guardian masterclass: how to run a purpose-driven business

Sally Hill | Wildwon | Oct 2016

purpose.do sallyrhill

10:00 am Introductions

10:15 - 11:15 am The purpose-driven business landscape

Break

11:35 - 1:00 pmWhat can purpose do?

Lunch

2:00 - 3:00 pm Your Business: Purpose applied and purpose frameworks

Break

3:20 - 4:20pm Meet the masters: Guest speaker

4:20 - 5:00pm Takeaways: Tools and Resources

The day


Introduction

Group intros:+ name + role & organisation + why you were interested coming along + what you’re hoping to get out of the day


Purpose in a nutshellWhat is a purpose-driven business?

Organisations have often been divided into two major types: non-profits and for-profits.Purpose-driven business is something in between.

Purpose is an aspirational reason for being that is grounded in humanity and which inspires a call to action.

All companies have a purpose - however we define purpose-driven business as companies that are oriented around something other than money and serve a higher, positive purpose.Today we’re talking primarily about organisational purpose rather than personal.


Long-term/outwardly focused

Aspirational and belief-driven

Humanistic

Broader than the company’sactivities, products or services

Resonates with the company’sDNA and values

Captivates customers,employees, partners and the market

Timeless (or lasts at least 100 years)

‘Why a company exists in the first place’ (David Packard)

Purpose is Purpose is not

A vision

A mission, values, credo, tagline etc.

Philanthropy

Solely focused on the organisation internally

Branding, corporate sustainability, or public relations

Short term

Business goals or strategy

About being trendy

‘Tacked on’ via marketing or community activities

Write down your purpose statement (v1)


The purpose-driven business landscape


The business world has a spotlight firmly on purpose


The business world has a spotlight firmly on purpose

Simon Sinek “Start with why”


Edelman GoodPurpose studyHavas Media “Meaningful Brands” Global ReportDeloitte Core Beliefs & Culture surveyEcho Global CSR Study

Consumer expectations have shifted

• 87% of global consumers believe that business needs to place at least equal weight on society’s interests as on business’ interests

• 80% of global consumers think it’s important for companies to make them aware of their effort to address social issues

• Only 6% believe the singular purpose of business is to make money for shareholders

• 76% think it’s ok for brands to support a mission and make money at the same time

• 91% of global consumers would switch brands if a different brand of similar price and quality had a strong mission


Edelman GoodPurpose studyHavas Media “Meaningful Brands” Global ReportDeloitte Core Beliefs & Culture surveyEcho Global CSR Study

Consumer expectations have shifted

• 54% of consumers don’t trust mainstream brands

• 47% of global consumers buy brands that support a good cause at least monthly

• 53% would not invest in a company that does not actively support a good cause

• 90% would boycott if they learned of a company’s irresponsible business practises, and more than 55% have done so in the past 12 months


Employee expectations have shifted

47% percent of tertiary students are Purpose-Oriented and they are raising the bar for higher education and the workplace. Employers and colleges that are able to adjust to meet these needs will likely thrive over the next few decades(Imperative 2016 Purpose in Higher Education Report)

The movement is already happening. People are increasingly looking for jobs that give them personal fulfillment; and companies are seeing that purpose-oriented employees are more productive and successful.

(Global Purpose Index 2016)


The data is showing that purpose-driven companies outperform others

“A purpose mobilizes people in a way that pursuing profits alone never will.” - FastCompany“Over a decade-long period, purposeful, value-driven companies outperform their counterparts in stock price by a factor of 12.” - John Kotter and James Heskett, Corporate Culture and Performance “Those companies able to harness the power of purpose to drive performance and profitability enjoy a distinct competitive advantage” - Valerie Keller, Global Lead, EY Beacon Institute The meaningful brands index outperforms the stock market by 120%- Edelman GoodPurpose Study



In ‘Firms of Endearment’ - the authors profiled 28 FOE and found that they not only outperformed the S&P 500 by huge margins, they also outperformed the companies highlighted in the bestselling book Good to Great, which identified 11 companies that delivered superior returns to investors over extended periods. The performance metrics below are nothing short of astounding.


EY Beacon Institute


“Those companies able to harness the power of purpose to drive performance and profitability enjoy a distinct competitive advantage” - Valerie Keller, Global Lead, EY Beacon Institute


CSR

Corporate sustainability

Shared value

Integrated reporting Purpose as a change enabler, guiding force & competitive advantage

PhilanthropyRegenerative design

Circular economy

Corporate context


EY Beacon Institute


Emphasis on the ‘driven’ or ‘led’ in purpose-driven or purpose-led

By acting on their purpose, companies can create more value for their shareholders and society over the long term than by pursuing purely financial goals or a narrowly defined self-interest.

