The 3 key takeaways for business leaders:
- 2020 is the tipping point for the Purpose Economy as Aaron Hurst points out for the Age of Purpose. Millennials are finding their way back to meaning and purpose through impactful work and ethical consumption.
- With 66% of Americans saying they would switch to a purpose-driven brand and 78% believing companies have to do more than just make a profit, it is clear that the tide has already turned toward purpose-driven consumption.
- It is not just consumers and employees putting demands on the market, “purpose” in a corporate context is now being quantified in the form of Environmental, Social, and Governance (ESG) performance. Investors, stakeholders, and consumers want to know what businesses are doing to move the needle toward the UN Sustainable Development Goals (SDG) to end poverty and take climate action—just to name a few.
Purpose isn’t just the latest buzzword—it is fueling a generation that is dictating a new economic order where profit isn’t the only bottom line. This new economy was first coined as the “Purpose Economy” by Aaron Hurst in his book with the same title back in 2014. Hurst predicted that the Purpose Economy would come of age in 2020 and he backed his claim with statistics like PwC estimating a 300% increase in consumer demand for purpose-driven products in the same year. As we come into what appears to be the fourth economic order in the history of the world, this highly innovative economy isn’t leading where many might think—innovation and technology have actually propelled people back in search of meaning.
Tipping point for purpose
Our ancestors were hunter-gatherers until their descendants learned to work the land to feed their communities. This agrarian-based economy was launched into the Industrial Economy with the age of the railroad, assembly lines, the cotton gin, and electricity, just to name a few. The 1960s dawned the Information Economy with access to information and knowledge like never before, through first radio, television, and then computers and smartphones. Now it is 2020, the tipping point as Aaron Hurst points out for the Age of Purpose. Millennials are finding their way back to meaning and purpose through impactful work and ethical consumption.
We lost sight of meaning in work
Generally speaking, we lost sight of what our work produces in Western culture besides more money in the bank. Market trends such as the Maker’s Movement, DIY, homemade, and companies like Etsy are indicating that people want to see work produced by their own hands. Most of us don’t actually touch the end product which is a stark contrast to previous generations that ate what they harvested and lived in homes they built.
For the baby boomers, providing for their families was meaning enough, but the millennials want to have an impact on the world around them. With millennials making up most of the workforce at 37.9% and becoming the largest living adult generation, it is hard not to listen to what they want. Forty-four percent of millennials want passion in their work, beating out money at forty-two percent. The San Diego Chamber of Commerce said that of the 51.9% of millennials that are thinking of leaving their jobs in the next six months, the main reason was wanting to find more meaning in their work. Harvard Business Review said that 71% of millennials are disengaged from their work. Millennials want to work for companies that are making a “profit with purpose,” so that they feel a part of something bigger than a paycheck.
We want to know where our products come from, who made them, and whether they’re good for the planet.
This sense of purpose extends to purchasing decisions, as people understand that what they consume can actually reach around the world and affect a child who is forced to work in a factory. This purpose-driven generation is asking where products come from, who made them, and is it environmentally sustainable, as they buy Fairtrade, Certified Organic, BCorp Certified as well as local. They see that the businesses they support can actually make a difference for the environment and reduce inequity around the globe. With 66% of Americans saying they would switch to a purpose-driven brand and 78% believing companies have to do more than just make a profit, it is clear that the tide has already turned toward purpose-driven consumption.
In the process of employees demanding meaning from work and consumers asking questions about consumption, the Purpose Economy has grown up. It is not just consumers and employees putting demands on the market, “purpose” in a corporate context is now being quantified in the form of Environmental, Social, and Governance (ESG) performance. Investors, stakeholders, and consumers want to know what businesses are doing to move the needle toward the UN Sustainable Development Goals (SDG) to end poverty and take climate action—just to name a few. The next stage of growth for the purpose economy is already underway around the world, as we move from voluntary ESG markets to regulated ESG disclosures.
Purpose-driven businesses and consumers have grown up. If your business exists solely for a profit, it is time to mature as well and find meaning and purpose for the sake of your employees, customers, investors, and soon, regulator bodies.
ABOUT THE AUTHOR
Elizabeth J Walter
With a varied career in international politics, social enterprises and a tech start-up, the common thread for Elizabeth over the past decade has been the pursuit of sustainable development in emerging markets. Writing has been the medium to synthesize her experiences in between changing diapers and kissing skinned knees. Elizabeth believes that power of purpose-driven businesses to deliver profitable products at the intersection of societal and environmental benefit can change the world. She lives in an ‘01 converted Blue Bird school bus with her husband, two kids and a Vizsla.