- April 19, 2020
- Posted by: Ali Kasa
- Categories: Articles, Entrepreneurship Article
Written By: Ali Kasa
When I started my first business in 2003, the only objective I had in mind was to make money. This is what I have been promoting to want to be entrepreneurs and existing entrepreneurs as well as my employees. Throughout my entrepreneur experiences I have come to question what I believed about business and reflect on what drives someone to start and withstand the challenges and issues that come with starting, growing and managing a business.
Here is a quote that has challenged my thinking and belief system about why someone should start a business.
“Profit is not the purpose of a business; it is the test of its validity” Peter Drucker.
This means that an entrepreneur is like an inventor who invents something new and tests that the invention is useful is that it works and people start to use it. When a business makes money, it is the evidence that the business model works.
If making money and profit is not the core purpose of a business then what is it? The answer is: PURPOSE– this is your reason for being – and it does not change over time although it may inspire change. Google’s purpose has been articulated as “to organize the world’s information and make it universally accessible and useful” – and this purpose drives its continual innovation in new products, technologies and services.
Why do you need to articulate or define the purpose for your business?
Defining shared purpose for your organization is much more than an abstract statement. It can create key advantages in an increasingly fast-paced world, with tangible bottom line benefits. Here are some key reasons why you should define and articulate a purpose for your business or organization:
- It is good for Strategy. Strategy is about making choices, and your purpose drives your strategy.
- It is good for aligment. Purpose—not profit—is the single best motivator to get everyone in an organization rowing in the same direction.
- It is good for bottom line. Purpose-driven leaders and their companies are more successful, highly regarded, and make more money.
- It is good for employees. For 77% of millennial employees, organizational culture is just as important as base salary and benefits.
- It is even better for customers. Studies found that 89% of consumers are more likely to buy from companies that support solutions to particular social issues.
- It is great for decision making. CVS Health, a USA healthcare retailer decided some years back not to sell tobacco because it was against its purpose.
- It is critical when the going gets tough. Starting and managing a business is really hard and your purpose is a major reason to keep going despite the adversity.
Here is how Simon Sinek puts it in this video:
How do you define your Purpose?
An effective purpose should provide clarity and be aspirational. If you are thinking about starting a new business or you have started one but you do not have a defined purpose yet, we recommend the following four steps.
Step 1: Define your purpose.
When defining your business purpose you should answer the following three questions.
- How do you make a difference?
- How do you do it differently?
- What do you love about your business?
The aim of each step is to articulate the purpose statement; something similar to what Airbnb purpose statement “belong anywhere“. After you have articulated the purpose statement it is time to test it.
Step 2: You test the Purpose Statement.
Your Purpose Statement must withstand the pressure test. Here is how you test your purpose statement.
- Is it short?
- Is it easy to understand?
- Is it concrete?
- Are you proud of it?
If the answer to all of these questions is all YES, then you proceed to the next step. If NOT, then you have to go back to the step one and redefine your purpose, then test it again until you get yes to all of these questions.
Step 3: Connect purpose with organizational culture
Noble purpose is the significance of the meaning you attach to your business, which translates into behaviours that produce top performance. Therefore, there must be a connection between purpose and culture. Culture goes beyond collaterals; it is how people operate when no one is watching them.
Here are three steps for how you can create your culture:
- Define your culture
- Realize that your primary tool is your own behaviour
- Reward the behaviour you desire
Step 4: Communicate and Measure the impact
Leaders who implement a strategy based on purpose believe in the dignity of their business. Focus on the impact you’re having, not just a to do list. This means that your weekly or monthly meetings should start with customer impact stories. You should constantly be reminded by the following questions?
- How are you improving the world?
- How are you improving the lives of your team members?
- What’s the purpose?
Ultimately, a shared purpose should create strategic clarity. It allows you to focus on what really matters – and in the process boost productivity, performance, loyalty and the bottom line.
I am writing this article amid the global pandemic COVID-19 crisis. If money was the real reason for going to work or starting a business, why are nurses, doctors, policemen, fire fighters and all the essential service workers dying in the line of duty?
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