network. The shareholders are just a node – the network is also made up of employees, consumers, suppliers, the environment and the entire community. Therefore, the company must take into account the aspirations of all stakeholders, beyond direct investors.

The principle that for a company its own interests should go beyond the immediate profit goal, for the benefit of a higher purpose, is very debated. After overcoming the scoping stage as an aspiration to inspire and call for action, now companies are entering the stage of defining the goal according to a wider conception.

It is man-centered, and the company becomes socially committed to the goal, which aims to create value for many stakeholders. While many organizations seek to identify their values and purpose, to clarify the theme, I propose to define this new and deeper articulation of intent the following five points of analysis:

  1. Trust – Recovering confidence in the corporate values of all stakeholders is rather a difficult task. The propagation of the effects of big scandals has strongly hit this reference currency for any human interaction. Young generations believe less and less in goodwill and in the values underpinning management decisions, in any case much less than previous generations. In the perception of this new generation, welfare distribution and equal opportunities are affected by certain decisions of those who are the guardians of an outdated world.
  • Sustainability – Climate change is currently on the social agenda and has brought companies under public scrutiny and regulation of their impact on the environment. Public pressure forces their management to reassess how they produce, consume and deliver goods and services according to social and environmental criteria.
  • Social equity – Global economy is growing and, together with it, social inequality. More than 50% of the global wealth is owned by 1% of the population. The pay gap between company employees in different parts of the world is also rising. Consequence? Increasing the frequency of nationalist proclivities at the level of public discourse, societies that are increasingly less resistant to nationalistic tendencies and intolerance towards the ones different.
  • Long-term thinking – Stakeholders are now forcing companies not to confine themselves to short-term profitability. In the view of the many, companies have an obligation to address global environmental and social challenges in the long run. Despite many short-term pressures, directors are also trying to take into account some of the long-term consequences, aware that the real value of a company is linked to brand, employee, and intellectual capital.
  • Digitization – Instant connection between stakeholders and the increasing power of real-time data analysis make it possible for companies to know and better serve the consumer. These transformations will rebalance the game power, due to new ways in which customers signal any gap between a company’s image and its actions.

These five forces show that many employees, customers, investors, communities and other stakeholders are deeply questioned about the role of companies in their communities. While change is an immutable feature of life and business, technology and science accelerate the pace and scale of change more than ever. Understanding the main purpose of an organization’s existence by correlating with the evolution of the world is a constructive way to address growth.

Today everything is happening in the network. The interconnections between its nodes increase exponentially to the benefit of those who make it. Companies interested only to thank their shareholders miss the opportunity to connect to the network. The shareholders are just a node – the network is also made up of employees, consumers, suppliers, the environment and the entire community. Therefore, the company must take into account the aspirations of all stakeholders, beyond direct investors.

Foto: Pixabay

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