A "purpose driven business", fashionable, but what is it exactly? And what purpose is driven by the business? Most importantly - does it matter?
The answer to the last question is YES! It matters - but not in the way you would expect. In this article, we break down the purpose, and what drives the employee push for it, and how it is mostly not aligned with the real purpose of the business - its customers.
The hollowness of shareholder value
It goes without saying - investors in your company demand a return. They are entitled to a stake of the profits, after all, they parted with money to make your business grow. However, solely focusing on shareholder return is hollow. Especially if the investment is speculative (short term). The aim of a lasting business is long term, not quarter by quarter. In fact, many shareholder value driven organisations refrain from making a transformational decision which invests in the longevity of the business as a whole - as the return is beyond the expected and accepted shareholder value horizon.
Furthermore - imminent shareholder value can be at odds of customer success - the only reason a business exists and is allowed to prosper, is the success of its customers obtain by engaging with the business, and buying its products and services.
The final critique on shareholder value as a valid business purpose is that it is not very relatable to the employees. Even if you provide share or option plans, at best it is part of the remuneration. It certainly does not inspire. In absence of an inspiring purpose, employees demand to fill this gap, usually leading to corporate activism fueled by a few passionate employees.
Activism is surprisingly ineffective
The "social enterprise" - what does that actually mean? Businesses of all sizes are part of the social fabric - and certainly we do not want any business to be harmful to society. But what does this actually mean? That a business, large and small, should take part in some form of activism to make the world a better place? But what are the causes that lead us there? Do we have a single path to follow towards that? This is where the divisiveness comes in. In some rhetoric, you are either "with us" or a "fill in your slur of choice". Diversity of thought is not part of an activist agenda.
Companies have no voting rights. Nor are they voting blocks. Just because a CEO says that "fill in your social issue of choice here" is the most important thing that needs to be addressed, does not make that a universal truth for all employees. Just because one set of employees believe in it, and demand action, it does not mean that other employees that do not share that view are less valuable to the company.
And customers do not like to be lectured to by any corporation, when it is outside of the purview of that corporation. It has been exceptionally fashionable to advocate for certain causes as a business - but it is resulting in more division - not all customers share the views - and typically the louder a group advocates for something (and the more aggressively they do that) - the smaller the actual base they serve. The association with such loud and aggressive activism may drive a large base of your customers away - and you lose out on the opportunity to serve these customers.
Your business purpose is the success of your customer
It is that simple - your mission as a business, is to make your customers better off when they do business with you than with your competitor. And by making your customer better off has a huge impact, as it ripples through to make waves. For example, in my business, I help customers with their success with business applications. What does that mean? I make them better, more efficient, in serving their customers. This affects the people I work with directly (we spend most of our waking hours at work, so if I have the privilege of making a small improvement there, I am humbled by the impact), but also benefit their customers. This is my business' purpose. This is where I believe employees can get behind. If a business cannot actually serve their customers, why on earth do they think they have the ability to make changes in society at large successful? Stay humble.
As an individual, I obviously have more purposes in life. I would expect corporations with many employees to have an equal number of purposes shared among them. But the unifying purpose should be customer success. This is meaningful, measurable, and achievable. It fills the corporate vacuum of purpose if it is just shareholder value driven - every employee can get behind making the lives of their customers better by contributing to a better product, and better customer service. Other purposes could be filled by providing employees options to volunteer in the local community. This way we all get to make our small but meaningful contribution.