Profit with purpose for business success
Traditionally, businesses have focused on maximising profit through a linear model of extraction, production, sale and disposal. This degenerative economic model is now under scrutiny. Today’s companies are expected to go beyond financial gain, using resources to positively impact society and the environment. This shift is not just a trend--it’s a strategy that benefits both the planet and the bottom line.
Understanding profit and [urpose
Profit is straightforward: it’s the financial benefit gained when revenue exceeds costs, taxes and expenses. Purpose, however, is more abstract. According to Harvard Business Review, purpose is “the ultimate goal of the business, the essential reason why it exists, and how it contributes to the common good.” Simon Sinek, in , explains that people buy the “why” behind a company, not just what it sells. Companies like Apple, with a purpose to “challenge the status quo,” show how purpose drives innovation and success. Others, like Patagonia, have clear missions that fuel their growth.
The business case for purpose
Consumers, investors, employees and suppliers increasingly favour purpose-driven businesses. Research shows that consumers are four times more likely to buy from companies with a strong purpose, and --91% among millennials. Suppliers prefer ethical companies to protect their reputation and investors are gravitating toward ESG assets. Moreover, purpose-driven companies retain employees three times more effectively due to higher engagement.
Beyond customer loyalty, purpose-driven businesses see better financial results. For instance, they report a 30% increase in innovation and greater resilience. These companies also the S&P 500, with an average return on equity of 13.1%, beating the index by 9%.
How to build a profitable, purpose-driven business
Building a purpose-driven business requires genuine leadership commitment and employee involvement. The purpose must resonate with employees, who should be engaged in its development. The intersection of four key areas--what society and the planet need, what employees care about, the company’s unique value proposition, and how profit is made--forms the foundation for a genuine purpose.
Purpose must permeate all aspects of the business, from HR practices to product development. Transparency and accountability are crucial; failing to deliver on purpose can damage the brand’s reputation.
The risks of inauthentic purpose
A hollow or misused purpose can harm a company. which misused social justice imagery, faced backlash, damaging trust and causing millions This serves as a cautionary tale about the risks of inauthentic purpose, which can also expose a company to legal issues.
Conclusion
Integrating purpose into a business strategy is essential for long-term success. Companies that align profit with purpose contribute to societal and environmental benefits while strengthening their financial performance. By being transparent, accountable and genuinely committed to their mission, companies can create lasting impact and ensure long-term success.
This is an extract from the white paper “”. Download the white paper for more insight and practical advice.
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