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CEOWORLD magazine - Latest - CEO Insider - The Rise of the Purpose-Driven Leader: 3 Keys to Prioritizing Purpose in Your Organization

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The Rise of the Purpose-Driven Leader: 3 Keys to Prioritizing Purpose in Your Organization

Anjan Thakor

A recent report confirms that the public trusts businesses more than the government or media even amid economic uncertainty. This gives leaders the chance to stand out by highlighting their organizations’ purposes. Purpose-driven organizations represent steadiness amidst swirling change, which can drive commitment, inspiration, and trust for stakeholders, customers, and employees.

Amid all the economic uncertainty in the world right now, businesses are given a golden opportunity to stand up and stand out. According to the latest findings in the 2023 Edelman Trust Barometer, private sector companies hold the last vestiges of people’s trust. The survey showed 62% of respondents felt they could trust businesses while trust in government and media has fallen sharply. This places business leaders in an elevated position to set the standards the public hopes for. It’s yet another reason to consider becoming a purpose-driven leader or, if you’re already running a purpose-driven organization, a more firmly focused one. But what is a purpose-driven organization?

A purpose fuels a purpose-driven organization, but this purpose doesn’t just sit at the top of a letterhead. It affects how the organization makes business decisions, speaks to its employees, and interacts with the community. The purpose explains why the organization exists and runs as it does. Ultimately, it becomes a guiding light, illustrating how everyone’s jobs work together to fulfill a goal.

What makes purpose-driven leaders and the companies they run so attractive to consumers dealing with the realities of global turbulence? For one, they represent steadiness amidst swirling change. A purpose-driven organization has an intrinsic compass that drives it to positively contribute — to its own employees, customers, or society at large. The compass is reliable, predictable, and meaningful. No matter what happens, stakeholders of the purpose-driven organization know there’s a North Star that won’t waiver. This is powerful and drives commitment, inspiration, and trust for stakeholders, customers, and employees.

Is it any wonder that purpose-driven organizations grow three times faster than other companies, according to Deloitte? Or that research published in Corporate Reputation Review has connected high employee satisfaction and faster growth to purpose-focused businesses? Thanks to these organizations’ overarching transcendent purposes, employees never have to wonder about the “why” behind a corporate vision or mission statement. Because they know, understand, and live their company’s higher purpose, they are naturally influenced to make better choices that align with the business’s purpose-driven direction.

Despite these obvious positives, you might already recognize (or be able to intuitively guess) that becoming a purpose-driven leader at the helm of a purpose-driven organization isn’t always simple. Becoming a recognized, purpose-driven giant like DTE Energy or 4Ocean takes effort and commitment. This is because of the inherent challenges that come from trying to strike a balance between profit and purpose in business.

DTE Energy’s purpose as a power company is to reduce environmental impacts. It does this by investing in and producing renewable energy in Michigan, prompting it to become Michigan’s leader in renewable energy. It also holds its operations to environmental and pollution policies. Because DTE Energy sells energy that it produces renewably, it balances profit and purpose.

4Ocean’s purpose is to clean up the ocean by removing plastic waste. But in order to fund this operation, 4Ocean needed revenue. This purpose led its leaders to make and sell jewelry using the plastics they had sourced from the ocean. While selling jewelry makes the company profitable, it also furthers the original initiative by repurposing the pollution into a product.

Make no mistake: The problem isn’t that purpose won’t or can’t lead to profitability. It will and can, as shown by many corporations like the two named above. However, in the short term, concentrating on becoming more purpose-led may require a temporary profit sacrifice. That’s a tough pill to swallow, especially when inflation is running high and the specter of a possible recession darkens all corners of the globe.

Nevertheless, you can’t squeeze all the benefits out of running a purpose-driven organization — such as increased efficiency, lower turnover, and stronger customer relationships — if you’re unwilling to take a calculated risk with your short-term profit margins. To be sure, you may not see the needle move much; it all depends on how much you need to change your systems and processes to put purpose above profitability.

How can you begin to transition to a purpose-driven leader? There are three steps to begin this journey.

  1. Identify your organization’s higher calling.
    If you’re already feeling a little overwhelmed, you’ll be pleased to know that you probably won’t have to reinvent the wheel. Your organization likely already has the threads of a higher calling. Many of your leaders and employees are already moving in that direction. Your job is to recognize that higher calling, name it, and mold it into your purpose.

    For example, start looking at your organization’s best practices. What are your corporate cultural standards? What is the collective “voice” that’s fermenting the seeds of purpose at your company? Listen well and learn from what you hear. The vast majority of organizations already have an unstated purpose. You just need to pinpoint it so you can raise it up and make it a driver for decision-making.

  2. Stand behind your stated purpose with conviction.
    Becoming a purpose-driven leader can take more than a modicum of courage. Your words and convictions matter, especially to workers eager to become purpose-driven employees and proudly carry the “purpose torch.” Some people — including investors and customers — may not agree with your purpose. This is why you must have the strength to be authentic about communicating your vision and never waver from the belief that your company’s purpose must be upheld at all costs.

    At Washington University’s Olin Business School, our leaders identified our bigger purpose by surveying colleagues. To stay trained on this purpose, we’ve set up several pillars of excellence that everyone is expected to follow. These pillars aren’t changeable; they’re standards our colleagues deeply care about. Consequently, we look for purpose-driven employees who believe in the pillars of our organization to help continue our mission.

  3. Make sure all business changes line up with your purpose.
    Evolutionary changes will always be necessary as your company moves forward so you can remain competitive. Before implementing a change, though, make certain that it’s consistent with your purpose. Remaining consistent is critical because it helps people feel comfortable with the changes they’re being asked to make.

    An additional benefit to being consistent is that the changes will be more likely to take root. Humans are naturally resistant to change. Nonetheless, if they see how the change and the purpose they believe in are linked, they’ll be more apt to adapt and form new habits.

There’s never been a more important moment for you to transform yourself into a purpose-driven leader. Not only will your efforts help you rally people around you, but you’ll set the stage for your company to become more profitable in the years to come.

Written by Anjan Thakor.

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CEOWORLD magazine - Latest - CEO Insider - The Rise of the Purpose-Driven Leader: 3 Keys to Prioritizing Purpose in Your Organization

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Anjan Thakor
Anjan Thakor is director of doctoral programs and John E. Simon professor of finance at Washington University. He is also now the interim dean of WashU’s Olin Business School and co-author of “The Economics of Higher Purpose.”

Anjan Thakor is an opinion columnist for the CEOWORLD magazine. Connect with him through LinkedIn. For more information, visit the author’s website CLICK HERE.