- As found by an Ernst & Young study, purpose contributes to more growth, and better transformation.
- India is ready to play a vital role as a globally emerging economy, but is it foregoing purpose by not paying attention to its workforce?
- Building a meaningful bond for businesses will have to balance shareholder and stakeholder interests, which necessitates a strong purpose.
Here at X-Leap we’ve been thinking a lot about Purpose. As a fledgling company, we’ve had quite a few conversations around the usual questions: why are we here, what do we want to do, etc.
Through these somewhat existential sessions, I’ve been thinking about the centrality of Purpose. Aside from it being a right-of-passage for companies to be successful, Purpose isn’t (or shouldn’t be) some fuzzy concept relegated only to our Annual Reports to impress shareholders.
Rather, in this VUCA world Purpose is what’s closely linked to:
- Deciding your organization’s performance
- The well-being of your staff
- Building a meaningful, relatable and sustainable community
Purpose and performance
Purpose defines and gives character, and is the eventual next step to scaling-up and profitability. It gives meaning and a sense of contribution to doing something bigger.
Looking at the hard numbers, an Ernst & Young study found that organization performance (i.e. growth) improved by 10%. Furthermore, 53% of executives who responded to the study said that their organization is better at innovation because of a “…strong sense of purpose…”
Closer to home, business leaders say that purpose is integral to better business as it attracts customers that value businesses as more than “…greedy money making machines…”. The Indian government has also managed to inspire corporates to spend more on philanthropic initiatives and address policy issues.
But in a bid to bring about social change, have Indian companies struggled to get their own houses in order?
Purpose and performance
In our pursuit of better understanding organizational performance here at X-Leap, we’ve also found that issues like well-being, psychological safety and other individual factors also put companies at a disadvantage.
Other have found that the Indian workforce has been battling mental health issues over the past couple of years. This has amounted to a yearly loss of US$14 billion.
But this isn’t simply throwing money at Employee Assistance Programs (EAP). Well-being is intrinsically linked to performance. Maybe this is a good time to ask how organizational purpose can be used to align to workers’ needs. In such a dynamic environment where attrition rates are so high, well-being measures will only serve as a band-aid to a more systemic problem. This will be a crucial time for companies to revisit their purpose and understand how they can navigate the new normal together.
A strong bond with your stakeholders
I lean to Larry Fink’s (CEO of Blackrock) 2022 letter where he addresses CEOs of the need for purpose. Fink’s letters have gained a cult status in the business community, especially for his outspoken nature on business needing to be more socially and environmentally conscious.
“Your company’s purpose is its north star in this tumultuous environment…”Larry Fink, The Power of Capitalism
Whether it’s staff, shareholders, buyers or other stakeholders, every relationship will be determined by how strongly they align with your purpose.
For India, businesses have excelled due to strong management skills, where result-oriented growth has been prioritized, even during the pandemic. But areas that are lacking, are linked to topics of personal growth, productivity and well-being. The same study has also found that innovation guided by technology and otherwise, are areas where companies are struggling.
As disruptions continue, progress will rest on how well companies are able to develop strong bonds with their stakeholders. It’s the basis of these relationships that will continue to keep companies competitive. As experts have pointed out again and again, these conditions are helped when a strong purpose guides stakeholder needs and aspirations.