Profit of Purpose

Businesses that operate from a center of purpose outperform the overall stock market. This seems counter-intuitive. You would think that businesses grow from what they focus on the most. If they focus on the money, they make more money. That’s just not true—money is the result, not the means.

“...conscious firms outperformed the overall stock market by a ratio of 10.5:1 over fifteen years, delivering more than 1,600 percent total returns when the market was up just over 150 percent for the same period.” — John Mackey, Conscience Capitalism

Businesses that operate from a center of purpose grow organically and spend less time on managing and advertising. The decisions they make are usually not made from fear or short-term gains but for long-term benefits. They also attract a greater sense of brand loyalty and advocacy. Overall, they can spend time on their business rather than dealing with making up ground through artificial stimulants like discounting and sales promotions.

A Will Toward Meaning

Everyone has a will toward meaning. This is one of the theories of internationally renowned psychiatrist and neurologist Victor Frankl. He learned, developed, and practiced his theories while he was being detained in Auschwitz—a Nazi concentration camp. Dr. Frankl witnessed those who believed they were born for a greater purpose than to die in the concentration camp lived. Those who didn’t don’t. If man’s search for meaning is the primary motivation in life, then we are attracted to a brand because we look for meaning in brands—not just specifically for a product or service. We will be most attracted to those brands that have meaning, communicate their meaning, and connect with their meaning.

The Search for Meaning

Branding is all about searching for meaning and purpose in a name, voice, customer experience, product design, and all visual imagery. From using colors, symbols, words, shapes, and interaction, meaning is built. All those individual signals are received and create a tapestry that becomes the brand. With one unraveling thread, the brand becomes marred and starts to erode the integrity of its wholeness. Enough unraveling threads, and the image is broken down to a point it’s unrecognizable. At this point, it only provides confusion from the incoherent and incongruent message. The bond becomes weak and is forgotten, and easily replaced.

The Good, True, Beautiful & Heroic

Genuine purposes are transcendent, energizing, and inspiring all the independent stakeholders. They can fit into one or all of these four categories: The Good, The True, The Beautiful, The Heroic.

They are defined as follows.

THE GOOD: Service to others—improving health, education, communication, or quality of life

THE TRUE: Discovering and furthering human knowledge

THE BEAUTIFUL: Excellence and the creation of beauty

THE HEROIC: The courage to do what is right and improve the world

Companies like TOMS Shoes, Whole Foods, REI, Tata, and COSTCO are well known as one the best places to work. They also operate from this center of purpose. They have the luxury of spending time building their business rather than bailing water from a leaky hull. They can continually move forward rather than two steps forward, one back. Losing key employees, stopping to clean up a PR mess, or spending lots of time, energy, and money to find new customers can slow growth.

Buying the Why

It’s human nature. As Simon Sinek puts it, “People don’t buy what you do; they buy why you do it.” Each business must invest in the search to define and communicate its purpose. Once found, they must implement that purpose starting with their name and carry it out in every customer interaction. It’s the cold hard facts. Brands built on a sense of purpose will attract the right customers, make higher margins, and outperform their competitors.