Sometimes inspiration isn't difficult to find. This week it was around the bend in the train tracks as my little red train wound through snow-capped mountains to Davos, Switzerland. Every year at this time, the eyes of the world turn to Davos for the World Economic Forum (WEF) annual meeting, a gathering that brings together leaders across politics, economics, academia and arts, unified under the Forum's clear purpose "to improve the state of the world."
It was at last year's WEF meeting when corporate leaders gathered on the forefront of a movement: purpose. For some time now, we've been seeing that purpose can no longer be the tagline under the logo. Instead, companies are seeing that they can serve a higher purpose beyond profit to attract and retain customers and talent -- and to drive innovation and transformation. This is what led us to convene business luminaries to talk about purpose at last year's meeting -- including Unilever CEO Paul Polman, Mondelēz CEO Irene Rosenfeld and Virgin Group founder Sir Richard Branson.
This also led us to launch during last year's WEF the EY Beacon Institute -- a community of executives, entrepreneurs and academics committed to redefining what it means to be a successful business in the 21st century. And as we approach our one-year anniversary and global leaders reconvene in Davos, it is clear that while progress is being made, we need more action to accelerate that progress.
Purpose is a proven value creator.
First, the good news: There's more evidence of a strong and growing business case for purpose. The EY Beacon Institute reviewed more than 150 articles and books on this topic and interviewed leading experts and practitioners. Full results will be published after the Forum's annual meeting in our report called The State of the Debate on Purpose in Business, but here are five key insights we can share now that are priming our Davos discussions this week:
- First, a clearly articulated aspirational purpose instills strategic clarity in a business. In our volatile, rapidly changing world, purpose serves as a "North Star" -- a fixed point guiding both short- and long-term decision-making, which helps determine what activities the business should -- and should not -- consider.
- Focus on a compelling bigger picture, so purpose can encourage people to look beyond short-term considerations to look for solutions and innovations that will deliver durable value and returns. In this way, purpose helps channel innovation and keeps people focused on what matters.
- Purpose helps organizations transform themselves, motivates people through meaning, not fear, and helps people understand the need for change rather than feeling alienated by imposed change.
- Humans have an innate desire to contribute to something bigger; to find meaning in their lives and their work. Articulating a business's purpose helps people see they are working for something, rather than simply against the competition, tapping into a powerfully motivating universal need.
- By showing where people and organizations share common ground, purpose also helps build bridges, across business functions within organizations and between different organizations. This helps to create the collaboration businesses so need to succeed in the 21st century.
Moving purpose from aspiration to action isn't easy.
Unfortunately, it's not all good news. Research we conducted with University of Oxford Saïd Business School and in a survey with Harvard Business School Analytic Services revealed that in many areas of a business there's still a wide gap between aspirations and action.
For example, there's a wide gap between intentions and achievements aligning purpose with performance metrics and rewards. This is troubling given the important role purpose can play in changing people's behaviors. There is also great risk here. If businesses don't align internal measurements and rewards with their stated purpose, their people and public will be confused at best; disillusioned at worst. Lofty expressions of purpose may come to sound like empty rhetoric unless acted upon consistently in every aspect of the organization.
Moving from discussion into action.
More and more, customers are making their buying decisions based on an organization's stated aims and more millennials are choosing their employer based on its purpose. Now that companies are armed with the impetus and the business case to transform around purpose, the discussion needs to shift from "why" to "how."
Specifically, how can businesses bridge the gap between aspiration and action, and how can they put purpose into practice? A key part of moving into action is scrutinizing the main challenges that companies face. Also, organizations must make purpose an integral part of their strategy and decision-making, into business models and cultures to unlock the value of purpose - and avoid the perils.
As the WEF meeting opens, we will once again convene a distinguished group of experts on the subject of purpose. And besides discussing the issues, our EY Global Chairman and CEO Mark Weinberger will host a workshop to pinpoint concrete actions. In the coming weeks, we'll share learnings, helping inspiration and ideas ripple from Davos to businesses in Dublin, Dallas, Dar es Salaam and beyond. We invite you to share your perspectives and insights as we advance the evolution of business and take more steps on our collective purpose journey to improve the state of the world.
This post is part of a series produced by The Huffington Post to mark The World Economic Forum's Annual Meeting 2016 (in Davos-Klosters, Switzerland, Jan. 20-23). The theme of this year's conference is "Mastering the Fourth Industrial Revolution." Read all the posts in the series here.