By Brad Addison - CoFactor Managing Partner; and communication, engagement and reputation management specialist
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In the last decade, we’ve seen a dramatic shift in the expectations of organisations. Organisations face increasing pressure to be socially responsible and to create a positive impact in the communities they serve. The wider community expects organisations to be responsible, transparent and accountable. They identify organisations with real people.
Organisations are responding by moving beyond a sole focus on creating profits and sustaining value for shareholders to a multi-stakeholder approach that creates and shares value for multiple stakeholders and society.
The idea of having a compelling purpose has taken a permanent place in the business world.
This was reinforced by the World Economic Forum’s updated 2020 Davos Manifesto which describes a company’s principal responsibilities toward its stakeholders:
“The purpose of a company is to engage all its stakeholders in shared and sustained value creation. In creating such value, a company serves not only its shareholders, but all its stakeholders – employees, customers, suppliers, local communities and society at large. The best way to understand and harmonize the divergent interests of all stakeholders is through a shared commitment to policies and decisions that strengthen the long-term prosperity of a company.”
Prominent global investment manager BlackRock, in a letter to the CEOs of companies it invests in, follows a similar theme:
“A strong sense of purpose and a commitment to stakeholders helps a company connect more deeply to its customers and adjust to the changing demands of society. Ultimately, purpose is the engine of long-term profitability.”
A key aspect of stakeholders’ perception of brands and businesses is the emotional connection they feel towards it: of associating with organisations with whom they can identify — and with whom they perceive an alignment in values.
It can be a daunting proposition for companies to orient their business to serve the interests of all stakeholders. But this is becoming increasingly important as company value hinges on the degree to which your company can demonstrate its reason for being and connect emotionally with key individuals and groups.
“What is your company’s core reason for being, and where can you have a unique, positive impact on society? Now more than ever, you need good answers to these questions.”
Management consulting firm McKinsey
It’s no longer just about what your brand does; but why it does it and how you tell the story. For many companies, developing an authentic purpose which demonstrates your place beyond your immediate products and services feels like a difficult stretch. But given its growing importance to stakeholders, your reputation, and an increasingly important factor in company value, it is well worth pursuing.
Interested to learn more?
CoFactor helps organisations define their purpose and weave it into a strong corporate narrative - the story that tells who you are and why you exist - to connect more deeply to your stakeholders and help drive long-term profitability.