In a recent New York Times piece, Black Rock CEO and influential investor Larry Fink stated that business leaders need to do more than make profit—they need to contribute to the greater good in society. It seems like media, investors, consultants, businesspeople and society at large have been enamored with doing good—and with the term “purpose”—lately.
My colleagues and I are no different. In fact, at our Global Institute for Leadership Development® (GILD)—where we gather hundreds of the world’s best companies and leaders every year—the entire program was built around our research-based Purposeful Leadership™ model.
Searches for the terms “purpose” and “purposeful” have been on the rise, peaking in 2017. Justin Bieber even has a Purpose Tour! Although, he canceled it partway through—perhaps his planning was not so purposeful?!
My friend and GILD cochair, Richard Leider, has dedicated his life to studying purpose. He says that at its most basic level, purpose is about a few things:
- Growing and giving: Improve yourself and then pay it forward.
- Identifying a place where your gifts (what you’re good at), values (what matters to you) and passion (what gets you excited) intersect.
- Developing a sense of purpose for yourself, you can apply your purpose to others.
While this is a good start, the reality is that purpose means very different things depending on whom you are speaking to. Let me give you some examples.
Purpose is about performance
Indra Nooyi, legendary CEO of PepsiCo, launched a corporate platform called “Performance with Purpose” several years ago that has been pivotal to their operating model. The goal of this initiative is to “deliver sustainable long-term growth while leaving a positive imprint on society and the environment.” The company stock has gone from roughly $70 to $120 during that same time period. Now investors might say, that’s about the same movement as the DJIA or S&P500. Sure, but it’s around twice the growth of Coca-Cola over the same period. Maybe performing with a purpose has something to it?
Wait, what about profit?
Milton Friedman would say free markets don’t and shouldn’t care about social good. Maybe they didn’t before—but they do now. Peter Drucker would say the purpose of business is to create a customer and to create profit and shareholder value. He also wrote in Management: Tasks, Responsibilities, Practices: “in modern society there is no other leadership group but managers. If the managers of our major institutions, and especially of business, do not take responsibility for the common good, no one else can or will.”
Profit is good, and much good can be done with it. I would argue, in fact, that profit is a noble purpose—so long as it has a reason. (What are we going to do with this profit? How will it help us? Our clients? The world?) I would also suggest that all the profit in the world is worthless without a purpose. And all the purpose in the world is meaningless if your corporate accounts are empty.
Or…is it philanthropy?
When I read about purpose, or impact, I also see philanthropy getting a lot of attention, and for good reason. Purposeful philanthropy is about finding a worthy cause that is aligned with your personal purpose and organizational aspirations. Just like profit, philanthropy is a noble purpose. Do you think, however, that Larry Fink will stick to his missive to not invest in companies without a social impact plan if those philanthropic companies are not creating an active return on an investment?
That said, philanthropy is not the only valid purpose of an organization. And there are innumerable causes out there making a difference in our world, and I support many of them. At Linkage, we give about 10 percent of our EBITDA to philanthropic causes each year. We’re excited by philanthropies that align with our mission and our passion. And, there’s an important distinction here—I think that many have confused being philanthropic with being purposeful.
So at the end of the day, it all boils down to this: Larry Fink’s focus on having a social mission is good. It’s great. And it’s only a start. The world doesn’t need more people doing just what the markets and popularity contests demand—it needs more people who know what they’re here for—more people going after that relentlessly. Being Purposeful. The performance, profit, social mission—those all come when leaders stay the course on purpose.