What Is Your Business: Economic or health crises do not only have adverse effects. They also offer the opportunity to question in depth the raison d’être of companies. Business leaders and consumers/citizens ask you the question: what is your business for? How is it helpful to society?
The current enthusiasm of many companies to define themselves or re-establish their raison d’être is palpable on both sides of the Atlantic. In the United States, it finds its source in the new currency of the “Purpose Economy 1 “, this economy of meaning which comes from a raison d’être of companies serving society, while in France, it is part of the momentum that followed the implementation of the PACTE 2 law. In either case, we should favor a thoughtful, structured approach to respond to the six major issues underlying the exercise of defining a raison d’être. Here are which ones.
1st Challenge: A Shared Understanding
It is essential not to juxtapose what is usually called the Company’s mission with a new statement oriented towards “social” utility, designating a fundamental problem of society or a contribution to a better world. Indeed, there cannot be two founding documents in a company, the mission on the one hand and the raison d’être on the other, without generating a risk of opposition between the two.
Purpose expands mission. It includes it and gives it a new meaning, centered on utility concerning society. The purpose answers the question “For what” (in two words), while the mission should answer the question “How.”
According to the definition adopted by Entreprise et Progrès, “The Purpose defines the meaning that the Company with its stakeholders wishes to give to its activities. It guides its strategic choices with a double desire: that of having a specific USEFULNESS concerning the Company in the service of a better world, and that of bringing a CONTRIBUTION, unique if possible, to its customers and all its stakeholders”.
Therefore, it is up to each Company to define its ambitions and choose its commitments to society and its customers with precise objectives over time. For a progressive company, the raison d’être is very economic AND societal, with the idea of a subscription to the GOAL above all, rather than to the result and the means. Following the expression of John McKay, founder of Whole Foods Market, “Purpose before profit,” profit thus becomes a means.
2nd Challenge: Make It A Unifying Exercise
When the manager of a company wishes to define the purpose of his organization, it would be to his advantage to avoid too precise a framework and to open up questioning with all the stakeholders: employees, customers, suppliers. , shareholders, citizens (of the community, territory, etc.).
Qualitative research, very open, should be carried out with representatives of the stakeholders around questions centered on their expectations vis-à-vis the organization, their immediate needs, and what the Company could do to contribute to a better world by trying to be as concrete as possible. Interviews could conclude with what stakeholders would be willing to do with the Company to contribute to this better world.
In an exercise of genuinely strategic reflection, the executive will then have a summary exercise to carry out. The use here of a “materiality matrix” would be particularly appropriate: this tool makes it possible to position the societal challenges of a company according to the importance they have both for the stakeholders and the Company. Herself. Lastly, it is responsible for proposing the most applicable statements to the Board of Directors, then to the shareholders’ meeting.
3rd Challenge: Purpose As A Strategy Lever
The raison d’être is not the culmination of a sustainable development policy, even if organizations long committed to corporate social responsibility (CSR) will see a powerful additional tool for mobilization. Purpose, economic and societal, is instead the foundation of strategy, as highlighted in a recent publication by the Harvard Business Review 3 and demonstrated by the model of the progressive Company comprising five components.
Strategic thinking must first define a strong, distinctive, attractive, feasible value proposition – but not only in favor of the customer alone, but also employees, suppliers, and various stakeholders -, then roll out the appropriate strategies to deliver these different value propositions.
For companies that want to reposition themselves at the crossroads of the economy and humanism, starting from a statement of intense, even radical raison d’être, it will be a question here of properly integrating societal initiatives within the initiatives economic, so that there is no longer a business plan on one side and societal actions of the CSR or philanthropic type on the other. The exercise of defining the raison d’être, therefore, provides an excellent opportunity to break the dichotomy between the economic and the social or societal and allow the fusion of the two components, logical and stimulating, within the business model.
4th Issue: The Credibility Of The Purpose
State the raison d’être in the strategic plan is, of course, the first guarantee of its credibility. Still, it is also necessary to mention three elements that will make it tangible.
1 – Equip the raison d’être with concrete commitments. It will mean saying, for example, that “we favor one distribution network and will eliminate another,” or even “from now on, the products and services offered must meet such criteria,” or even “by 2025, we we will be carbon neutral”.
2 – Provide the rationale with evidence and monitor indicators to be included in the Company’s overall performance. In line with previous commitments, the Company’s dashboard will have, in addition to traditional economic indicators, indicators related to the idea of societal utility included in its raison d’être. Of course, the Company will have a hand of adhesion, of “loyalty” to its reason for being, but above all – and this is neither simple nor easy – it will have indicators that measure the improvement of health in its community if this theme has been included in its raison d’être. This is what Danone does, which describes its raison d’être as follows: “To bring health through food to as many people as possible.”
3 – Ensure that the purpose statement is consistent with the Company’s values. Indeed, we cannot claim to engage the entire organization in the process of reducing GHGs and, at the same time, ostensibly drive a car that emits a lot of CO 2 . Nor promote inclusion in the community and continue to recruit only our fellow human beings… The executive and the board of directors (or the advisory committee if it is an SME) will have to “challenge” the proposals of raison d’être with the values prescribed in the Company on the one hand and the practical values on the other hand. Then they will have to either adjust the purpose statement or evolve the Company’s value system.
To be credible, the construction of a raison d’être should resemble the three stages of a rocket: the statement on the first stage, the significant commitments on the second, and finally, the proofs with results on the third.
5th Issue: Sustainability
Stated for the long term and without a defined horizon, the raison d’être must remain the guide for strategic orientations and daily decisions over time. Of course, it can evolve, but it must nevertheless continue to generate constant support. To achieve this, it is essential to measure this support among all stakeholders, customers, and employees in priority, suppliers, shareholders, representatives of civil society, etc.
This issue is also linked to the brand equity of any company. Among these attributes, we must find the commitment to contribute concretely to a better world. Thanks to the raison d’être, the brand or sign could rank among the “positive” brands.
6th Challenge: Communication
Although caution should be exercised in this area, communication is essential. It is, therefore, necessary to have a summary statement of one or two.
Sentences, followed by many commitments, and make the entire purpose statement available to as many people as possible.
This communication of purpose should, ideally, meet the following five criteria:
Engaging: make a real contribution to society;
Inclusive: include an explicit or implicit openness to stakeholders;
Stimulating: arousing enthusiasm through the originality and accuracy of one’s choices;
Credible: feasible, compatible with the business model, with commitments and indicators;
Simple: easy to understand and share.