Scott Ko is the Creative Strategist and Founder of ColourSpace, Australia’s first certified visual arts social enterprise. Scott began his journey with the passion and purpose to connect local artists and businesses in a way that makes a positive impact on mental health in workplaces. This discussion was an opportunity for entrepreneurs to gain insights as to what it means to have a business with a purpose, why purpose is important, and how to align your business with a purpose you care about. This is the first part of key takeaways from the webinar.
The Meaning of ‘Purpose-Driven Business’
The definition is still being constructed while it holds different meanings to each individual. However, people’s response could be put into three categories when describing the meaning of ‘Purpose-Driven Business’:
1. A business whose purpose goes beyond just profits. True, but the challenge with this definition is that many businesses do usually have an underlying driver other than profit. For example, Apple holds a purpose to deliver a quality experience to consumers.
2. A business whose purpose goes beyond just profits to creating a social impact. A definition of that shows social conscience, however, will vary depending on who you talk to. For example, a business that would like to build computers could be considered creating a social impact for some and not for others.
3. A business whose purpose goes beyond just profits to creating a social impact that is aligned to Global Sustainable Development (GSD) Goals (developed by UN). A definition provided by people who are more aware of global challenges.
Some examples of ‘purpose-driven business’ mentioned by Scott are Who Gives A Crap, Thankyou., Streat, Patagonia, Danone, Unilever, Ben & Jerry's. And Scott admits there is a spectrum but all in the right direction of providing a solution to consumers while trying to avoid direct or indirect negative consequences to humans, society, or environment.
The Advantages of Being a Business with Purpose
► Consumers are increasingly considering social factors and the wider social and environmental impact of the supply chain when making decisions about brands. Therefore, becoming a business with purpose will benefit from onboarding the increasing shift in consumer preference as well as being environmentally and socially responsible.
► In a more simple sense, the advantage of being purpose-driven is that it is more sustainable in the long term for business, people, and the world. Not long ago, a significant number of businesses were solely profit-driven (think modern slavery and ignorance to environmental impact). But now, there is a lot more pressure towards building a sustainable business which is and will be continuously beneficial for all in the future.
► According to an article by Deloitte, when companies align purpose with doing good, they can build deeper connections with their stakeholder and, in turn, amplify the company’s relevance in their stakeholder’s lives (source).
The Disadvantages of Being a Business with Purpose
► It is harder to achieve. For example, for sustainable fashion, there are numerous things to consider such as the material must be sustainable and ethically sourced, the labour must be free from slavery, all while ensuring the entire supply chain is not impacted.
► There is greater scrutiny. By claiming your goals, there will be a higher level of expectation from consumers; and therefore, pushing business owners to be more proactive than just reactive. The business should reflect your chosen purpose and operate in a way that can withstand judgements and questions.
► It takes courage to bring people on the journey. As a purpose-driven brand, you won’t be competing on price, but competing on purpose. Hence, even if your service or product may be more expensive, you must be able to convey and convince others that it is more sustainable and aligned with your business. It becomes increasingly challenging as a publicly listed company, there will be a wider range of the stakeholders/customers that have to be convinced and onboarded with the entire organisation’s mission and services.
We’ve known for a while that when profit is the sole key metric of a business, it results in the exploitation of people and the environment. Yet, it is also not easy to become a purpose-driven business or guilt-free entrepreneur. Debates and conflicts will arise finding the balance between delivering service, solving a problem, and profit to achieve sustainable business.
This is the first part of the HQ Boardroom Discussion with Scott Ko: Business and Purpose Blog. Read Part 2 here.
Disclaimer: The information provided in the webinar and in this blog is strictly for educational purposes to explain government incentives and startups, and it does not constitute investment, accounting, financial, legal or tax advice. It has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.