Why Purpose Matters in Organizations: The Numbers
Discovering your organization’s purpose seems like a personal, inward-looking process. While that may be true, it’s important to keep in mind that your organization's big, audacious meaning will not remain internal. It will continue to grow outward - flowing through your entire organization, influencing everyone involved, and ultimately, leading to higher revenue.
A report from the Big Innovation Centre in England found that a clear purpose is vital to economic success and calculated that businesses defining their “visionary purpose” could be worth upwards of $185 billion to the country’s economy.
Purpose can act as the grease to your organization’s components, making everything run smoothly. By sharing a common framework for what you do, the ability to collaborate, innovate and inspire increases greatly. A top-to-bottom understanding of what motivates the work in your organization will eliminate a great deal of confusion and ineffectiveness as well, while letting great ideas prosper. Simply put, everything and everyone benefits. Especially your bottom line.
“Only purposeful companies, freed from the exclusive focus on short-term profit maximisation, will make the long-term investments required to succeed in today's economy. In the long-run, there is no trade-off between purpose and profit."
Alex Edmans, Professor of Finance at London Business School and author of the report told london.edu
As our co-founder Mark O’Renick noted his blog post, building a culture of purpose can seem formidable. But if you focus on meeting the individual physiological needs of employees (making money and a sense of security), it can help grow a sense of togetherness among the organization, making it easier to develop and communicate a coalesced sense of meaning. Companies who have aligned their deeper meaning internally are proven to run more efficiently as well. A recent study found if employees felt they are working towards a good cause, it increased their productivity by up to 30 percent.
And when this happens, organizations have a much simpler path to success. In a study on corporate culture, Harvard professors John Kotter and James Heskett found that organizations with purpose do shockingly well compared to their counterparts, outgrowing them by a margin of 15:1. According to their findings, these companies also experienced 400 percent higher revenues, 700 percent greater job growth, 1,200 percent higher stock prices and faster profit performance than similar companies.
For more on the relationship between your organization’s purpose and profit, take a look at our founder Dan Salva’s post on the magical intersection between meaning and money.