#2 The Purpose Paradox

Huge financial upside can be unlocked from linking purpose with profit, but only a small fraction of companies achieve this. There are three secrets behind their success...

3 min read (761 words)

90% of CEOs believe positive impact is fundamental to long-term success (World Economic Forum).

And rightly so: a wealth of research and case studies validates this belief.

But only 3% of companies implement ESG effectively and link it with financial performance (L.E.K. Consulting).

This is what I call the Purpose Paradox.

I included this infographic in last week’s newsletter, and a few people have asked for more on this topic.

We will first explore how to overcome the challenges that cause most companies to fail.

Future newsletters will also look at the stat's referenced above and provide case studies to illustrate how different businesses in the top 3% have linked purpose with profit.

In the meantime, you can find out more about the many benefits enjoyed by purpose-led companies in this post on 'Purposeful Advantage'.

Three secrets to success

There are various challenges and barriers that cause most companies to fail.

And there are three secrets that will help you overcome them:

Secret #1: Aim for Improvement, not Perfection

Secret #2: Create Clarity on The Why and The How

Secret #3: Link Impact to Financial Performance

We'll explore the first one in today's newsletter and the other two in the coming weeks.

The Starbucks story

Back in 2019, I was advising Starbucks on sustainability.

It was at the height of the backlash against single use coffee cups.

The days of the 'Latte Levy'.

The leadership team of Starbucks EMEA were presented with a comprehensive blueprint for eliminating waste and creating the first closed-loop coffee stores.

And I even showed them how it would increase profitability and create shareholder value.

But they were terrified of any potential scrutiny they'd receive from the press.

Despite the enormous pressure they were under from the general public and the government to be more sustainable.

They wanted to be 100% bullet-proof from the media.

Rather than focussing on the improvement that could be made, they wanted to reach perfect in one jump.

It is very difficult to make progress with this approach.

Small steps and incremental improvement is the key.

A drop in the ocean

Some of the early-stage companies I work with face a similar issue.

They are fiercely committed to using their business as a force for good.

But they wonder: is it enough? Will it make a difference?

And sometimes this prevents them from taking action.

Sometimes these companies commit such a significant and disproportionate amount of their resources to creating meaningful impact that it stifles the growth of the company.

It is crucial to find the right balance.

Aim for improvement, not perfection

Whether you're a Starbucks or a start-up, the important thing is to make a start.

The enormity of the change that is needed can be overwhelming and prevent us from taking action.

But here's a better way to look at it:

When so much needs to change, it is easy to make progress by taking small steps.

Make a start, and focus on incremental improvement.

It won't be perfect, it may only be a drop in the ocean initially - but you can make a small step forward each day and over time they'll add up to meaningful change.

Next steps

1. Consider whether any of these limiting beliefs are holding you back.

2. If you aimed for progress rather than perfection, what actions could you take?

3. What could you start doing next week that would represent a small step forward?

The journey towards a better way of doing business

We are on the cusp of a new paradigm of responsible business, and helping impactful companies pair purpose with profit will accelerate the shift.

I believe this holds the key to solving many of our greatest challenges and inspiring positive change throughout society.

If you can think of two or three others that would find this newsletter helpful, I'd be really grateful if you share it with them.

Thanks for your support.

P.S. — A sneak peek at next week...

For those that do get out of the starting blocks, it is not easy to implement ESG initiatives effectively.

They often fail to obtain the desired results - both in terms of the impact being achieved, but also running late and over budget.

If this sounds familiar - you are not alone.  Most companies are experiencing this. 

ESG initiatives must be intertwined with a clear sense of purpose felt throughout your company.

This gets everyone aligned and motivated to do what is needed to achieve results.

If there is a shortcut or a 'hack' to joining the top 3%, this is it.

More on this next week...