- EY Beacon Institute

The Purpose Paradox

“The best way to maximize profits, is not to make profits a primary goal.”

- John Mackey, co-founder and CEO of Whole Foods

Terms, frameworks and who’s who


The Purpose EconomyResource Framework Who?

Brands

- purpose is what’s next after information economy

- purpose as the primary driver of economic output

- purpose as the common denominator in other mega-trends

Aaron Hurst


Higher Purpose: Recognising that every business has a purpose that includes, but is more than, making money. By focusing on its Higher Purpose, a business inspires, engages and energizes its stakeholders.

Stakeholder Orientation: Recognising that the interdependent nature of life and the human foundations of business, a business needs to create value with and for its various stakeholders (customers, employees, vendors, investors, communities, etc.). Like the life forms in an ecosystem, healthy stakeholders lead to a healthy business system.

Conscious Leadership: Human social organizations are created and guided by leaders – people who see a path and inspire others to travel along the path. Conscious Leaders understand and embrace the Higher Purpose of business and focus on creating value for and harmonizing the interests of the business stakeholders. They recognize the integral role of culture and purposefully cultivate Conscious Culture.

Conscious Culture: This is the ethos – the values, principles, practices – underlying the social fabric of a business, which permeates the atmosphere of a business and connects the stakeholders to each other and to the purpose, people and processes that comprise the company.

• Business is good because it creates value, it is ethical because it is based on voluntary exchange, it is noble because it can elevate our existence and it is heroic because it lifts people out of poverty and creates prosperity.

• Free enterprise capitalism is the most powerful system for social cooperation and human progress ever conceived. It is one of the most compelling ideas we humans have ever had. But we can aspire to even more.

• Conscious Capitalism is a way of thinking about capitalism and business that better reflects where we are in the human journey, the state of our world today, and the innate potential of business to make a positive impact on the world.

Conscious Capitalism

Brands


Conscious CapitalismResources Framework Who?

John MackeyRaj Siodia Michael Bradley


Shared ValueFramework

- Shared value is a management strategy focused on companies creating measurable business value by identifying and addressing social problems that intersect with their business.


The Purpose EconomyCSR > CSV BrandsWho?


Circular EconomyAbout FrameworkWho? Brands

A circular economy is one that is restorative and regenerative by design, and which aims to keep products, components and materials at their highest utility and value at all times, distinguishing between technical and biological cycles.


Cradle to CradleResource Framework Who?

Brands

- created by industrial designer William McDonough

- also called ‘regenerative design’

- views materials as nutrients circulating in safe, natural metabolisms

William McDonough


Natural CapitalismResources

• Most businesses still operate according to a world view that hasn’t changed since the industrial revolution.

• Then, natural resources were abundant and labor was the limiting factor of production. Now, there’s a surplus of people while natural capital (natural resources and ecological systems that support life) are in decline and relatively expensive.

• Business must adjust to these realities and account for diverse forms of capital/value.


Natural CapitalismFramework Who?

Related ideasSix Capitals

Integrated reporting

True cost accounting

Investing in natural capital

Biomimicry

Radical resource efficiency

Service & flow economy

Cradle to Cradle


Purpose-driven entrepreneurship


B Corp (Benefit Corporations)Resources Who?

• B Corp is to business what Fair Trade certification is to coffee

• It’s about ‘redefining success in business’

• being best for the world, not just best in the world

• Stringent assessment tool and standards

• Alicia Darvall (ED)


Brands

1104 B Corporations 60+ Industries 30+ Countries 1 Unifying Goal1600


Social Benefit CompanyAbout Legally Who?

Prashan Paramanathan, CEO

We wanted our new structure to allow us to raise equity while embedding our purpose into our DNA. Practically what 'embedding our purpose' means to us is:

- that everyone (i.e. shareholders and directors) is clear on what the purpose of the organisation is; and

- that they are required and permitted to act to further the purpose; and

- that shareholders (in particular founders) have a way of ensuring that the purpose is followed even with ownership changes

Current Australian equivalent of a (US) Public Benefit Company

Three tenets included in legal structure of organisation:

- statement of purpose

- statement of director’s duties

- mission lock (changing the purpose or Directors Duties requires a 100% shareholder vote

“a new legal structure for Australian social enterprises”


Social enterprise developmentSocial enterprises are businesses that trade to intentionally tackle social problems, improve communities, provide employment and training, or help the environment.

In Australia there’s no legal structure / entity type for social enterprise but they’re typically defined as:

1. driven by a public or community cause - social, environmental or economic

2. derive most of their income from trade, not donations or grants

3. use the majority of their profits (at least 50%) to work towards their social mission

Typically, they start with the cause and then build a business model around it - meaning one of the key challenges is social enterprise development and sustainability.

