Purpose-driven leadership — the refreshing mix of Profit and Purpose that leaders need to adopt!

Gone are the days when businesses existed only to maximise the bottom line to deliver higher returns to their shareholders. Everything around us has changed. Today, many leaders, employees and customers want to find more meaning in what they do and how they do it. Many investors are also beginning to realize that the positive correlation between profits and purpose is a value maximization strategy; hence, it does not necessarily have to be an either-or decision.

So, what does purpose, an organization’s purpose and purpose-driven leadership mean in the current context?

Purpose is the reason for which something exists. It is both the intended or desired result and also the determination or resoluteness to do something.

An organization’s purpose is the organization’s reason for being. It is the benefit that customers and stakeholders gain from the company, now and in the future. It is the difference the organization wants to make through its products, services or processes. This overarching goal fills members of the organization with determination, commitment and pride.

Purpose-driven leadership is leading ourselves and others with purpose and focusing on the ultimate contribution that we want to make collectively. Goals such leaders strive for are focused not only on the organization and employees’ self-interests but also on the greater good of the community, society and planet.

Conventional business models have always looked at impact in the context of profit. The best that organizations have done to create impact is to generously contribute through corporate social responsibility initiatives, some out of choice and some out of compulsions, legal or otherwise.

However, purpose-driven leaders are beginning to challenge this paradigm. They are trying to find a win-win by challenging these two false assumptions:

• Making a profit is impossible for a purpose-driven company.

• Profit is inappropriate for a purpose-driven company.

The more leaders have challenged these assumptions, they have understood that every ethically run business has the potential to create impact without compromising its bottom-line objective. I would even argue that the scale of impact that a profit-driven business can make can, most of the time, outstrip the impact that pure-impact initiatives can create. This is true because the impact-creating activities are integrated into a sustainable and profitable business, with adequate resources and partners at its disposal to multiply the impact.

It is time for the capitalist and idealist in each leader to come together to embody the dual commitment to profit and purpose. There is no better time than today to pursue purpose-driven leadership, as the business landscape is becoming more conducive to this shift. Employees, employers and customers are asking for purpose-driven agendas. Purpose-driven business may even mean better financial outcomes besides more meaning, satisfaction, energy and performance for and from everyone involved.

What can for-profit businesses do to find their purpose and increase their impact?

The best way to articulate the “impact” agenda is by business leaders asking three straightforward questions:

• What can we contribute to making the planet more sustainable?

• How can we alleviate poverty and help meet the basic needs of those at the bottom of the pyramid?

• How can we provide equal opportunity for everyone?

You don’t need to tackle all the above questions in one go, and nor do you need to take an exhaustive look at each of these to have all the answers. These questions should help you identify one to two themes you could focus on as you conduct your business. Believe me, whichever themes you pick up, you will be able to identify enough areas overlapping with your business activities to focus on.

Sustainability could mean reducing your carbon footprint by accessing alternate energy, reducing energy and water consumption or minimizing packaging materials.

Meeting the basic needs of those at the bottom of the pyramid could mean making your products more affordable — or including those at the bottom of the pyramid as partners or stakeholders in your business model.

An equal opportunity could mean taking a fresh look at your recruitment and talent development practices by ensuring that these move forward an agenda of diversity, inclusion and belongingness.

The business case for impact is obvious; each of the above will help you deliver cost savings or unlock opportunities that were not on your radar so far. It is always possible to come up with a purpose that helps your business’s cause rather than being a drain on your resources.

Once you have identified the business areas that can help you bring these themes to life, you need to start walking the talk. Align what you and your organization say about your purpose with what you and your organization do (i.e., how you behave).

Purpose is the most powerful motivator in the world. Showing your people how their work is moving them closer to a compelling cause gives them a powerful reason to get up in the morning and come to work that the size of the paycheck can never match.

This article was originally published in the Forbes Coaches Council post on Oct 4, 2022