Most B2B companies focus on providing products and services to make money and create profit for shareholders. While profit is critical, it is no longer the sole purpose for companies. Instead, yielding to pressure from all fronts, B2B leadership is now focused on providing value for all stakeholders: employees, suppliers, partners, customers, investors, the community, and the planet.
The good news is that companies can be successful serving the needs of stakeholders and shareholders. Companies that do both will be the ones to outperform their peers.
Why Do We Need Purpose Beyond Profit?
Consumers have had a major impact on B2C firms by boycotting and publicly criticizing those whose actions hurt people and the planet. Why should B2B leadership care about this?
- B2B customers bring personal awareness and preference to the buying process. Customers increasingly care about the broader value that companies deliver to people and the planet. They also care about how companies operate and look to ensure that companies do not harm people or the planet in the creation and delivery of their offerings. A company’s purpose, when activated, can demonstrate commitment to broader values that customers seek.
- Employees care and increasingly won’t work for companies that don’t align with their values (as the “great resignation” has shown). In the tight war for talent, companies cannot risk alienating potential talent.
- Investors care, increasingly requiring companies to report on and publish their progress against environmental, social, and governance (ESG) initiatives. Failure to make progress on revenue and profit targets is not the only thing that can damage stock price progress (or lack therein). ESG can also cause damage.
- There is regulatory risk, as, finally, the United Nations and activists are pushing governments to care. Governments will begin regulating if companies don’t act.
What Can B2B Leadership Do To Define Authentic Purpose?
As a result of these influences, B2B leadership is expanding its purpose to include a broader set of stakeholders. For example, Salesforce seeks to change the world for the better through technology that builds stronger relationships. Atlassian, the creators of the Jira software, seeks to “unleash the potential of every team.” DHL Supply Chain, which provides logistics and supply chain outsourcing to other companies, seeks to “[connect] people and [improve] lives.”
To be authentic, a company’s purpose must:
- Align with the competencies built in the creation of its products and services.
- Be woven into the fabric of the company, providing guideposts for decision-making and requirements for product design.
- Be needed by society, either by improving people or the planet.
- Deliver value to the company’s bottom line.
Purpose statements run the risk of being “taglines” or lofty goals unless the employees within these companies embrace their meaning. The power of purpose is unleashed when every employee considers how they can deliver value against the stated purpose. Power happens when employees articulate, activate, and extend the purpose. Unfortunately, only 24% of organizations embed purpose into their business so that it influences innovation, operations, and community engagement.
What Can We Do To Unlock The Power Of Purpose?
B2C companies were hit first by consumer activism and preference, but B2B companies wield far more impact on people and the planet. It is now time to act. Each of us plays a role in unlocking the power of our purpose. We must be innovative in designing products, overhauling operations, rethinking processes, extending our competencies, and measuring and reporting on our progress. Initiatives and policies centered on environmental, social, and corporate governance policies are inextricably linked to business risk, value creation, financial performance, and sustainability.
For more on purpose in B2B leadership, listen to our What It Means podcast episode on this topic.