Social procurement is becoming recognised as a key way for large organisations to have a positive impact through their purchasing power

• The ‘Finding Australia’s Social Enterprises Report (FASES) 2016, from Swinburne University’s Centre for Social Impact (CSI) in partnership with Social Traders, surveyed 370 social enterprise practitioners.

• Australia’s social enterprise sector is thriving, according to the recently released Currently,

• There are at least 20,000 Australian social enterprises in operation, and many of these are between two and five years old.

Social EnterpriseWho?

Social procurement

ResourceAbout


Not-for-profit + mission-aligned trading activity

eg. Oxfam (stores)

Inspiring Adventures

ADARA Group - Audette Exel (0:22 - 12:00)

Hybrid Models


Community or welfare organisation (charity)

NFP with mission-aligned trading

activitySocial enterprise Social / ethical

businessMainstream

commercial business

PRIMARY PURPOSE PRIVATE PROFITCOMMUNITY BENEFIT

via Social TradersSpectrum




activity

Social enterpriseSocial / ethical

business Mainstream commercial business

Mainstream business w. shared value

or integrated reporting

Purpose-driven mainstream business

PRIMARY PURPOSE PRIVATE PROFITCOMMUNITY BENEFIT

Spectrum: reconsidered


PRIVATE -> MUTUAL PROFIT

COMMUNITY BENEFIT

B Corp

Conscious Capitalism

Circular Economy

Natural Capital

Shared value

Purpose-driven entrepreneurship

Purpose economy

Spectrum: reconsidered



activitySocial enterprise

Mainstream commercial business

Mainstream business w. shared value

or integrated reporting

Social / ethical businessPurpose-driven

mainstream business


Emphasis on the ‘driven’ or ‘led’ in purpose-driven or purpose-led

By acting on their purpose, companies can create more value for their shareholders and society over the long term than by pursuing purely financial goals or a narrowly defined self-interest.

- EY Beacon Institute

The Purpose Paradox

“The best way to maximize profits, is not to make profits a primary goal.”

- John Mackey, co-founder and CEO of Whole Foods

Pairs to discuss:+ where does your organisation sit on the spectrum? + why? + does profit or purpose ‘drive’ for your organisation?


Break


Purpose as strategyaka ‘what can purpose do?’


Purpose

Leadership Behaviour

Values-based Culture

Trusting & engaged employees

Meaningful experience for customers

Purpose as strategy

• Purpose is activated internally by leaders whose daily behaviour and decisions reflect the company’s purpose and values.

• This creates a values-based culture, along with positive interactions and experiences

• Builds employee trust and engagement

• This drives positive interactions and experiences with customers, leading to engaged, motivated and satisfied customers who trust and recommend you.


EY Beacon Institute


Brand

Who Gives a Crap, Patagonia (Driving the character of a brand and loyalty - brand equity via story)

Innovation

Nike, Interface (driving force and focus for innovation, R&D, flows to brand)

Team, Community & Culture

ETSY, Blackbaud (community and team can rally around purpose, decision-making clear)

Customer Experience

FrankGreen, Sendle (superior customer experience by solving a problem well)

Parts of a business that purpose can infuse and drive forward

Giving companies a competitive advantage

Profitability and performance

Brands who’ve actually done this and how it has manifested

What purpose can do


Purpose statement:

Build the best product; cause no unnecessary harm; use business to inspire; and implement solutions to the environmental crisis

LeadershipCulture Meaningful experience for customers

CUSTOMER EXPERIENCE

PURPOSE PARADOX - ‘don’t buy this jacket’

INNOVATION


Brand promise

Toilet paper that builds toilets ‘Consumer philanthropy’ - or - we can change the world using beer and toilet paper.Brand Customer experience Culture

BRAND

CULTURE

INNOVATION


Purpose statement:

To be the first company that, by its deeds, shows the entire industrial world what sustainability is in all its dimensions: people, process, product, place and profits - by 2020 - and in doing so we will become restorative through the power of influence.

CLOSED LOOP

NET-WORKS

BIOMIMICRY


CEO Mike Parker:

“Can we double our business while halving our environmental impact?” “If you have a body you are an athlete” “Bring inspiration to every athlete in the world” Clear case of purpose driving performance and profitability

FLYKNIT

PURPOSE PARADOX - ‘market cap’

FLYEASE


Purpose statement:

Build the best product; cause no unnecessary harm; use business to inspire; and implement solutions to the environmental crisis

Smart cups + Cafe Pay Superior experience for customers

SMART CUPS

SOLVING A PROBLEM

INNOVATION


Purpose statement:

Our mission is to reimagine commerce in ways that build a more fulfilling and lasting world.

We are a mindful, transparent, and humane business.

We plan and build for the long term.

We value craftsmanship in all we make.

AN ‘ETSY’ ECONOMY

INNOVATIONCOMMUNITY


Sendle delivers parcels door-to-door across Australia at flat rates cheaper than post.Meaningful experience for customers Designed to solve the problem of latent capacity in delivery vehicles - and better post. Creates radical efficiency and saves Co2 emissions


Commodity

Products

Services

Experiences

PurposePurpose is at the top of the chain of value creation (video 4:30 -9:36)

Chain of value creation - James Moody (Sendle)

Discussion - what are your favourite examples? What is purpose ‘doing’ for this company? - brand - innovation - team, culture, community- performance and profitability

Back to purpose statements.

But first, a few things to think about


collaboration & partnerships

circular economy & closed loop

deep community

cathedral thinking

different by design

meaningful work

business model innovation

solving a problem

21st century economics

Key trends and ideas


Long-term/outwardly focused

Aspirational and belief-driven

Humanistic

Broader than the company’sactivities, products or services

Resonates with the company’sDNA and values

Captivates customers,employees, partners and the market

Timeless (or lasts at least 100 years)

‘Why a company exists in the first place’ (David Packard)

Purpose is Purpose is not

A vision

A mission, values, credo, tagline etc.

Philanthropy

Solely focused on the organisation internally

Branding, corporate sustainability, or public relations

Short term

Business goals or strategy

About being trendy

‘Tacked on’ via marketing or community activities


Purpose vs mission

In a 1960 speech to Hewlett-Packard’s training group, company co-founder David Packard said,

I want to discuss why a company exists in the first place. In other words, why are we here? I think many people assume, wrongly, that a company exists simply to make money. While this is an important result of a company’s existence, we have to go deeper and find the real reasons for our being. . . . Purpose (which should last at least 100 years) should not be confused with specific goals or business strategies (which should change many times in 100 years). Whereas you might achieve a goal or complete a strategy, you cannot fulfill a purpose; it’s like a guiding star on the horizon—forever pursued but never reached. Yet although purpose itself does not change, it does inspire change. The very fact that purpose can never be fully realized means that an organization can never stop stimulating change and progress.


• What is your purpose?

• What problem does it solve?

• What special superpower does it employ? (personal or organisational)

• Have we checked that it’s timeless and that it’s not a vision, values or mission statement?

• How will it let purpose drive?

• What benefits would flow from it (brand, culture, team, innovation etc) ?

Purpose definition

What is your purpose statement - V2


Lunch Break


Your business: Purpose applied

‘Doing’ purpose - activation across an enterprise


Purpose

Leadership Behaviour

Values-based Culture

Trusting & engaged employees

Meaningful experience for customers

• Purpose is activated internally by leaders whose daily behaviour and decisions reflect the company’s purpose and values.

• This creates a values-based culture, along with positive interactions and experiences

• Builds employee trust and engagement

• This drives positive interactions and experiences with customers, leading to engaged, motivated and satisfied customers who trust and recommend you.

Purpose applied: Flows outwards from core

Innovation

Motivation

Story

Brand

Messages

Service


Break

‘Meet a Master’

Guest speaker - Simon Griffiths, Who Gives a Crap

– Simon Griffiths, Who Gives a Crap

“We can change the world using beer and

toilet paper.”


More tools & resources


Commodity

Products

Services

Experiences

PurposePurpose is at the top of the chain of value creation (video)

Chain of value creation - James Moody (Sendle)


Business Model CanvasBusiness modelling


Business modelling with purpose at the apex


B Corp impact assessment

Patagonia - ‘The Responsible Company’ checklists

GRI - sustainability reporting standards and index

UN Global Compact - voluntary, CEO commitments

Social Traders - re. improving social procurement

Further resources: tools for assessment & tracking


+ Audette Exel (ADARA Group)

+ Helen Souness (ETSY)

+ James Moody (Sendle)

+ Simon Griffiths (Who Gives a Crap)

+ Ben Burge (Powershop)

+ Clinton Squires (Interface)

+ Kim and Jason Graham-Nye (gDiapers)

Further resources: Purpose (conference) on Vimeo


Spark Strategy - moving from NFP to sustainable enterprise models

Hatched - infusing purpose through your whole company and strategy

EY - purpose-led transformation

Centre for Sustainability Leadership

School for Social Entrepreneurs

Further resources: companies and agencies specialising in purpose


Startup Podcast

Foundr Podcast

People of Purpose

The Good Work Revolution

mezzanine.co

Further resources: podcasts

http://mezzanine.co


B the Change Media

Guardian Sustainable Business

3BL

Triple Pundit

grist

Further reading: blogs & online

guardian masterclass: how to run a purpose-driven business

Leadership & Management