“We have to get better at looking at the bigger picture, where our driver is not profit above all else, as this is an unsustainable business model”, a quote from an executive – Purpose Beyond Profit: The Value of Value – Board-level Insights
Our work is built on the premise that a business can help create both a better society and better business if it is inspired and guided by a purpose that benefits society, where profit is seen as one outcome. But being purpose-led is not just about having a purpose that is inspiring, authentic and practical. It is also a mind-set shift about what motivates people. Putting people at the heart of business success – and meaning it – is what unlocks intrinsic motivation and moves people to commit to a shared worthwhile endeavour.
Over the last 18 months, this idea of having a purpose beyond making money has hit the mainstream in the UK and US. We’ve noticed this in our interactions with the CEOs of major companies. Two years ago they were intrigued by us turning up to talk about ‘purpose’; today the desire to be purpose-led is more widely shared, and many are exploring how to bring about such a transformation. Many are also quick to remind us of the power that investors have to enable or disable their best intentions. On the other side of the coin, investors were asking us how to tell a company that is genuinely trying to be purpose-led, from one which has simply undergone a slick communications exercise.
This is why in March A Blueprint For Better Business teamed up with Quintin Price (former global head of active strategies at BlackRock) and convened a group of 10 leading stewardship investors from a range of asset management companies, with combined assets under management of over $8 trillion. Together they drafted a short list of questions which they think help get under the skin about whether a company is serious about putting purpose and people at its heart.
At first glance, these questions might seem quite simple, but that is their strength. Their simplicity is key to eliciting an honest, open conversation across a range of areas that go beyond prepared statements and can’t be answered with a data point or by ticking a box. Instead, they invite business leaders to reflect on issues at the heart of their business, particularly how they use their purpose to take decisions, how far they genuinely care about people and relationships, and the quality of their governance. They are not intended to be exhaustive but rather to support and enhance existing approaches.
When considering purpose and seeking to evaluate human relationships, it is clear that not everything that counts can be counted, and the paradox is that what can be is what counts. IIRC, Black Sun and AICPA research demonstrates that existing accounting, information and reporting processes and systems do not meet the needs of either companies or investors. In fact, a recent survey of investors found that nearly 75% of respondents are using non-financial information in investment decisions. There is increasing recognition that integrated reporting can help support a more holistic dialogue about long-term value between investors and companies. But there is also an understanding that not everything can be presented numerically and a range of approaches is needed.
It is a compelling call to action that this group of UK investors think questions such as these should be discussed in investor meetings with company chairs and CEOs. By asking these simple questions, investors can get a much better idea of whether a business is genuinely committed to becoming purpose-led and send a clear signal to the business that they value their long-term sustainable success.
However, business leaders need not wait for this. They can also ask themselves these questions to get a different take on how purpose and people are seen in their organisations and to examine their own motivations and practices. This is not a one-way interrogation; it is about widening the dialogue for the benefit of all.
Click here to download the list of simple questions investors want to ask businesses to understand if they are committed to becoming purpose-led.
A Blueprint for Better Business is an independent charity which works as a catalyst to help businesses be guided and inspired by a purpose that benefits society. We are funded by charitable foundations and individuals and do not accept funding from business. Our work is about stimulating and energising a different way of thinking and behaving in business rather than about compliance, kite-marks or regulation. If you would like any more information about Blueprint or the Five Principles please contact firstname.lastname@example.org.
By Charles Wookey, CEO, A Blueprint for Business