Manage with Purpose for Impact
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September 27th 2020 - Edition #55

When we do something we do not intend to, we say: “Sorry, I didn’t do it on purpose!”.

This shows the need of a purpose for our acts to be the intended ones.

When we drive a new project, manage an organization or something similar, the purpose should be present, well defined and known by all, otherwise things will be done not on purpose and someone will be sorry for them.

Bearing this in mind, we should not be surprised by the leading role that, presently, purpose assumes in busines and management arenas.

We might say, and it is true, that purpose is not a new subject. Aristotle citation about purpose “Where your talent and the need of the world meet, there lies your purpose” or Abraham Lincoln one “Adhere to your purpose and you will soon feel as well as you ever did” are there to prove it.

To me, the key question is more about the impact caused by the chosen purpose for the organizations and societies, than the existence of purpose itself that seems undisputable.

If we, as a global society, have chosen the right purposes we should feel well, as Lincoln says, but… I guess we don’t. Is it because Lincoln is not right or because we chose the wrong purposes?

I strongly bet on the later. For the last decades we replaced purpose by objectives, usually short-term objectives and, I would dare to say, short sighted ones, not only in terms of their time frame but also in their scope. And managed “successful” companies based on those objectives.

The importance of purpose is not new, but, if we are to create impact,  we need to use it differently. When I mean impact, I mean value creation for the society as a whole, for all stakeholders and not only or mainly for shareholders.

I guess this is the reason behind the McKinsey & Company September 2020 Report “Milton Friedman’s pathbreaking essay on corporate purpose was published on September 13, 1970. How much has management thinking evolved?” I believe management thinking evolved and successful business purposes will no longer be maximizing profit or value creation for shareholders.

This different way of thinking is clearly expressed by Professor Collin Mayer from Oxford University and author of the book “Prosperity”, when he argues that if students are taught that the purpose of a business is to maximise shareholders profit, that is fundamentally wrong.

But also, on declarations like the following one.

“Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate. Without a sense of purpose, no company, either public or private, can achieve its full potential. It will ultimately lose the license to operate from key stakeholders.” in Larry Fink is Founder, Chairman and CEO of BlackRock, Inc, January 2018.

But are these radical new ways of looking into the business, namely about their purpose, anything new? No, they are not, they have just been forgotten for some decades and replaced by the short-term objectives of the stock markets value, quarterly reports and prizes and alike. We just have to read the quotes from Henry Ford (July 30, 1863 – April 7, 1947): “A business that makes nothing, but money is a poor business.” Or “To do more for the world than the world dies for you that is success “or “A business absolutely devoted to service will have only one worry about profits. They will be embarrassing large.”

It is up to us to learn with past situations.

This was what the founders of B Lab did when they created the B Impact Assessment after seeing the company (that they have successfully created and sold), going, in their perception, the wrong way.

The B Impact Assessment is an open tool that allows you to manage your organization with purpose for impact, taking into account all the stakeholders and creating positive value for the society. It assesses and gives leads for improvement in 5 different areas: Governance, Workers, Environment, Community and Clients; leading to a certification as B Corp and promoting the share of best practices amongst the B Corp community of over 3 500 companies, of all sizes, in diverse areas, all around the world.

Linked with this tool, a new one was jointly developed with UN Global Compact: the SDG Action manager. The tool indicates the more relevant SDGs for your organization, assess its performance towards them, and gives you leads for an impactful management towards the more relevant ones.

I challenge all of you, as we (B Lab) have challenged the Business Round Table CEOs, in August 2019: Let’s work together! Towards an inclusive, equitable and regenerative economic system for all people and the planet. We have the tools to manage with purpose for impact, to measure and manage value creation beyond revenues, without forgetting these.

This might not be something completely new but has gained a sense of urgency beyond any reasonable doubt. At least for me, as a father of 4, concerned about the world my kids will live in and, hopefully, to some of you as well.

Have a great and Impactful week!

Luis Amado (luis@bcorporation.eu)
Executive Director - B Lab@Portugal
Founder - Less, Lda.

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