Research: Societal Purpose: A journey in its early stages

Research: Societal Purpose: A journey in its early stages

A report by the Economist Intelligence Unit, sponsored by Deloitte (January 2012)

The aim of this report is to explore business leaders’ attitudes to coporations whose purpose is defined in terms of benefits to the wider society: a societal purpose.

What is ‘Societal Purpose’?

According to the report, a societal purpose seeks to define a corporation’s core business outputs – the products and services produced through core day-to-day activities from which the organisation seeks to make a profit – as fundamentally orientated towards making a positive contribution to wider society, or enhancing quality of life.

“In the transactional nature in which purpose is talked about, purpose looks like one of these higher-order things,
but purpose is the very reason for your being,”
says R Gopalakrishnan, Director of the Indian-headquartered conglomerate Tata Sons.

Some examples of organisations with societal purpose include:

  • Alliance Boots: To deliver products that help people to look and feel their best
  • CVS Caremark: To improve the quality of human life
  • GlaxoSmithKline: To improve the quality of human life by enabling people to do more, feel better and llive longer
  • Royal Philips Electronics: To improve the quality of people’s lives through timely introduction of meaningful innovations
  • Vale: To transform mineral resources into prosperity and sustainable development

A number of questions were raised as part of the research:

  • How is corporate purpose perceived among business leaders today?
  • What attitudes and beliefs do business leaders hold about having a societal purpose?
  • Does societal purpose drive financial performance or is it s a by-product of a well-managed company?
  • What role will business play in addressing broad societal issues in the future, and what is expected of business leaders?

Summary of Insights

There were a number of key insights identified as part of the research.  The report summarises them into a number of key areas:

What makes companies define the purpose of their core business in terms of societal benefits? While the profit motive is still of primary importance for business leaders, they also see their companies as delivering societal goods and benefits, and increasingly they want the performance of their companies to be measured against their societal purpose too. One of the challenges in fully calibrating views on societal purpose is that different people formulate and describe their views in many different ways.

Regional Differences. Asia Pacific respondents to our survey, for example, view societal purpose as a product of business maturity and strong corporate leadership. European and North American responses are more ambivalent. In Latin America, the Middle East, and elsewhere respondents feel most strongly about the importance of societal purpose to future success. Tomorrow’s business leaders, according to our survey, will need to put societal purpose at the forefront of their thinking.

Telling the purpose story – both internally and externally – will be increasingly important. External stakeholders are clearly seen by business leaders to be lagging internal stakeholders in their awareness of corporate statements of purpose, and this has an impact on what leverage and benefits flow from societal purpose. Awareness will be vital.

Truly understanding the connection between a company’s purpose and its financial performance is not straightforward, and the direct connection is often not made. The evidence of this kind of link exists more in the realm of accountability, particularly for consumers whose conscience guides their purchasing decisions. Most importantly, a purpose statement is seen to guide decision-making and embody corporate culture – it is currently understood to be better leveraged internally than externally.

Finally, this research examines the extent to which business leaders are prepared to take the lead in solving society’s big challenges. This, it seems, is precisely what many people expect of corporations.

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