As Simon Sinek recently acknowledged, “People don’t buy what you do; they buy WHY you do it.” That understanding and the competitive leverage it can bring is the foundation of a purpose-driven strategy.
To be sure, having a purpose can generate a feel-good effect and provide guiding principles for employees. But upon further investigation, having a purpose-driven strategy can deeply impact employee morale, productivity, longevity, and engagement, as well as your company’s ability to continue an upward trajectory in profitability and growth.
Here are a few reasons manufacturers should consider embracing a purpose-driven strategy.
- Realize greater innovation and profitable growth in a very competitive world. A genuine purpose as part of a strategy can create transformational changes and growth. When researchers Millward Brown and Jim Stengel researched 50,000 companies, they determined the top 50 purpose-driven companies saw a 400% greater return on the stock market than the S&P 500. Why? The answer is multifaceted but one thing was clear—when employees look to a purpose-driven strategy, they can create unparalleled transformation through original ideas, creativity, and a shared mindset to be problem-solvers and value providers versus mere “do-ers.” In fact, companies with purpose-driven strategies have 30% higher levels of innovation, according to a Deloitte 2020 study.
- Generate increased productivity. Smart goals connected to purpose-driven strategy boost productivity. When teams and individuals understand how their roles fit into the team’s goals—and the purpose-driven strategy the company hangs its hat on—they are more fulfilled. More fulfilled employees are more productive and engaged, which shows up on the bottom line.
- Attain stronger employee recruitment. Recruitment challenges rank among employers’ top pain points. What resonates strongly, especially with millennials? Sharing a clearly defined company purpose so workers can see how their personal values align. Millennials in particular want to work for a company that offers a way to be part of something bigger than themselves.A 2021 Kane Insights report found that 88% of Wisconsin’s working women believe it’s important to work for a company that’s intentional about making a positive impact in the world. And yet, critical segments of working women in Wisconsin don’t feel this connection. This is troubling as employees who derive meaning from their work report almost twice the job satisfaction and are three times more likely to stay with, and contribute to, their employer, according to a Harvard Business Review study.
- Get better employee retention. The same elements that attract employees are also integral to retention. A purpose-driven strategy increases employee pride and engagement and gives them the answer to “why” they do the work they do versus simply the “what.” When you give employees something to believe in, studies show they are more motivated and energized, and more inclined to stay.
- Develop deeper customer loyalty. Customers view purpose-driven companies as being more caring and, as a result, are more loyal. In fact, a purpose-driven reputation can win you customers for life because they recognize your focus is on helping them and serving the greater good. People often make a purchase decision based on what a brand stands for and are drawn to brands aligned with their personal values.
As you can see, embracing a purpose-driven strategy can be highly transformative. It directly correlates with profitability and generates value today and in the long run.
Need help putting purpose at the core of your strategy? Contact Marie Mansheim, Senior Consultant—Growth & Strategy Practice Leader.