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News

How can purpose reveal a path through uncertainty?

1.02.2018
Company: EY

We discussed why purposeful businesses help drive inclusive growth at WEF 2018. What are the questions for boards to consider about how purpose can reveal a path through uncertainty?

In recent years, the concept of a purpose-led business strategy has gained increasing traction among leading businesses. Companies that have developed and embedded a clear purpose throughout their organization argue that it has provided them with both the ability to drive transformational change and the agility to innovate effectively in times of disruption.

Question for boards to consider

 

  • Does your organization’s purpose take into account the implications for a broad set of internal and external stakeholders?

 

 

Click here for more questions
 

In that context, the EY Beacon Institute surveyed almost 1,500 business leaders globally to understand how best-in-class companies are using their purpose as a beacon to navigate turbulent times. Some highlights of this research can be seen below:

Report highlights

  • Nearly all of the 1,500 business leaders surveyed claimed their company has a purpose of some sort, but this can mean different things. For some, it means serving a single stakeholder group, such as shareholders (15%), employees (11%), or customers (33%).
  • The research reveals, however, that a socially engaged conception of purpose that seeks to create value for a broad set of stakeholders ("capital P purpose") best enables companies to realize potential benefits.
  • Two-thirds of executives are profoundly re-thinking their organizations’ purpose as a result of the disrupted environment, and more than half of those (52%) are moving in the direction of a capital P conception.
  • Purpose must be embedded into an organization to fully unlock value. 75% of executives from purposeful companies state that the integration of purpose creates both short and long term value.

Questions for the board to consider

  • Does your organization’s purpose take into account the implications for a broad set of internal and external stakeholders?
  • Given the strong linkages between an integrated purpose and value creation, is the board’s focus on purpose adequate and appropriate?
  • How is the board supporting and holding management accountable to bring a purposeful strategy to life? Are there purpose-related KPIs and performance measurements that the board regularly reviews?
  • Have you revisited your organization’s purpose to ensure it provides the right strategic framework for responding to disruption?
  • Are there activities within your business that are inconsistent with its purpose, which are creating reputational or financial risk?
 

Tags: Finance | Business Development |

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