Opinion: James Barr: Societal Purpose Led Companies
The idea of being a societal purpose led company is becoming far more common. Forward thinking organisations are realising that traditional thinking may not be sufficient in the future, given how the world is changing.
The population is increasing at an alarming rate. If you are in your late forties, then there are now twice as many people on this planet as there were when you were born. Another 2bn people will live on the planet by 2050. These increases will lead to a lack of natural resources – by 2050 if everyone on the planet lived like the typical American does today, then we would need four and a half planets earths to supply our needs. For example, by the mid 2030s the world is expected to demand 40% more clean water than it can supply today. When we see how people and governments have reacted to a shortage in oil, only optimists would believe that we will share out all the natural resources that the world possesses.
In the not too distant past, the vast majority of people would have remained ignorant to these resource concerns and the plight of communities that they will inevitably bring. However, with the advent of social media – Facebook approaching 1bn users, Twitter users posting 400m tweets per day – knowledge is spreading to every corner of the globe each second that passes. As younger people become more aware of this changing world and the ongoing plight of different communities, so their attitude as potential employees and consumers will change. They are likely to want to work for organisations with philosophies that are aligned to their own personal beliefs. The traditional financial purpose of making money for shareholders doesn’t get many employees out of bed in the morning, but the idea of improving lives puts a spring in one’s step. So companies who wish to attract the best young talent to their organisation may need to rethink their core purpose.
Case Example: Mahindra & Mahindra
Mahindra & Mahindra is $16bn group based in Mumbai, which operates in over 100 different countries. They call themselves a federation of different companies, operating in industries such as automotive, aerospace, IT consultancy, financial services and many more. They have a common social purpose for all their companies; to enable people and communities to Rise. As an example, when they moved into the defence industry they wanted to ensure they followed their common purpose, and so they don’t manufacture fighter planes or develop new technologies for modern warfare; but instead they clear landmines.
(Their CEO, Anand Mahindra explains their purpose well: http://www.mahindra.com/Who-We-Are/Our-Purpose-and-Values#
Not so long ago, companies led by a social purpose would have been called charities, but Mahindra is a hugely successful profit making entity (2011 rev $9bn, increase of 17%).
Case Example: Café Direct
Café Direct is another example of an organisation that is driven by a social purpose. They aim to change lives and build communities, focussing on their social and economic impact in the developing world. They deal directly with smallholders and always have two spaces on their Board filled by growers. This can create logistical issues when arranging meetings but they accept that because they believe it is the best way to operate. 75% of growers are shareholders in the company and they plough 50% of profits back into the growers, to ensure a sustainable supply. The purpose of supporting small farmers in low income countries not only makes it an attractive place to work, but it is recognised as a positive by customers too. Twelve people drink a cup of Café Direct every second in the UK.
These two examples show how an organisation with a social purpose can be successful. It is clear however that it is not enough for global organisations to simply state that they are changing their purpose. Employees and customers alike will only buy into that if the new social purpose is well communicated and absolutely brought in to every aspect of how the organisation works.
James Barr is currenlty General Manager of UK Operations for Stora Enso Oyj, a global forest products company with almost 30,000 employees. James previously worked on a project looking at innovation and global responsibility best practice and as part of which he visited about forty companies globally and one of the key proposals to the Board was to introduce a common social purpose.