Purpose & Impact

A capitalism dogma is being profoundly challenged. The primacy of shareholder is no longer sustainable. The time has come that a corporation must be managed considering society and the planet.

This is a debate that is emerging and that might lead to a profound capitalism reformation. It is interesting to remark that the burning issues are being brought to attention of the public not by social activists or radicals.

Over the last two years the concept of purpose in business has got increasing visibility and relevance thanks to the intense use of it in some outstanding business forums, for instance, World Economic Forum and by high stature corporate leaders CEOs, like Larry Fink, CEO of BlackRock, the number #1 asset management firm in the world, which in in charge of investments totaling US$6,3 trillion.

Fink and other asset management industry leaders are the ones who are actively doing it, on the grounds that companies in this kind of business do have to consider long term investments, and not only the short-term profitability.

Since the last decades of the past century corporate leaders were familiar with the idea of considering a triple bottom-line as the goal for their activities, i.e., businesses should be concerned about having positive results in economic terms and environmental and social terms.

Corporations which are concerned with a triple bottom-line goal follow a business mindset known as Corporate Social Responsibility. However, the contribution to the debate brought by Fink and as well by other peers and CEOs of high stature, for instance, Paul Polman, Unilever´s CEO, insist emphatically that companies must raise the bar in terms of corporate perform in pursue of profit considering their positive contribution to the society as a whole.

As the influential FT wrote recently in long reading article “the acronyms have changed, from CSR (corporate social responsibility) to ESG (environmental, social and governance)” meaning that companies must understand that a tactical engagement with other profitability goals, represented by the CSR tactical objectives, will be no longer enough to business organizations to survival in the long term. From now on the commitment with ESG, as a strategic objective, must be part of the DNA of a corporation to survival and prosper.

Furthermore, there is a very critical factor which studies are suggesting that a purpose-drive company becomes more competitive in a world of rapid digital transformation: it is its ability to attract and retain talents, especially the Millennial and Z generations. Somehow people of these generations unlike baby boomers and X, are no longer satisfied by the previous contract work.

Millennial and Z generations seem to be more interested in project engagement than traditional job employment, which was the rule during the last century. It seems that the newest generations are looking for more meaningful work, which allow them more options other than job security within traditional command-and-control organizational environment. Entrepreneurship, for instance, seems to be more an option for youngsters than to look for a nine-to-five job. Nowadays the creation of a startup is like forming a rock-n-roll band in the 60s and 70s.

In this context that we are discussing here, purpose ultimately can be defined as the intention of generating Impact: the intention to support positive social or environmental benefits alongside a financial return.

Skeptics might say that in the future purpose and impact are buzzwords which are going to fade away. Perhaps, but we don´t think so. Other critical challenges are emerging as we prepare to enter the 2020 decade, for instance, Artificial Intelligence, which will certainly happen even faster than the digital transformation. These challenges only can be effectively faced as purpose and impact take the center of our dialogue aiming to develop a business mentality able to be positively responsive to the needs of the people and society.