November 5, 2024
Creating a Sustainable Culture: The Fundamental Importance of Purpose
Introduction
The saying attributed to Peter Drucker, "Culture eats strategy for breakfast," speaks to the importance of aligning culture with strategy. In our recent survey of more than 2,000 CEOs and directors, 87 percent of the world’s business leaders cited culture as a top priority, reflecting its importance in implementing an organization’s strategy and its ability to perform and adapt in challenging times.
Having the “right culture” is regularly cited as a necessary condition for the success of sustainability initiatives, but nowhere is it defined by the values, practices and behaviors that support it. In our research, we found evidence for some aspects that may seem obvious in retrospect, others that challenge conventional wisdom about what “good” looks like, and well-intentioned behaviors of leaders that nevertheless undermine it.
Therefore, this series of articles offers a research-based, holistic view of the elements contributing to creating a sustainability culture.
Sustainability in the spotlight
Over the last 20 years, various organizational initiatives have achieved priority status — quality improvement, digital transformation, customer centricity, diversity and inclusion, employee engagement and wellness. Sustainability, having risen to prominence in the 1970s with discussions of environmental issues and activism focused on pollution, resource depletion and industry's impact on the planet, became a hot topic to achieve strategic organizational performance goals with minimum environmental impact. Market demand, regulatory requirements, investor priorities, technological advances, resource constraints, and broader societal and environmental concerns have all contributed to its importance today.
Organizations committed to operating sustainably for resilience and long-term viability need leaders equipped to drive related initiatives with the blessing and involvement of their boards, investors and other stakeholders. They also need the commitment of the workforce to pursue sustainability objectives. Nevertheless, even with the support of the organization's top leaders and its significant long-term business benefits, sustainability aspirations cannot be achieved without a culture that shapes the behaviors, decisions and practices of an organization that supports it.
Therefore, there are at least two questions to be answered:
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What are the characteristics of a culture that supports sustainability, and what are the characteristics of a culture that undermines it?
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What actions can CEOs and other senior leaders committed to sustainability take to create a sustainable culture?
We will attempt to answer these questions in a series of articles that describe what it takes to implement a sustainable culture:
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The fundamental importance of purpose
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The curious role of agility
- The question of the “right” culture
- The best leaders for the sustainability journey
- How CEOs can promote a sustainable culture
Let's start by looking at the link between purpose and sustainability.
The Fundamental Importance of Purpose
In the old days, a company’s sole purpose was to be profitable and make money for its shareholders. Today, we think of purpose as the guiding force that leads to profit and shareholder value — and one of the roads to sustainability. In fact, Spencer Stuart's research shows that revenue and value creation are increasingly expected outcomes of an organization’s sustainability strategy.
An organization's purpose ‒ why it does what it does ‒ is the fundamental reason for its existence. At a deeper level, we believe that the purpose should also answer the questions “What makes us distinctive?” and “What impact do we have on the long-term well-being of our world?”
The answer to the question, "Why do we exist?" returns the organization to the principles that led to its creation and serves as a guiding star for its strategy, decisions, operations and customers. The following statements of purpose are from companies that rank high on sustainability and echo their sustainability priorities:
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3M: “To improve our business, our planet and every life.”
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Abbott Laboratories: “To help people live their best possible lives, through the enabling power of health.”
- Bank of America: “To help make financial lives better through our focus on responsible growth.”
- Biogen: “We … are passionate about our commitment to patients, our employees, the environment and the communities where we live and work.”
- Halliburton: “We will lead the industry in innovation and the conscientious stewardship of global resources.”
- Intel: “We create world-changing technology that improves the life of every person on the planet.”
- J&J: “We blend heart, science and ingenuity to profoundly change the trajectory of health for humanity."
- Owens Corning: “Our people and products make the world a better place.”
- Patagonia: “We’re in business to save our home planet.”
- Royal Dutch Shell: “Power progress together by providing more and cleaner energy solutions.”
- Schneider Electric: “To create Impact by empowering all to make the most of our energy and resources, bridging progress and sustainability.”
The answer to the question, “What makes us distinctive?” can also reflect a sustainability agenda. Different companies in the same kind of business — grocery stores, technology companies, auto manufacturers, consumer goods makers — can stand out by including sustainability as the means to achieve their business goals and to separate them from the pack. Furthermore, when attracting the most qualified employees in a competitive talent marketplace, focusing on sustainability can be a powerful recruiting tool for people who resonate with it.
The answer to the question, “What is our broader impact on the well-being of the world?” gets to the heart of sustainability: beyond profit and shareholder value, can the organization’s purpose contribute to the quality of life in the near term while also ensuring the ability of future generations to meet their own needs? This is a more difficult intention to put forward and to achieve. Nevertheless, we believe that the ability to answer this question in the affirmative rests on the ability to answer the first two questions.
An organization’s purpose is not a tagline or a slogan: it should be a serious, well-articulated and testable proposition. It directly affects an organization’s personality: its distinctive operations, the values it stands for and the belief in a higher purpose that drives its culture. However, having a statement of purpose that reflects sustainability is not enough; leaders must create the conditions that enable it, and culture is an important component. Successful companies—those that win with consumers, in financial markets and with employees—will thrive at the intersection where culture and purpose meet.
In the next posts, we will examine some factors that contribute to a sustainable culture and one surprising element, usually considered a good thing, that can derail the culture if carried to an extreme.