There’s a theory in business that if you start out to make money you’ll probably end up broke, but if you have some other, higher, purpose then you’ll probably make money.
It’s ironic, of course, but it makes sense. Wanting to enrich yourself doesn’t justify starting a business on its own – in fact, it misses the point. A much better reason to ‘start up’ is to solve a burning problem or plug a gap in the market that people want filled.
But better yet is to have a purpose: a desire to make a difference and to fulfil a far-off ambition that makes the world a better place.
The big brands – think Nike or Apple – do this very well. They don’t just sell people trainers and phones, they want to improve our very lives and make us better people.
You’ll never hear either business brag about efficient supply chains or even the quality of their finished products. No, their advertising speaks of a way of life that you too can achieve by allying yourself with their vision.
If brands sold products straightforwardly, adverts would be extremely bland. They’d be lists of core materials and features, and about how these are better than those of the competition or cheaper pound-for-pound.
Instead, advertising usually features tangential concepts that make people feel good about purchases – a young person on a skateboard or a band or someone with a group of friends. Why? Because purpose beats practicality every time.
Clued up customers
But adding a layer of complexity to the puzzle is the emergence of an increasingly connected, cynical and informed buying public. They still like the pretty pictures, but they also want to know more and more why companies exist – other than to make a lot of money.
The Body Shop was popular in the 1980s because of its strong stance against animal testing, which chimed with its core audience of young and right-on buyers. At the time it was an isolated example, but today everyone is at it.
Uber says it wants to ease global congestion and reduce vehicular pollution; Facebook’s aim from the get-go was to create a more open and connected world, while Airbnb wants people to ‘belong anywhere’.
More prosaically, British food brands Leon and Ella’s Kitchen want to provide healthy options for people of all ages. In fact, you can Google just about any brand name with the word ‘purpose’ and you’ll find out what they are truly – or at least outwardly – for.
Corporate social responsibility has gone from being a fringe consideration to the very heart of business plans. Brands invest millions cosying up to good causes and backing events like the World Cup and the Olympics, which make them look good in the eyes of many international audiences.
The same, perhaps to a slightly lesser degree, is true of small businesses and startups who must justify their right to exist with a strongly stated purpose and a clear set of intentions. They understand that marketplaces are essentially battlegrounds on which companies duel for the hearts and minds of consumers.
Investors, take note
The reason a company exists is becoming as important as what it does to make money. This is especially true of consumer-facing firms, but with scrutiny over supply chains and advisory businesses increasing by the day, B2Bs are not immune either.
Startups and growing businesses should scream about their purpose; they should wax poetic. It’s the thing that attracts first-movers and develops early evangelists who spread the word to the mass market. If a business is not talking about their grand vision then people will – perhaps subconsciously – start asking, why not?
This is not to say that an organisation lacking a grand plan will be a dud, nor that a firm wanting to save the world will inevitably become a unicorn of global repute, but people will naturally gravitate towards the latter as long as the claim is authentic and relevant to the target market.
Purpose helps young businesses grow by delivering a simple message to first-movers. It’s possible to grow without one, but investors should understand that a company with a vision has an advantage over one that’s flying blind.