It’s no longer enough for companies to just create a good product. Consumers want to support businesses that have a purpose, with values that align with their own, and that really act on those principles—not only use them for marketing purposes. The business world is changing, but it might be easy to assume that a purpose is just good marketing for companies that want to sell products to bleeding heart consumers. But even business-to-business companies are coming to understand the importance of “purpose,” according to a new report, and it could help them attract and retain talent, grow their business, and help their communities—but there’s still a gap between what these companies say they care about, and what they actually do.
The report, from social impact consulting agency Carol Cone On Purpose, the Association of National Advertisers, and the Harris Poll took a look at this trend, and specifically what they call the B2B Purpose Paradox. These business-to-business companies are ones that sell their products or services directly to other companies rather than consumers, though some included in the report are “B2B-B2C,” meaning they sell to both markets; Microsoft, for example, sells directly to companies and governments as well as to the public. The report included responses from 259 businesses in finance, insurance, manufacturing, healthcare, technology, telecommunications, and professional services.
The report found that 86% of these business-to-business companies say that having a defined purpose is important to their growth, but only 24% say that their purpose is embedded into their business, influencing how they operate, innovate, and engage with society overall. That’s the paradox, and Carol Cone, CEO of Carol Cone On Purpose, says that there’s a gap between this “stated” purpose and an “activated” purpose because these companies are early in their purpose journey.
Why would these companies want to embark on that journey anyway? Basically, it’s good for business, from the hiring process to building a company’s reputation. “Purpose is a lens for our strategy development, our behaviors internally, our product development, the suppliers we work with, and then how we engage with society,” Cone says. Even if you’re not selling directly to a consumer, she adds, you still have to understand what you stand for as an organization.
Defining that purpose could be a key to winning the war on talent. “Gen Z and millennials really want to work for companies that have purpose, and those companies tend to be [business-to-consumer],” says Kristin Kenney, a senior associate at Carol Cone On Purpose. Kenney cites Interface, a carpet company that has been on the cutting edge of sustainability. “Interface is radical in its approach to upend the way companies approach sustainability, and that is highly attractive to younger generations who want to work with companies that ‘get it’ in terms of operating responsibly, especially given the state of the climate today.”
Employee retention is also important, and having a purpose helps these companies keep their workers happy, because those values then align to internal ones like fair pay, gender equity, and advanced training education. When it comes to the companies that these B2Bs do business with, that purpose can also translate across that relationship. If a business that works directly with consumers promises to be more sustainable, people may then scrutinize where that company sources its materials from, and if that company isn’t ethical, it can harm those business-to-business relationships.
Once these companies decide to find their purpose, they have to implement it, and one of the best ways to do so, according to the report, is to find the “believers,” a term that applies to employee ambassadors who can help their company advance its purpose work. Believers make up 21% of employees within the companies that responded to the survey, and 96% of those believers say purpose helps them defend their company to critics. “Believers are so excited to advance the company’s purpose,” says Cone. “The key takeaway from this is to identify your believers, arm them, help them build your culture, your operations.”
Purpose has become a requirement for many businesses. Now, it’s time for the business-to-business companies to take note. “There’s so many inflection points and positive pressures to change the way capitalism is conducted today,” Cone says, “and the B2B world has a huge role in it.” Still, 56% of responders in the report say “purpose” feels more like PR, and 51% say it doesn’t play a role in their competitive set, but that’s a disconnect, Cone says, with the clear benefits. “The journey is a little scary,” she adds, “but purpose well activated is worth all the work.”
Read this story at Fast Company.