Purpose-Centered Leadership: Strategies for a New Business Era

Leaders today are under immense pressure. The business world is experiencing a seismic shift as profound as the industrial revolution driven by evolving societal expectations, economic dynamics, and technological innovations. Despite growing evidence supporting purpose-centered models, many organizations are struggling to make the transition.

At Leaders on Purpose, we've identified six pivotal strategies that leaders need in order to align their business objectives with broader societal goals.

1. Embrace Audacity

Let’s talk about the transformative power of setting audacious goals. While some may perceive this as a lofty or even risky aspiration, there is incredible power behind it. Business Leaders may hesitate to make bold commitments for fear of falling short, and while incremental improvement may have its merits, it fails to inspire employees and won’t propel us towards the future we envision. To truly be the business we aspire to be in 2030, we must be willing to embrace audacity. “When others see risk, we see opportunity,” says Remi Eriksen, CEO of DNV – this mindset allows us to seize untapped and remarkable potential.

Take DONG Energy, a Danish oil and gas company. In 2008, faced with mounting evidence that climate change was man-made and linked to fossil fuels, they were at a crossroads. Either continue acting as they were at the expense of the planet, or take the difficult path towards sustainability. With 85% of their business relying on fossil-fuels, they made the bold decision to transform their business into a renewable energy powerhouse, with the intention of only 15 percent of their operations remaining in fossil fuels by 2040. At the time, solar and wind technologies were costly and underdeveloped, making the endeavor seem daunting. However, the company's audacious goal propelled them forward.

The remarkable outcome surpassed all expectations. DONG Energy, now known as Ørsted, stands as a leading sustainable business and one of the most profitable players in the energy sector. Their radical transformation, accomplished well ahead of schedule, showcases the immense power of audacious goals and visionary leadership. By galvanizing their team and pursuing their bold vision, they achieved remarkable profitability and market success.

2. Understand Your Impacts

After setting audacious goals, the next step is to gain a comprehensive assessment of where your organization currently stands. When done well, this has the potential to unleash game-changing strategic insights. I’m talking about a thorough evaluation – not only of your environmental, social, and governance impacts – but including your core competencies, employee sentiments, policy landscape, and scientific trends. By compiling this comprehensive information, you gain a holistic perspective that empowers strategic decision-making.

Assessment enables you to identify untapped opportunities, align your strengths with market needs, and address potential gaps. It also serves as a roadmap for effectively implementing projects, helping to avoid pitfalls such as overlooking critical stakeholders or misaligning timing. Equity Bank Limited’s business transformation is an example of an organization deeply understanding their business impacts and tying them to bold purpose-centered goals.

3. Align Your Organization

Today, people can easily discern if a company is engaged in “purpose-washing” or if they are genuinely walking the talk, so transparency is crucial in today's interconnected world. A company’s best way to build trust is through consistent alignment and the courage to live up to your stated goals.

Purpose-centered companies can achieve superior performance by aligning every aspect of their organization with purpose-centered goals. It helps to foster a culture of shared purpose, empowers employees, attracts customers, and strengthens stakeholder relationships, creating a cohesive and impactful organization that stands out in a crowded marketplace.

But this doesn’t have to just be an internal consideration; it extends to your partnerships, policies, and lobbying efforts. Engaging with partners who share your values and objectives enhances your credibility and amplifies your impact.

4. Form Strategic Partnerships

Once your organization is aligned, this makes it much easier to find the right people to collaborate with, without worrying if it may be an unsuitable match. Collaborative partnerships are indispensable for innovation and addressing complex societal challenges. By strategically opting for purpose-centered partnerships, organizations can harness diverse expertise and resources to achieve shared outcomes and unlock new avenues of growth and impact. Purpose-centered businesses are actively seeking partnerships to address public problems that no single company can tackle alone.

Take the example of companies in the beverage industry where water plays a significant role. Instead of individually addressing water table issues, joining forces with others in the industry creates a shared advantage. Collaborative efforts unlock access to innovation and mitigate risks, enabling greater progress towards common goals.

To determine the most material issues for your organization, revisit the assessment process. Identify macro-level challenges such as water scarcity or food security and understand their relevance to your business. From there, choose specific issues to address and craft targeted solutions. This approach ensures a focused and impactful partnership strategy.

We are seeing a rise of pro-competitive partnerships within industries. That is, competitors coming together to tackle critical issues that affect the entire sector. For instance, insurers forming collaborations to provide microinsurance for smallholder farmers or technology companies partnering to enhance financial inclusion. These partnerships leverage diverse expertise and resources to achieve a shared outcome, while still maintaining their competitive edge.

5. Redefine Leadership

The modern business landscape requires a new approach to leadership, emphasizing authenticity, empowerment, and a coaching mindset.

Firstly, leaders must embody authenticity – to show up genuinely, especially in times of crisis. It's not about talking your way out of a difficult situation but rather being transparent and demonstrating a sincere commitment to addressing challenges. As the face of the organization, CEOs should lead the conversation on pertinent issues such as geopolitical conflicts or labor concerns when it impacts or can be impacted by their markets.

Finding the right balance between short-term profitability and long-term impact is also critical for leaders today. In fact, the most successful leaders recognize that doing no harm and prioritizing sustainable practices yield better outcomes and stronger reputations than short term strategizing.

It is no longer about being the all-knowing figure at the top. Effective leaders must embrace a coaching mindset, guiding and partnering with their teams, and leading from the middle. They need to have empathy at the heart of their leadership. The role of a leader can no longer be solitary; it's about fostering a culture where everyone's potential is recognized and harnessed.

"Leaders must embody authenticity – to show up genuinely, especially in times of crisis."

6. Sequence Purpose Integration

Sequencing is the lynchpin for maximizing the benefits of purpose integration – but it often goes unnoticed. The order in which purpose is introduced and implemented can significantly impact its success; without thinking in this way, many companies fail to successfully embed their purpose.

The research studies conducted by Leaders on Purpose have long supported the importance of proper sequencing in purpose integration. Additionally, an analysis conducted by Deloitte found that organizations with a clear and well-sequenced purpose integration approach outperformed their peers. Purpose-driven companies experience higher employee engagement, increased customer loyalty, and stronger financial performance (Deloitte, "Mind the purpose gap"). This highlights the value of aligning purpose initiatives in a strategic and sequential manner.

Improper sequencing can lead to challenges and setbacks in purpose integration. According to a survey by Harvard Business Review, one of the common pitfalls is attempting to introduce purpose before the necessary infrastructure and systems are in place. This can result in confusion, lack of buy-in, and difficulty in sustaining purpose-driven initiatives (Harvard Business Review, "What is the Purpose of Purpose"). Proper sequencing involves a step-by-step approach that considers various factors such as organizational culture, employee engagement, stakeholder alignment, and strategic planning.

As we navigate this new era, organizations that adopt these strategies will not only survive but thrive, making significant societal contributions while also achieving business success. The journey may be challenging, but the reward is a resilient, purpose-driven organization that is equipped to lead in our rapidly evolving business landscape. The future belongs to those who dare to lead with purpose.

This article appeared in our monthly newsletter, subscribe now.