Purpose-driven Business Needs to Be Less of a Rhetoric and More of a Mindset

30/06/2016 15:45 | Updated 30 June 2016

It was reported in the media recently that Sir Philip Green had taken delivery of a £46m private jet. This news was bound to be salt in the wounds of the 11,000 people at risk of losing their jobs through the collapse of BHS.

As Britain's best-known retailer faces public scrutiny for selling the department store chain, the issue of responsible business is at the forefront of everyone's mind.

I recently contributed to the paper, Purpose in Practice, examining the status of purpose-driven business in the UK. An organisation's purpose should have a direct link to how it creates value, and if this is only about its financial accounts, it is unlikely to be sustainable. Unfortunately, when profit is put before everything else, behaviour can become disconnected from customers and society.

Research by Deutsche Bank has shown that companies that commit to doing good in the world out-perform those that don't. Sadly, some businesses seek to back Corporate Social Responsibility initiatives as an after-thought, or at worst to offset less palatable behaviour. Potential customers, staff and investors can understandably be cynical about such schemes.

In contrast, authentically purpose-driven business is a mindset which means creating value in the long-term. When you invest in the culture of your business, you're investing not just for this year's profit but right down the line. Ultimately, consumers will make choices about products according to a company's behaviour.

The corporate world is moving from financials to integrated reporting, which reveals the full story rather than just a narrow piece. This makes it very clear whether an organisation's purpose has value.

Employees also increasingly care about working for organisations with purpose. Before the 2008 global financial crisis, CIMA was speaking to undergraduates interested in becoming accountants so they could become multi-millionaires after leading an IPO. Since the financial crisis, undergraduates have been saying they want to work in real businesses, in substantive jobs in which they are valued and can make a difference.

In this connected world, with the huge growth in social media, it is impossible to hide from anything. Corporate leadership requires both an understanding of purpose and an expression of that purpose which is authentic and engaging.

If you don't tell your story, someone else is going to tell it for you. So businesses need to make sure they have an authentic story to tell if they are to survive. Transparency is the only way that organisations can build and maintain trust in these complex and fast-moving times.