A sense of purpose is essential for businesses today. Here's why

Businesses require a higher purpose now more than ever. The world of business has changed significantly since the World War II era when the pursuit of profits and stakeholder value creation reigned supreme. Increased emphasis on top-lines and bottom-lines has alienated people and communities from business.

Corporations that focus solely on increasing market share or shareholder value are perceived as self-centred. Businesses today need a higher purpose, which rises above profitability concerns.

The beauty of ‘corporate purpose’ is that it disentangles itself from the complexities of business. It rises above management edicts and semantics aside, to distil why a company should exist. It is a clear declaration of the impact the company hopes to have on the world. This is often encapsulated in a short phrase, to connect with all stakeholders of the organization.

The purpose of ‘purpose’ is both internal and external. Internally, purpose is a galvanising force that unites employees and persuades them to work towards a common goal. And the goal should be such that it inspires pride in its employees. ‘The Great Resignation’ should be a wake-up call for businesses to look beyond regimented work schedules and impersonal results. The way for large organizations to retain talent – apart from giving appropriate wages and career growth opportunities – is by pointing their employees to a greater purpose for ‘a common good’.

At Mahindra Group, we were able to unite all our people around the 'Rise' philosophy: ‘Only when we enable others to rise, will we rise.’ This has served as our purpose during challenging times. While profitability and value creation are very important for us, we are also aware of the larger role we play in paving the way for a more equitable world and a greener planet. For us, purpose and profitability are not mutually exclusive objectives; they are synergies that help us along our growth path.

To the outside world, ‘purpose’ is a commitment, or a promise, made by the organization to the world at large. People do not view corporates as trustworthy anymore, a trend that became more pronounced after the global financial crisis of 2008. Academics Rob Goffee and Gareth Jones wrote about this disaffection eleven years ago.

Large corporations can do a lot, especially for the communities they serve. The chasm that separates the haves from the have-nots has grown too wide, especially in the aftermath of the Covid-19 pandemic, as the International Monetary Fund has made clear.

The poorest half of the global population owns just €2,900 (in purchasing power parity) per adult, while the top 10% owns roughly 190 times as much. Income inequalities are not better either. At Mahindra, we work with underserved communities to improve their living conditions.

We believe that large corporations must contribute to a more equitable world. Businesses will thrive only if communities prosper. Therefore, it is in the interest of businesses to work towards bettering the lives of our disadvantaged populations. And by doing so, companies improve their chances of bulking up a loyal customer base. We must keep in mind that the new generation of socially conscious consumers demands more compassion and commitment from businesses.

Another area where corporate purpose should focus is climate change, which is wreaking havoc across the world, and businesses are partly to blame. Organizations must do more to accelerate the transition to sustainable operations. It is important for us to initiate a ‘just transition’, where no one is left behind, or disadvantaged, on account of our shift to sustainable, net-zero business operations.