Axel Femtehjell Wikner,
COO & Co-Founder
axel.f.wikner@coarconsulting.se
According to Kantar’s 2020 study, brands perceived as genuinely purpose-driven grow twice as fast as their competitors, 175 percent compared to 86 percent over a 12-year period.
In a time when customers, employees, and investors all expect more than just profitability, many companies display lofty values like “innovation,” “sustainability,” and “trust” on their walls. However, for a company’s values and purpose to have real impact, they must be embedded in every part of the organization.
Several studies indicate that companies that succeed in living up to their purpose and integrating it throughout the entire organization not only handle challenges better but also achieve higher growth than those that do not. For many companies, purpose is an afterthought, something to showcase externally but which does not reflect how the company actually operates. Companies that succeed, however, tend to approach purpose differentlt. They move it from the periphery to the core of their corporate strategy.
Putting purpose at the center
Kantar’s report “Purpose 2020” confirms this correlation, noting that brands perceived as genuinely purpose-driven grow twice as fast as their competitors. Brands strongly associated with their purpose increased their brand value by 175 percent over twelve years, compared with 86 percent for brands with a weaker purpose.
The study also shows that successful companies are far more likely to integrate their purpose into every part of their operations. 80 percent of high-performing companies state that their purpose permeates everything they do, compared with only 32 percent of low-performing companies.
The reason for this growth is that purpose influences through various mechanisms, by enabling more creative solutions and distinguishing the brand from the competition.
Purpose drives growth through several mechanisms:
Purpose redefines the company’s playing field
High-growth companies do not allow traditional markets and customers to limit them, instead they expand beyond the existing boundaries. With a purpose aimed at solving real-world problems, the company can create new offerings that redefine its former limits.
Purpose deepens relationships with stakeholders
A strong and pervasive purpose gives employees meaning, provides customers with something to identify with, and builds trust among investors. When employees know who they are and why, it becomes easier to create a self-reinforcing loop of loyalty and engagement that drives sustainable growth.
Purpose differentiates the brand
When the purpose is genuine and reflects the company’s actual operations, credibility and resilience are built. This gives the company greater flexibility to adjust prices and products in a long-term and stable manner, even in times of change.
A well-integrated purpose leads to long-term value creation
Ultimately, growth arises when a company’s purpose is fully integrated into the organization, shaping decision-making, influencing culture, and creating incentives for employees to think innovatively. Harvard Business Review highlights that companies that succeed in deeply anchoring their purpose not only achieve stronger financial results but are also more adaptable. This, in turn, leads to more sustainable and innovative growth over time.
Thus, purpose is not a cost to the company if implemented and embedded correctly, rather, it can be an important and central part of the path toward long-term value creation.
References
Malnight, T. W., Buche, I., & Dhanaraj, C. (2019, September–October). Put purpose at the core of your strategy: It’s how successful companies redefine their businesses. Harvard Business Review.
Aziz, A. (2019, November 11). The power of purpose: Kantar Purpose 2020 study shows how purposeful brands grow twice as fast as their competition. Forbes.
Kantar Consulting Purpose 2020: Inspiring purpose-led growth.
MEET THE AUTHOR
Axel Femtehjell Wikner, COO & Co-Founder
axel.f.wikner@coarconsulting.se
coarconsulting.se 