Friday, July 10, 2020

It's time for purpose beyond profit

We are faced with the so-called "purpose economy", a reinterpretation of capitalism that ceases to assume profit maximization as the main norm of behavior, personal and business.

The term comes from the self-titled essay published in 2014 by Aaron Hurst, founder of Imperative, a technology platform for leaders of the new economy. According to their approaches, the information-based economy that emerged in the middle of the last century begins to be replaced by another based on "purpose", understood as a subjective goal, and not linked to economic performance. This goal must involve all economic agents, generating value-based companies, regulatory administrations that facilitate this end, and conscious and committed consumers.

The purpose has, therefore, become the raison d'ĂȘtre of many companies, which have fairly understood what their role in society should be. An example of them is that 78% of Spanish managers consider that having a clear corporate purpose is profitable and contributes to the business, according to the survey "Spanish managers about purpose: 5 keys", prepared by Desarrollando Ideas, the Leadership through Knowledge of the Llorente & Cuenca consultancy.

With time, the economy of purpose has become the umbrella and the meeting point of different innovative practices: economies such as circular, which advocates minimizing the waste of any activity; the collaborative, based on the use, exchange or rental of goods between individuals; those that seek a slowdown in production processes or those that propose modifying the paradigm to move from competition to collaboration.

In this new scenario, the redefinition of purpose is a priority task that many companies are already taking seriously, examining whether the meaning of their existence also has to do with the well-being of the societies with which they interact. Although 50% of Spanish executives consider that their companies have a foundational, public and defined purpose, more than 80% do not believe that it is urgent to carry it out, as can be seen from the Llorente & Cuenca study cited above.

It is clear that the different interest groups intervene directly in the reputation and profits of the companies and that the ship of the Fourth Industrial Revolution needs a course set for a purpose and for the spirit of doing something positive.

Companies that pursue their purpose with a vision of generating social impact will benefit from a brand capable of making consumers feel comfortable with it, in addition to having travel companions other than business but who grant "good press" to the company: non-profit organizations, research centers, and social groups. Such a corporation could also benefit from positive discrimination in a public contest.

Technological transformation and social impact
Technologies like robotics, quantum computing, artificial intelligence, big data, nanotechnology, and synthetic biology will replace, alter, and transform business models in virtually every industry. The speed of change forces us to think about how to repair the cracks, both from previous industrial revolutions and from those that may arise now.

The reality today, as it appears from the interviews carried out in the report "Technology with purpose. The social impact of the company in the digital age ", prepared by the Business Observatory against Poverty", is that most companies are more focused on digitizing their processes than concerned with seeking a greater and better impact of their activity.

The need to join the change does not exempt from directing it. In the same way that consumers increasingly take into account the externalities of the products and services they purchase and use, companies should also add the purpose factor and the social impact of their digitization plans.

Therefore, a change of mentality is required, both in the company and in other social actors. Today, many corporations are still unaware of the opportunities that technology can provide to solve social problems.

In a moment of transition like the current one, there is a double juncture: improving the company's processes and technological transformation, and seeking a positive social impact. In this context, where technology is the protagonist of many of the challenges but also the opportunities, social innovation strategies can become an instrument of change in the hands of companies, which often have the capacity and resources to influence, but do not know how to achieve it.

On the one hand, technology allows us to know and get closer to the structural causes of poverty from an increasingly global perspective. On the other, it helps to find solutions for exclusion and inequality. This approach, of prevention and action, more on structural causes than on final situations, is one of the opportunities offered by technology. What is important is not only knowing where there is poverty, but why and how to act effectively to reduce its consequences. There is an awareness of poverty, but there needs to be an interest in solving it.

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