We recently came across an interesting article from McKinsey that speaks to the imperative of business to become increasingly purpose-driven. The article starts with the words, “Capitalism is under attack.” It then offers new definitions for prosperity, growth, government, and capitalism itself. Then it goes on to explain what business needs to do:
“We believe that a reorientation toward seeing businesses as society’s problem solvers rather than simply as vehicles for creating shareholder returns would provide a better description of what businesses actually do. It could help executives better balance the interests of the multiple stakeholders they need to manage. It could also help shift incentives back toward long-term investment — after all, few complex human problems can be solved in one quarter.”
“This is not to say that shareholders or other owners are unimportant. But providing them with a return that is competitive compared with the alternatives is a boundary condition for a successful business; it is not the purpose of a business. After all, having enough food is a boundary condition for life — but the purpose of life is more than just eating.”
“Some companies already think in these terms. Google, for example, defines its mission as “to organize the world’s information and make it universally accessible and useful” — a statement about solving a problem for people. And it famously refuses to provide quarterly financial forecasts.”
Solving problems to improve the lives of people
The main thrust of the article is a shift in thinking toward a capitalist system populated with purpose-driven, problem-solving businesses. It then asks readers this question: “What problems do you solve?”
“Once we understand that the solutions capitalism produces are what creates real prosperity in people’s lives, and that the rate at which we create solutions is true economic growth, then it becomes obvious that entrepreneurs and business leaders bear a major part of both the credit and the responsibility for creating societal prosperity. But standard measures of business’s contribution — profits, growth rates, and shareholder value — are poor proxies. Businesses contribute to society by creating and making available products and services that improve people’s lives in tangible ways, while simultaneously providing employment that enables people to afford the products and services of other businesses. It sounds basic, and it is, but our economic theories and metrics don’t frame things this way.”
Driven by new benchmarks of success
The purpose-driven form of capitalism the authors envision works through different approaches, values, and rewards.
“Today our culture celebrates money and wealth as the benchmarks of success. This has been reinforced by the prevailing theory. Suppose that instead we celebrated innovative solutions to human problems. Imagine being at a party and rather than being asked, “What do you do?” — code for how much money do you make and what status do you have — you were asked, “What problems do you solve?” Both capitalism and our society would be the better for it.”
Moving toward purpose-driven success
The first step is to step outside your immediate world and to see the meaningful outcomes your business generates beyond profit. Investigate the ways in which your business’s products, policies, and procedures improve individual and collective well-being. Start to imagine all the other ways your business could generate meaningful and gratifying outcomes for customers, employees, the society, and the environment.
Coalesce all this goodness into a promise that captures the essence of those meaningful outcomes. Use that promise to focus, motivate, and energize your organization and brand. Build success, profits, and shareholder support by solving important problems that improve well-being.
Emotive Brand is a brand strategy firm.
Originally published at blog.emotivebrand.com.