Beyond Profit: The Power of Purpose in Business
From a conversation with Frances Frei, Professor of Technology and Operations Management at Harvard Business School.
Previously, on Giuseppe’s Glimpse: In our last episode, we delved into the fascinating world of online retail, exploring the complexities of the modern shopping experience and the importance of simplification through curation. Did you miss it? Catch up here! 📢
Buongiorno everyone! 👋
I don't know about you, but I find that some of my best ideas tend to come to me when I'm bouncing thoughts off others, exchanging insights, and asking questions.
Recently I had the absolute pleasure of chatting with none other than Frances Frei.
From the importance of being "humbitious" (humble + ambitious) to the evolving role of AI in our lives, we covered a lot. But one topic really struck a chord with me: the idea of being purposeful, which is one of the guiding principles Prof. Kotler and I have defined in our latest book.
In today's fast-paced world, the concept of purpose has evolved beyond mere profit-making to encompass a broader, more holistic approach to business. 🌐
Gone are the days when Milton Friedman's doctrine reigned supreme, advocating for profit maximisation above all else (in his words, “the business of business is business”).
Instead, a paradigm shift has occurred, fueled by a deeper societal consciousness and a growing commitment to environmental sustainability, equality, and human rights.
The traditional business model, which prioritised shareholders' interests and profit maximisation above all else, has given way to a more inclusive approach—one that emphasises creating value for customers, investing in employees, nurturing ethical partnerships, and contributing to the well-being of communities. 🫂
And this shift isn't just a passing trend; it's a fundamental reimagining of the role businesses play in society.
It's about the ‘why’ behind ‘what’ we do, shaping everything from their products to their relationships with stakeholders.
And guess what? Consumers are taking notice. They're demanding more from the brands they support, expecting them to stand for something beyond just making money. 💰
The power of purpose in practice
The term ‘purpose' has increasingly become a buzzword, and an entire generation of managers has grappled with Simon Sinek's concept of 'finding your why.'
Therefore, it is crucial to contemplate the true meaning of being purposeful and how companies can embody virtue without compromising essential profitability.
Being purposeful is about more than just words on a mission statement—it's about action.
Purposeful organisations align their efforts with their core values, leveraging them to drive positive change in the world.
Take, for instance, the iconic Patagonia, which has long been a trailblazer in the realm of corporate social responsibility. 💫
From their unwavering commitment to sustainability and environmental activism to their recent bold move of donating their entire $3 billion company to fight climate change, Patagonia truly embodies what it means to be driven by purpose.
But being purposeful isn't just about making grand gestures; it's about making everyday decisions that reflect your values.
Whether it's offering repair services to extend the life of products or fostering a culture of inclusivity and diversity within the organisation, purposeful companies prioritise people and the planet alongside profit.
Prof. Frei and I had a deep dive into the importance of implementing genuine diversity and inclusion in organisations. She hit the nail on the head—true inclusion should always come first. 🤝
Because let's be real, if a company talks the talk on diversity but falls short of being truly inclusive, it's missing the mark.
As she rightly pointed out, learning to be inclusive turns you into a magnet for diversity.
In other words, we should consider reversing the acronym from D&I to I&D to reflect this priority.
That's how you attract the best talent, not just those who look and think like you, but a diverse array of perspectives that enrich your organisation in countless ways. That, my friends, is the ultimate goal. 🎯
The path to purpose: challenge or opportunity?
While the benefits of being purposeful are clear, navigating the path to purpose isn't always easy.
Companies are faced with tough decisions about where to allocate resources and how to balance short-term profitability with long-term sustainability.
But as the demand for purpose-driven brands continues to grow, so too do the opportunities.
By embracing purpose as a guiding principle, companies can foster greater employee engagement, build trust with customers, attract top talent, and create a lasting legacy that extends far beyond the bottom line.
Being purposeful isn't just a business strategy—it's a moral imperative. 👊
In a world grappling with everything from climate crises to social injustices, companies bear a responsibility beyond profit margins. They're tasked with leaving a positive mark on the world.
By embracing purpose and aligning their efforts with their values, companies can not only thrive in the marketplace but also contribute to a more sustainable and prosperous future for all.
So, what’s your take on the role of purpose in shaping the future of business and society?
Do you believe in its transformative potential, or do you see challenges that still need to be overcome?
Do you have any examples of companies that have successfully transitioned from traditional business models to more virtuous, yet still profitable, ones?
Share your thoughts in the comments down below!
Stay curious! 🙌
-gs
If you are curious about my conversation with Prof. Frei, here you have the complete version! 📽️
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Thanks, Giuseppe. Inspiring post.
I also believe in the power of purpose; however, there are two caveats.
First, there is always a purpose. Every organization or person is driven by a purpose. They may not know it, or it may differ from the one they share, but every choice, action, or behaviour has a purpose. Second, you don't define or find your purpose. It's your purpose that "calls" you. A purpose is a possibility for something that needs a medium to materialize. It's a purpose that brings people together to make something happen. Not the other way around.
Therefore, an organization should not be searching for a feel-good purpose to put on its website. Instead, it should embark on an introspective journey - one that requires unflinching honesty - to comprehend the cohesive force that binds the organization and its members together.
https://oneappleaday.substack.com/p/1257-you-wont-find-it