For the second year in a row, Larry Fink has focused his annual letter to CEOs on Purpose. This year it’s on the inextricable link between Purpose and Profit. Fink is CEO of BlackRock — the world’s largest asset manager with over $5 trillion in assets. Every year CEOs await his letter. But what can you do to help your company activate on his advice? As the pioneers of Purpose, we have some solid advice we’ve built over the past two decades from Cathy Carlisi, President of the Americas, and powerhouse at BrightHouse for the last 18 years.
Reading Larry Fink’s 2019 Letter to CEOs last week was vindicating. Paragraph after paragraph confirmed what BrightHouse has been saying for years. “Purpose is not a mere tagline or marketing campaign; it is a company’s fundamental reason for being … Purpose is not the sole pursuit of profits but the animating force for achieving them.”* It left me reflecting on how far business has come since the mid-nineties when we marched into boardrooms, a small band of revolutionaries, and tossed meaningful words around like inspiration, positive impact, and emotional connection.
It was when corporate America was recovering from the ‘80s when greed was good, and these stoic rooms were more comfortable with acronyms like EBITA, CAGR, TSR. The hard-nosed called Purpose soft until they saw the concrete data. No wonder hearing the world’s largest investor say, “Profits are in no way inconsistent with purpose – in fact, profits and purpose are inextricably linked,” is dizzyingly meaningful.
From Paleolithic cave paintings to Greek philosophers to pop music—there’s a constant thread of evidence that humans have always sought meaning in their lives, have always craved Purpose. The recent rise of Purpose in business is due to many reasons. In part, we’ve always seen it as a natural evolution. In early civilization, religion was charged with solving a community’s problems. Populations grew, and so did the problems. Governments were then looked to for solutions.
Today, the problems of the world are just that, global. And the only entity with the reach and resources to heal the ills of the world is business. Larry Fink puts it succinctly, “Unnerved by fundamental economic changes and the failure of government to provide lasting solutions, society is increasingly looking to companies, both public and private, to address pressing social and economic issues.”*
For Purpose to raise revenue, it must also raise goose bumps. The statement and story must be felt, must inspire. Yet while crafting a noble Purpose is a critical step toward long term performance it’s only the first. Sustained success requires sustained action. It requires activating and re-activating Purpose with emotional jet fuel.
The link between performance and Purpose is based not only on its presence, but also on its persistent integration. “Purpose…provides a framework for consistent decision-making, and ultimately, helps sustain long-term financial returns for the shareholders of your company.”* Purpose must be palpable to impact profit. Until you put your Purpose into practice, it’s a powerful tool snug in its shiny packaging.
Purpose should inform everything from culture and HR to strategy and ops to brand and customer experience. In all cases, Purpose requires strong leadership to flourish. You want to cascade Purpose from the top while sparking participation from the ground up. Think of all the things you’re already doing, what do they look like through the lens of your Purpose? Or as Fink puts it: “Clarity of purpose helps companies more effectively make these strategic pivots in the service of long-run goals.”
If you agree with Fink that everything from recruiting, “Attracting and retaining the best talent increasingly requires a clear expression of purpose,” to long-term profit, “…when a company truly understands and expresses its purpose, it functions with the focus and strategic discipline that drive long-term profitability” requires a strong Purpose, strongly lived, we recommend you surround yourself with the best possible team. You only have one chance to get Purpose right, so be sure you have the right partners on the journey. Ask potential Purpose firms how many years they’ve been doing this, with whom they’ve worked, and to see the outcomes.
Twenty years ago, Purpose was thought of as nice to have. Today, it’s a global movement from Davos to Detroit to Dubai. Because only, “Purpose unifies management, employees, and communities. It drives ethical behavior and creates an essential check on actions that go against the best interests of stakeholders.”* It unlocks passion by opening people’s hearts to the positive impact they can make in the world.
When articulated, activated, and embedded with expertise, Purpose demonstrates how each employee plays a part in something bigger. That what they do matters, no matter what they do. And when it is woven into every fiber of the organization, no leadership change, no market fluctuation, no magnifying glass and tweezer can extract it.
Cathy Carlisi is President of the Americas at BrightHouse, a BCG company. BrightHouse pioneered the practice of Purpose in business. Cathy has worked with Fortune 100 companies to develop Purpose frameworks and drive impact for 18 of BrightHouse’s 23 years.
* Larry Fink’s 2019 letter to CEOs, Purpose & Profit https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter