In the previous chapter, I focused on the various nuances of what it means to be 'purpose-driven'.
In this chapter, I start to look ahead towards whether people really thought we were moving towards a 'purpose-driven' future. What is the future of 'purpose-driven businesses'? Will there be an increase in social enterprise type businesses or is it just a fad? What do the stats say? And what might be impeding us?
Almost all respondents I spoke to believed that there is a growing consciousness among people on the impact of our footprint and that of businesses. This is fueled by greater access to information and ability for people to look up how businesses operate, their supply chains, their purpose, etc. In turn, this is driving greater demand for businesses to 'do good' and be more socially minded and responsible.
I did some further research to verify if these perceptions hold true, and it does appear to be borne out by research, with a 2019 US survey indicating that 70% of consumers want to know what the businesses they support are doing to address social and environmental issues, and 46% pay close attention to their social responsibility efforts.
In Australia, 34% of consumers will buy sustainable products, and the consumer demand for healthier and more sustainable goods doubled from 2007 to 2017, from $12 billion to $26 billion.
Many respondents also pointed to the younger generation (Gen Z, Millennials, etc) as a major segment who have greater awareness of the impact they have on the world, both as consumers and as employees
Again, research seems to bear this out, 73% of millennials appear willing to pay more for sustainable goods and products. A separate report from Nielsen shows that 85% of millennials find it important that companies implement programs to improve the environment, and 75% saying they would change their purchase habits to reduce impact on the environment.
Beyond being consumers, 76% of young people also consider a company’s purpose and values in choosing where they work, and 83% would be more loyal to a company if they were given opportunities to make a social and environmental impact.
This sentiment was echoed by the younger respondents I talked to, who spoke of being acutely aware and mindful of how they fit into the broader ecosystem. They not only talked about a shared understanding of our footprint, they also spoke at length of broader sustainability concepts such as circular economy and closed loop systems.
At the other end of the spectrum, one respondent I spoke to from a senior executive role also thought that 'purpose-driven' organisations may also require younger generations to lead them, because the older generations (including said respondent) were more likely to possess traditional mindsets when it came to business.
However it's not purely consumers that are driving this change. Several respondents spoke admiringly of businesses who have chosen to commit to being ‘purpose-driven’ and focusing on improving their respective impact on the world.
Unilever was the most commonly cited example among respondents of how it is possible for big corporations to succeed and grow in spite of putting environmental sustainability at the core of what they do, and of the leadership of Paul Polman (former CEO) in fostering the change. They haven’t necessarily gotten everything right - something they appear to be transparent in admitting - but they were perceived to be a private business driven by purpose.
Another respondent also highlighted multinational food-products corporation Danone as another example of an existing business that is becoming ‘purpose-driven’, in light of their recent commitment to be B-Corp certified.
These examples were presented by respondents to demonstrate that even existing, large corporations can evolve to become ‘purpose-driven’, and that it’s not necessarily small businesses or charities who need to do all the heavy lifting.
About a third of the respondents spoke of the length of time they believe it would take for change to occur, simply due to human nature and systemic inertia.
For example, our fight against single use plastic has been years in the making, with the shift towards reusable shopping bags requiring several iterations of carrot and stick incentives before a critical mass of shoppers finally switched their habits.
And whilst businesses will also face increasing pressure from customers, employees, and competitors, the next generation of purpose-driven leaders is, well, a generation or two away.
So what's stopping us? What barriers are in the way?
At this point, having established what I felt like was a general consensus that we are shifting the needle towards becoming more ‘purpose-driven’, I asked respondents what they felt might be barriers. As always, there was a diversity of responses.
The most common reason can really be summed up as the standard capitalistic, Milton Friedman-inspired profit-generating system of business that prioritises profit and shareholder return above all else.
I particularly liked one response that suggested part of the reason why some businesses may struggle to weave ‘purpose-driven’ initiatives throughout their operations is because of accounting. When each business unit is measured in terms of revenue and expenses, it can be difficult to sign off on impact initiatives that decrease that margin. This could be why CSR is often cordoned off into one part of the business, so that it’s centralised and reported under a different cost centre.
At a more macro level, another respondent cited that their organisation had a major super fund as a shareholder, whose members consist of aged pensioners. These super funds exist solely to provide a higher return for their aged pensioners, a pressure that is passed on to the organisation and the leadership.
That said, some respondents did acknowledge the ethical investment funds have doubled in recent years, with shareholder activists now utilising the same investment infrastructure to exert a different type of pressure on businesses.
The next most commonly cited barrier to change was leadership, specifically at the Executive, C-Suite, and Board level. Many respondents felt that genuine change for any organisations had to fundamentally come from the top, as demonstrated by Paul Polman of Unilever and Emmanuel Faber of Danone.
There were several reasons suggested for why leaders may be resistant to change. First is due to the systemic inertia described above, in which leaders are beholden to other corporate, bureaucratic, or even sometimes market forces. For instance, one respondent who works at a major engineering firm shared that if they wanted to become more sustainable or ‘green’ in their manufacturing process, the tooling and hardware changes would likely require significantly more time than their customers would be willing to wait for.
The second reason cited for leadership resistance was generational, that current leaders who are older may have cut their teeth in a business world in which profit was the primary driver. These older mindsets - whilst not immutable - may be less capable of reconciling profit against social impact.
And finally, personal greed was cited as the third barrier to change. Mark Zuckerberg and Jeff Bezos were cited a couple of times as leaders who clearly had no need for more money, yet they continued to make decisions that fundamentally increased their own wealth or that of their businesses. Again, as identified in Chapter 1, respondents agreed that generating wealth isn’t an issue, but the question becomes 'how much is enough'?
Several respondents disagreed that Executive Leadership was fully to blame, elaborating that middle managers are often the ones tasked with making change happen but weren’t held accountable to it.
For example, a couple of respondents reflected on their experiences at ‘all hands’ team meetings in which CEOs might speak eloquently of the importance of mental health and wellbeing, the need for inclusiveness and diversity, and what it means to be ethical.
But as soon as the meeting was over, everyone returned to their regular routines. Middle management would continue to be measured by project output and productivity, instead of by any of the values shared by the CEO.
In short, there’s no incentives or accountability required at the middle management level to create change.
Turning the spotlight away from the ‘business’ world, many respondents felt that individuals, consumers, and the general public could take on more personal responsibility for being the change they seek.
Respondents felt that too many individuals talk the talk, especially when it comes to asking businesses to be more ‘purpose-driven’ or socially minded, but don’t actually walk the walk in their personal lives.
Research seems to bear this out, with one 2017 American study showing that 88% of people think that the average person should be doing more to reduce their environmental footprint, yet 61% would choose comfort and convenience over the environment, manifesting in the result that only 35% of Americans actively recycle.
Putting it crudely, for every 3 people who talks the talk, only 1 actually walks the walk. Millennials don’t get off the hook here either; the same research indicates they’re less likely to recycle at only 27%. Sidebar: I can’t say that I’m personally that surprised at this statistic, but only because it is a personal bugbear of mine to see poor recycling habits in offices, in spite of all the clearly marked labels on the bins, on packaging, and on signage. End rant.
Some respondents felt that social media may have a role to play (i.e. slacktivism) though the jury appears to be out on whether it’s effective or not in effecting change.
This barrier refers to the lack of understanding people have of how systems work in order to effect change, whether that’s business, monetary, government, or supply chain.
About a quarter of the respondents I spoke to felt that people (the general public) may sometimes demand better outcomes or call for change, but not necessarily understand how that change manifests or the time required.
Again, social media may have a role to play here, especially campaigns that simply ask users to share messages on social media or sign a petition. Whilst these activities may raise general awareness, the respondents I spoke to felt that people need to understand the system better in order to make more informed decisions, and not just 'tear the system down'.
Both the lack of personal responsibility and lack of systems awareness contribute to the third barrier flagged by respondents: A lack of empathy.
There were two primary observations from respondents. Firstly, that people were sometimes too quick to judge, expecting unrealistic changes from businesses and other people in an unforgiving manner. The second was the negativity as a result of a perceived tall poppy syndrome, especially in Australia, in which people or businesses are cut down for being perceived as thinking too highly of themselves.
The combination of these two can create environments that can make it difficult for people and businesses to become more ‘purpose-driven’. Charitably, this can create greater levels of scrutiny and accountability for businesses. Less charitably, it can create a toxic environment that makes it harder for businesses to justify taking a risk, for fear of being castigated if they try, and then fail.
And finally, to end on a slightly more positive note, about 10% of respondents who didn't think there was anything that was fundamental 'stopping' us from becoming more ‘purpose-driven’; we just need more time for the system to naturally evolve.
Whilst most respondents felt that there is a move towards becoming more 'purpose-driven, quite a few respondents wondered if this was simply a new form of Corporate Social Responsibility. There were several observations I thought were particularly interesting to highlight.
The first observation came from a couple of older respondents I spoke to. They reflected on the big social movement towards Corporate Social Responsibility and the introduction of 'social contracts' in the 1970s, which then died off in the 1990s and is now resurging. I think this raises a legitimate question whether we’re simply seeing history repeat with a fresh coat of paint, or whether this is a genuine evolution of 'social impact'.
The second observation centred on how important was it really for businesses to have a 'feel good' part of their business, especially if they already have an in-built loyal audience. One respondent shared a thought provoking observation, that being Apple’s primary purpose of 'challenging the status quo' is so strong and their customer base so loyal that they can almost afford not to have a 'feel good' part of their business. Which isn’t to say Apple doesn't have a Corporate Social Responsibility arm (which has attracted quite a bit of criticism), but that there tends to be less focus on Apple’s social impact credentials compared to other businesses.
The final observation focused on whether there was a genuine growth in the proportion of people (not demand) for 'purpose-driven' businesses or whether we’re simply more aware of better marketing towards already conscientious market buyers. Using Thank You. or Who Gives A Crap as examples, is there really a growing number of buyers who are more conscious of their purchases, or is it actually the same proportion of buyers who are already primed to be socially conscious and now they have more options to purchase?
I think these are all fascinating observations shared by respondents and adds more questions around what it means to demonstrate purpose, which will be the focus of the next chapter.