However, the 2020 Edelman Trust Barometer reveals that government is seen as the “least competent and least trustworthy” of the four societal institutions measured.
As trust in government continues to erode, more and more leaders of purpose-driven companies are taking a public stand around issues that impact us as a society. And they have discovered that it doesn’t hurt their business. In fact, it is good for business. Research reported in the Harvard Business Review found that purpose-driven organizations “exhibit superior accounting and stock market performance.”
You don’t have to choose between profits and social good.
Marc Benioff, Salesforce CEO, wrote in the New York Times (Oct 2019) that business leaders can “no longer wash our hands of our responsibility for what people do with our products. Yes, profits are important, but so is society. And if our quest for greater profits leaves our world worse off than before, all we will have taught our children is the power of greed.”
More recently, at Davos 2020, he stated, “Stakeholder capitalism, or the idea that companies have a greater purpose besides just providing returns for shareholders, has hit a tipping point.” Benioff concludes that “suggesting that companies must choose between doing well and doing good is a false choice. Successful businesses can and must do both.”
Indeed, Benioff is describing a growing phenomenon.
In 2017, in response to the Trump administration’s move to sell millions of acres of national park land for uranium and coal mining, Patagonia changed the landing page of their website to this bold statement. And they immediately filed a suit to block Trump’s proclamation in Washington federal court. Despite Trump’s predictable vicious retaliatory attacks, they pressed forward. October, 2019, a federal judge turned down an attempt by the Trump administration to dismiss the legal challenge. Today the battle continues and they’re not backing down.
Why did Patagonia take this stand? It comes from being true to their mission to “build the best product, cause no unnecessary harm, and use business to inspire and implement solutions to the environmental crisis.” As founder Yvon Chouinard explained on a CNN interview, “We’re losing this planet, and we have an evil government… and I’m not going to stand back and just let evil win.”
Patagonia is an inspiring example of a company that is both profitable and purpose-driven. In 2014 they were featured in a Fast Company article “How Patagonia’s New CEO Is Increasing Profits While Trying To Save The World.” Since the time Rose Marcario had joined Patagonia as CFO in 2008, Patagonia had doubled its scale of operations and tripled its profits. At the time she became CEO in 2014, they had about $600 million in revenues.
What makes a company purpose-driven?
Taking a stand is one aspect of being a purpose-driven company. To be truly purpose-driven, people must know what the values are, know what behaviors demonstrate the values, and must live them on a daily basis.
It doesn’t matter what size your company is – whether it’s a huge corporation or a small fire department. Purpose-driven companies live their values in all ways great and small, internally and publicly.
Starbucks, Southwest and Zappos are all highly profitable purpose-driven companies. Their values are prominently displayed on their website. More importantly, they hire for their values, communicate their values in everyday conversations, and use them to make decisions.
Furthermore, values are woven into the fabric of how work gets done. For example, Berrett-Koehler Publishers says, “We reject hierarchical relationships based on compulsion and force, and we seek to abolish class systems on every level.” This value is reflected in their salary structure where each level earns no more than 10% above the next – including the president and CEO! On his own time, Berrett-Koehler Publishers founder and senior editor Steve Piersanti recently took a public stand by penning an article about the ineffectiveness of Trump’s economic policies.
This impressive short video was created by the Bend Oregon Fire Department to show why their values are important and how they are lived. It is used to build relations with their community and is used internally for training new fire fighters, supporting rookies and reminding themselves about what is important.
What does this mean for leadership?
It is impossible to become a high performance organization – to sustain over the long-term high levels of profitability, employee satisfaction, and contribution to society – without also being purpose-driven.
Leaders build these organizations by creating conditions where:
1. Employees are clear about the values and what behavior demonstrates them.
2. Leaders model the values.
3. Values are used to guide how you make important decisions.
4. Goals are about more than profitability.
5. Concern is for the benefit of all stakeholders – employees, customers, shareholders, society.
These organizations require authenticity from their leaders. Being a purpose-driven leader means knowing when you need to speak your truth… and having the courage to take a stand for the greater good during times of moral crisis.