Arguably the most significant shift in business history is underway. Over the past 18 months, the pandemic has forced companies to reexamine and redefine their core purpose. Profit has taken a backseat to company ethos, and organizations are finding that they need to prove why the world needs their business.
The purpose-led business has CEOs focused on resetting, realigning, and restarting. More and more company leaders are placing purpose at the heart of their decision-making. Recent studies found that purpose-led companies far outperform traditional organizations that define success through maximizing profits and increasing ROI for shareholders. Companies must now define and communicate their purpose in terms that resonate with employees, customers, investors, regulators, and society.
A 2021 EY study identifies five factors that CEOs must reset in developing business strategy for this new purpose-full environment.
1. Trust: 80% of people expect brands to solve societal problems. CEOs must create purpose, vision, and strategy documents that show how their company contributes to solving societal pains. Their reporting needs to include non-financial metrics that highlight how their company’s contribution translates into benefits for their employees, customers, investors, and society. To generate trust in their business, CEOs must listen attentively to all stakeholders to create their targets. They must then transparently share their performance and who is responsible and accountable for it.
2. Trade: Global tensions are re-drawing supply lines, as tensions have grown between the US and China or between the UK and the European Union. These growing tensions are redefining how globalization plays out, with regional forces creating incentives for businesses to reduce their dependence on specific nations to provide them with supplies, customers, and employees. CEOs must define risk more holistically and revisit their strategy quarterly to mitigate risks.
3. Tech: Over the past three decades, every business had to adopt some level of technology to function, but during the past 18 months, the imperative for companies has been to move as quickly as possible to a fully digital operating system, much like it was during the peak of the pandemic. CEOs must imagine a fully digital enterprise, adopt the necessary tech, train their employees, and provide guidance to their customers to make this transition as effective as possible.
4. Sustainability: One of the most significant challenges of our time is to ensure the sustainability of our planet. Companies often need to make trade-offs between short-term financial gain and long-term gain for the environment, society, or corporate governance. Studies show that companies that put sustainability at the heart of their decision-making outperform businesses that only focus on short-term financial gain. Customers and employees increasingly value organizations that protect the environment and benefit society. CEOs must create governance structures that make sustainability a core element of how the business operates, measures performance, and communicates its agenda and progress with our broader society.
5. People: A common theme connects the four abovementioned elements of sustainable growth: people. Businesses are vehicles to serve people, not the other way around. CEOs must operate from a place of decisive yet empathetic leadership. They must lead with emotional intelligence to successfully create the strategy, drive change and report progress.
The new post-pandemic world presents extraordinary challenges and opportunities. The new business environment requires that CEOs build trust, adjust their trade, invest in tech, and prioritize sustainability while always putting people at the heart of everything.
As CEOs contemplate growth strategies, they must recognize that the shifts described here already impact their business. While some industries, markets, and countries have been affected more than others, these five elements have nevertheless impacted every business on the planet. Customer and employee expectations have drastically changed, as have companies and governments, quicker than perhaps ever before in business history. Against this backdrop, CEOs must now create strategies that put their companies on a path to sustainable growth.