Why purpose-driven companies thrive during challenging times.
Discussions around getting the right balance, or re-balancing priorities, is a recurring theme as the world discusses the best ways of emerging from the circumstances we all now find ourselves in. It's clear that cities are addressing the imbalance between pedestrians and cyclists against the primacy of cars (City Transformations); and Amsterdam, for example is rebalancing economic strategy from growth to thriving, and connecting bodily health to planetary health; even Mark Carney, former Governor of the Bank of England, has joined in with his thoughts on how The Economy Must Yield to Human Values.
Many businesses are struggling in the face of challenges posed by the COVID-19 pandemic, but some are also thriving. Although each has unique secrets to their success, one common thread is that most companies seeing growth right now have a purpose larger than profitability. This is another example of 'better balance' and some commentators are even suggesting that the pandemic will put shareholder primacy and profit-maximization to rest for good.
Growth in difficult times by companies with a purpose larger than profitability isn’t a new trend. In the last recession, such businesses were 63% more likely to survive than other businesses of similar size. When we look at why these purpose-driven companies do better than their profit-oriented peers, four main themes emerge.
First, purpose-driven companies effectively innovate under pressure. They are accustomed to using creativity to solve some of the world’s biggest challenges while producing a marketable product.
Next, purpose-driven companies have flattened hierarchies and more flexible roles for workers. The drive to boost social good in business motivates workers to take on new roles in times of crisis. Transparent communication across teams also allows newer members to take on responsibility and facilitates group cohesion.
During a crisis, people scrutinize how companies are responding. Socially conscious companies feel the pressure to deliver the same quality product in a way that accounts for the additional struggles their consumers are facing. During COVID-19, consumers have become especially aware of companies who are truly making a positive impact with actions.
Lastly, times of crisis call attention to the role of humans in work. COVID-19 has highlighted the fragility of human life, which extends into the workplace. At a time when we are focused on caring for others in our communities and the world at large, we are also paying attention to companies that take care of their employees and their customers. If we are going to risk going back to work, it better be for something we truly stand behind.
All industries are struggling at the moment, but companies with a larger purpose than just profit are the ones best motivating their employees to get up and be productive each day for a cause larger than themselves. As we make economic decisions moving forward, shouldn't we be focusing on companies that are focused on us and our world?