A new business paradigm is emerging and opening up exciting opportunities for charities.
The new corporate paradigm
This new paradigm is known “Purpose-Driven Business” (PDB) and it means that a company has identified a reason for existing that is greater than just making money.
One of the pioneers of PDB is Paul Polman, Chairman of Unilever, who said:
“I actually only joined this company for its values. The origins of Lord Lever; when he did his Sunlight bar soap and Lifebuoy – it wasn’t to report quarterly profits or make shareholders happy. It was to address the issues of hygiene in that time in Victorian Britain, which were humongous. So, the reason that I believe businesses should be around, and the reason businesses have been created, is to serve society.”
Factors behind purpose-driven business
There are several factors behind PDB. Firstly, the global financial crisis in 2007/08 led many people to question the purpose of business, so they trusted them less. PDB offers a way for companies to restore that trust.
Secondly, the growth of the internet and social media has changed marketing, so rather than just pushing advertising messages to consumers, companies now need to engage them in conversations to gain trust and attention. PDB offers meaningful content to help facilitate these conversations.
Thirdly, millennials want more meaning. Deloitte research shows that 9 out 10 millennials want to work for companies that don’t define success solely by financial performance.This generation is so important for companies especially when we realise they will account for 75% of working people by 2025.
Why is it an opportunity for charities?
PDB is a huge opportunity for charities because it means that companies are moving in their direction and will be more open to the right type of partnerships. In fact, the best way for a company to demonstrate commitment to its greater purpose is to form a partnership with a charity that has a good fit with their business. By working in a strong partnership with the charity, they can do work at a grass roots level that shows their commitment is genuine.
PDB is gathering momentum with approximately one-third of the FTSE 100 engaging their purpose. This momentum was underlined by Larry Fink, Chairman and CEO of Blackrock, who called for more “purpose driven companies” in his annual letter to shareholders. As Rana Foroohar the FT journalist remarks, “It is one thing when liberal academics and politicians call for a new kind of “stakeholder” capitalism. It is another when the largest asset manager in the world does it.”
Many companies have a purpose that is social, and they are becoming increasing brave about sharing it like this inspiring advert from Nationwide.
How can charities seize the opportunity?
Charities can seize this opportunity by creating partnerships based on shared purpose. The first step is to find companies that share your purpose. Once you’ve found that company you create an idea that sums up your shared purpose and you pitch it to them.
Shared purpose partnerships are particularly exciting because they are based on organisations’ big ambitions, so they have enormous scope and potential.
A great example of this was when Phyllis Tuckwell Hospice Care approached Bridges Estate Agents. The Hospice wanted to grow their Hospice Care at Home service and Bridges wanted to sell more homes. So, their shared purpose was they recognised the importance of homes. The charity pitched the partnership idea of “Home is where the heart is” and they secured their biggest ever corporate partner.
The twist in this story is that PDB is nothing new. As shown by both Unilever and Nationwide these companies started because of a social purpose. As Mike Kelly, former director of CSR at KPMG and chair of the charity The Passage and Dame Kelly Holmes Trust, said, “We should describe this as the resurgence of purpose-driven business.”
Nevertheless, this new trend in business is an important shift and an opportunity that charities should seize with both hands – the sooner they start these conversations, the sooner they can lock in a strong partnership and make bigger impact with the strength that comes with two entities sharing an inspiring purpose.
FT interview, 3rdDecember 2017
Deloitte Millennial Survey 2016
11 Facts about the Millennial Generation, Brookings Institute, 2014
FT.com, 4thMarch 2018