We are on the cusp of a new age driven by the unearthing of a timeless principle that has evaded businesses for decades: purpose. While the concept seems elusive, we define it simply as a deeper meaning behind why we do what we do. It is the meaning we provide to all of our stakeholders through our businesses now that will define the next age: The Purpose Economy.
What is the Purpose Economy?
Throughout U.S. economic history, there have been three overarching ages that have defined our society. We started in the Agrarian Age, where the production of farmland was king. As humans became smarter, we moved into the Industrial Age, where our processes became mechanized, thus increasing efficiency and production on a massive scale. Most recently, we entered the Information Age, where we have harnessed the power of technology to create incredible advancements. But here is the thing — we lost sight of why we innovated in the first place. We now move toward the 4th major U.S. economy — the age of purpose, where meaning is the most valuable currency.
Simon Sinek most notably introduced this topic in his TED talk, “How Great Leaders Inspire Action,” which states that successful companies start with “why” because “people don’t buy what you do; they buy why you do it.” People are buying how a product makes them feel. They are using their emotions as filters to make purchasing decisions, and millennials are a huge driver of this change.
In the book “The Purpose Economy” by Aaron Hurst, this shift in society is defined as “an economy where value lies in establishing purpose for employees and customers — through serving needs greater than their own, enabling personal growth and building community.”
There is a paradigm shift happening in the economy, and the human need for purpose is in the driver’s seat.
How Does It Affect Business?
Purpose is affecting business in the most profound manner yet. The human element is being incorporated back into modern business practices. This is something we have all been yearning for, but we were motivated too much by extrinsic factors that inhibited our ability to speak up. We now have a generation driving this narrative — the millennials.
The millennial generation is not motivated by pay raises or getting the next promotion; they care about making an impact each day in everything they do — work, leisure and purchases. They invest in movements and show extreme loyalty to companies whose brand clearly represents values they wish to associate with themselves. Adaption to these principles will be crucial to any company looking to sustain and thrive in a millennial-lead economy.
You have already seen purpose start repaving the business environment with companies incorporating various cultural changes to support “green” initiatives or participating in volunteer efforts in their communities. By providing these services, companies are cultivating meaning for their employees and customers.
These changes are internally focused, but there is also a dominant shift in consumer trends as well. A survey by PwC released in the 2016 World Economic Forum indicates the demand for purpose in the consumer marketplace will increase by nearly 300 percent by 2020. This shift in public desire around the concept of purpose will change why, how and what we buy, and from whom we buy it.
Purpose-driven companies are maintaining substantial market share because they are selling a deeper meaning and value that comes with their brand association. The data around these studies is overwhelming. In the book “Firms of Endearment,” written by Raj Sisodia, David B. Wolfe and Jag Sheth, a 2013 study of purpose-driven companies found they outperformed the S&P 500 market four-fold. Imperative Group Inc.’s work with purpose-driven companies has shown a 400 percent increase in performance and a 125 percent increase in productivity from inspired employees.
How Do We Become a Purposeful Organization?
Now the question is not whether or not you should consider adding purpose to your company, but rather how do I do this now. Hurst put it simply: “People gain purpose when they grow personally, establish meaningful relationships, and when they are in service to something greater than themselves.”
You can start down this path by engaging your employees in thoughtful dialogue and asking how the company can support their personal growth goals or how you can leverage your business’ strengths to provide a service to the community. Perhaps most importantly, ask yourself what the deeper “why” is behind your business and how you can integrate that “why” into your services.
The best part of this lucrative emerging economy is there are no barriers to entry. You can start now with exactly what you have. It all starts by evaluating your stakeholder engagement and impact, uncovering values and aligning your “why” with everything you do.
Thomas Waterman is the co-founder of Purpose Pioneers, where he believes that when we find meaning in our work, we experience real-time fulfillment. He can be contacted at thomas purposepioneers.com and @purposepioneers on the socials.