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Integrating a Purpose-driven Approach to Business

Posted on the 10/11/16 by purposeful
Latest News, Purposeful Blog

In a previous blog, we established that there is a strong business case for purpose. Integrating a purpose-driven approach to business can boost performance, improve culture, employee wellbeing, attraction and retention. It can even enhance a businesses connection to all stakeholders including community.

In this article, I’ll explain how the purpose-driven approach to business differs from the more traditional Corporate Social Responsibility (CSR) approach and how we can start to integrate purpose into business. As we will see- planning, creating, measuring, reporting and communicating social impact is a core part of this approach.

“Purpose-driven businesses* outperformed the S&P500 by a factor of 14:1 over 15 years”

From CSR to Purpose

CSR first recognised the idea of moving from a purely shareholder-driven business model, to a wider conception of responsibility to other stakeholders. There is also a moral imperative for business to do good and contribute to the community in which it operates. Carroll neatly articulates this in his “pyramid of CSR”:

“business is expected to be a good corporate citizen, that is, to give back and to contribute financial, physical, and human resources to the communities of which it is a part”

However, a purpose-driven approach to business provides a new understanding of the relationship between business, community and other stakeholders. It allows business to proactively map out the impact, relationship and influence it wishes to have with people, community and the planet:

“purpose allows business to articulate a clear vision of the positive social change they wish to make, how they will do so and how this will contribute to a better world”

The purpose-driven approach recognises that in an increasingly connected and co-dependent world, that we must take active steps to help each other to do better together. This draws from an understanding that business and the community are partners in co-producing goods and services.

Just as business depends on the community to be its customers and ensure its growth, the community may increasingly rely on business to produce social value and contribute to positive social outcomes. US Grocer Whole Foods are a great example of adopting a stakeholder-driven business model, premised on Conscious Capitalism:

Whole Foods has deeply considered the role of the community in supporting the business and vice-versa. Corporate Citizenship and Giving Back are central pillars to this approach, embedded into this model to ensure a strong connection and relationship with the local community.

Purposeful approach

This is where the idea of business engaging in social impact work comes in. Business can come up with a social impact program or strategy outlining the key societal or community issues it wishes to help tackle, through concrete action.

Articulating a clear mission for the business and how it will tackle societal issues and contribute to communal wellbeing is a great way to integrate purpose. This should also be clear on how the proposed social goals align with the business mission and current value model. This is what a purposeful business might look like:

The formula is quite simple- having a clear strategy that aligns well with your organisational values, mission and vision; and helping others through social impact programming and strategy results in a purpose-driven approach to business.

Integrating purpose

Building purpose into your business and yielding the results and social impact relies on following a clear process to arrive at a ‘social impact strategy’. Purposeful’s approach to this is to embark on a process called the ‘social impact cycle’ (SIC).

Generally, the strategic action will be a combination of workplace giving, jointly funding specific project(s), volunteering and purposeful education. This is our SIC and model of positive social change:

The SIC is designed to take you from organisational values to aligning with social impact goals, mapping actions, measuring impact, reporting on impact and improving results. Importantly, each of the stages relies upon a community-centred approach to planning, that is enabled by partnerships, relationships and collaboration.

Communicating impact

There are now a range of ways that businesses can report on impact. Social enterprises are particularly good at reporting on social impact. Some standout organisations in this space are Who Gives a Crap, Pollinate and SEFA. Below is Pollinate’s progress snapshot, which is just part of their ‘our impact‘ section:

A key challenge in this space is getting the balance right between storytelling and social impact measurement using hard data and assessment measures. Settling on the right ‘theory of change’ and measurement methodology is also a key consideration in reporting on impact.

How a business chooses to report on and communicate impact will depend on a range of considerations, but the fundamentals are:

  • Outline a clear process and methodology
  • Have clear and concise inputs and outputs
  • Outcomes are accessible, relevant and useable

Moving toward a purpose-driven approach to business can be a great way to increase performance and deliver increased social impact and value to all stakeholders.

Businesses can kickstart this process by engaging with the Purposeful Approach and SIC. They may also consider how social impact reporting will help them to achieve their strategic and community goals.

Mike Davis is Founding Director of Purposeful, a purpose driven advisory, helping organisations to improve their social impact, culture, systems and strategic planning. Connect with Mike at mike@purposeful.com.au and visit the website at purposeful.com.au.

 

* – Purpose-driven businesses is my interpretation of Raj Sisoda’s ‘Firms of Endearment

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