The most successful companies of the next decade may all share one common trait: a purpose, or reason for being, beyond profits, that is activated. An activated purpose is one that is not just written on walls and in handbooks, but integrated in culture, operations, products and services, and communications to measurably impact the business and society.
Why? Generating profit is no longer a guarantor of success if a company doesn’t create value for, and fulfill responsibilities to, all its stakeholders. While the stakeholder capitalism movement has grown in recent years, the events of the last few years have demonstrated its role in defining the future of corporate America. Paul Polman called the pandemic “an acid test” for stakeholder capitalism, and for many companies, it was a test of resilience, agility, and humanity. Accenture called it “the big reset,” a moment that would “alter what it means to be part of a society and community.” The Financial Times editorial board said COVID-19 pushed the private sector to pursue “radical reforms.” And the companies and investment funds that already had strong environmental, social, and governance (ESG) profiles outperformed the S&P 500 amidst COVID-19.
While companies around the world have acknowledged the importance of operating with and for a purpose beyond profits for years, it remains challenging for companies to move from a purpose that is merely defined, or stated, to one that is operationalized, or activated. And though it’s typically B2C companies that gain the most external recognition for being purpose-driven, the $22 trillion global B2B sector is increasingly turning to purpose to achieve competitive edge. B2B companies are operationalizing purpose to inspire employees, drive innovation, demonstrate accountability to investors, support communities, and act as committed global citizens.
To better understand the adoption and impacts of purpose within the B2B sector, my firm partnered with The Harris Poll and the Association of National Advertisers to conduct research with 250+ B2B decision-makers. While 86 percent of respondents said their company has a stated purpose, only 24 percent said that purpose was activated. Among those B2B companies with an activated purpose, we identified several best practices:
They ground purpose in societal objectives and core insights gleaned from data, research, stakeholder interviews, and employee input.
They charge senior leadership with “ownership” of purpose, and employees with development and activation of purpose.
They embed purpose into culture, behavior, and decision-making at all levels of the organization.
They utilize purpose as a lens for innovation, partnership, and collaboration at scale to address societal challenges.
Both organizations have identified their ‘Believers,’ a subset of employees we identified in our research. These individuals are ambassadors for purpose, and core to its development and integration. In our research, Believers—who made up 21% of all respondents—agreed with the statement: “I believe that if my company focused on our purpose, we would be more successful.” Believers were more likely than the rest of their colleagues, by a 20-point margin, to recruit others, collaborate with colleagues, provide better customer service, and defend the company in times of crisis. Additionally, 87 percent of Believers say purpose protects their company’s reputation and 74 percent say prioritizing purpose has had a positive impact on growth.
Recent McKinsey research backs this up, finding significant benefits when a company’s purpose is activated to align with business strategy and when it aligns with an employees’ individual sense of purpose. At this crossroads of activated company purpose and individual purpose, organizations find their employees are more loyal, engaged, and willing to advocate for their company. Those employees also believe their company’s purpose has a positive impact on society.
For TCS, one of the world’s leading information technology services and consulting companies, Believers are understood to be vital to the company’s success. Based in Mumbai, employing 510,000 people in 46 countries, and generating $23 billion in revenues annually, TCS leverages its purpose for tremendous competitive edge.
Chief Social Responsibility Officer Balaji Ganapathy says, “Purpose is the new tech. Every company over the past fifteen years wanted to be a technology company, advancing their internal capabilities to serve customers. But today, purpose has proved key to attracting, engaging, and retaining employees, meaning companies must live out their humanity and values with authentic action.”
TCS engages employees in its global education, skilling, employment, and entrepreneurship programs—including Ignite My Future and goIT—and makes CSR an integral part of the onboarding process for new hires. These efforts have enabled TCS to achieve an employee retention rate of 92.8 percent, with 97 percent of employees stating clear pride in the company in a recent survey.
Last year, despite the impacts of the COVID-19 pandemic, the company’s Ignite My Future In Schools program exceeded its goals of engaging 1 million students and 20,000 educators, achieving this across 350+ largely underserved U.S. school districts. Its goIT program engaged more than 54,000 historically underrepresented students in 33 countries. TCS believes that through innovation and collective knowledge, purpose-driven companies can lead positive change for all stakeholders.
Lineage Logistics, a $2 billion food cold storage and distribution company, moves one-third of the US food supply and has a clear purpose: “To feed the world.” Lineage demonstrates the power of “servant leadership” to activate its Believers, whereby senior leaders are accountable and accessible to employees at all levels of the organization. “From sweeping the floors to taking calls, every job matters,” says Jowan Kennedy, a training department lead.
When the C-suite carries the mantle of purpose, as executives do at Lineage, it is more likely to be authentically and effectively activated. Last year, Morning Consult research found that among the top drivers of CEO performance, half relate to purpose, and the top driver is “contributing positively to society.” This level of C-suite ownership, combined with a servant leadership mindset, was critical when Lineage defined its purpose, a project launched in 2015 when new CEO Greg Lehmkuhl joined. Central to the process were listening sessions with all levels of employees to understand what mattered to them and resonated with them.
“We were always a company with purpose,” said Sean Vanderelzen, Chief Human Resources Officer. “The key for us was: How do we articulate it in a way that is easy to understand, motivates our team, and helps people outside of our team understand what we’re about?”
Involving employees in the process is critical; our research found that 81 percent of companies said their employees played a role in defining purpose, and 74 percent say their organization’s purpose is a clear source of pride for employees. Lineage employees at all levels say they feel closely connected to the company’s purpose. Michael Rico, a distribution center employee, said: “I know the food I’m loading onto this truck is going to end up on the plate of some child, so we want to make sure he’s getting a quality meal.”
This was illustrated in early 2020 with COVID-19. Lineage responded with agility and innovation, activating its entire supply chain through a bold $100 million "Share A Meal" campaign to deliver vital meals to people and communities in need.
Both TCS and Lineage Logistics demonstrate the galvanizing effect of purpose on employees and culture to achieve long-term success. By placing employees at the heart of purpose development and then mobilizing their Believers, both companies have demonstrated the quantifiable positive impacts of an activated purpose.