UK: In Business, Purpose Now Delivers Profit

Last Updated: 9 August 2017
Article by Anthony Hilton

Choose a point on the business horizon and head for it, says Anthony Hilton

The chief executive of a FTSE 100 company said the other day his biggest challenge was persuading junior executives that it was all right to take risks.

The blame culture whereby every disaster, corporate or otherwise, is followed by a search for someone to blame, combined with the massively increased emphasis in companies on risk assessment and risk control, had created a mindset where everything had to be done by the book and there was no point in suggesting anything different.

Yet the major moves forward in business only come about when someone has the courage to think and do something different.

Most boards think it is important that management at all levels is encouraged to feel innovative and entrepreneurial. The challenge is getting younger executives to believe you want them to be savvy but not fearful.

A second challenge is to create resilient organisations. When you analyse the growth in corporate profitability over the past few years it becomes obvious that the driver is usually not sales growth.

Most of the improved margin has come from cost-cutting.In part this comes from more efficient organisation, with international just-in-time supply chains being an obvious example.

However, it also comes from removing capacity – doing away with backup systems, dispensing with in-house expertise, and generally making moves which save money but make it harder for the business to cope with the unexpected.

This new fragility means that what might once have been an easily absorbed minor blow can now become a major problem simply through the lack of capacity to cope with it.

A third challenge is planning. One of those business futurologists who specialise in scaring the wits out of their audiences by painting pictures of the coming world, which bear almost no relation to the present, says that no one should produce five-year plans any more. The longest time horizon anyone should expect to get remotely right is two years.

Businesses should give up having a detailed route map which they expect to take them from A to B; instead, they should think like a sailor and navigate.

They should have a destination they want to reach, but understand that how they get there will depend on the winds and tides they encounter and the captain's skill in turning these to their advantage.

"Businesses should give up having a detailed route map; instead, they should think like a sailor and navigate"

An interesting new approach to these problems was produced by the New York-based Beacon Institute, which is part of the accounting and consulting firm EY.

The headline-catching figure of 'How can purpose reveal a path through disruption?', a worldwide survey of 1,500 business leaders, many of them running major multinationals, highlighted that they were profoundly rethinking the fundamental purpose of business.

Were such a survey conducted 10 years ago, before the great financial crisis, it would have thrown up overwhelming support for Chicago's most famous monetary economist Milton Friedman's aphorism that the purpose of business is business – in other words, it was wholly and exclusively about the pursuit of shareholder value.

However, in this most recent survey, conducted between November 2016 and January 2017, only 15% of respondents said their organisation's purpose was pursuit of shareholder value.

Some 11% said it was satisfying employees, and 34% said satisfying customers. The remainder (40%) said their purpose was satisfying society or having an 'aspirational reason for being'.

Interestingly, although three-quarters of respondents said that having a well-integrated sense of purpose will be useful in dealing with disruption, just two-thirds are profoundly rethinking what this purpose should be.

Half of those changing tack said that business must be infused with a desire to meet broader societal goals. Simply satisfying one stakeholder group, or even trying to balance the interests of several, is no longer going to cut it.

Such claims can easily get dismissed as marketing or PR hype and the Beacon Institute exists to help develop a sense of purpose in business, so it is talking its book. Having said that, the survey does stress that simply defining purpose is the easy part, and nowhere near enough.

The real gains only come when that purpose is infused throughout the business, and to do that requires genuine leadership and commitment from the senior executives – in a world which is depressingly short of genuine leaders. It is a genuinely hard thing to do.

It is also worth underlining that the institute's survey data suggests that organisations which have a clear sense of purpose embraced by all the employees have greater customer loyalty, find it easier to attract and retain staff, suffer less damage to brand values and reputation and – most controversially – are better equipped to innovate and cope with disruption.

Its core message is business should no longer see this as a choice of purpose versus profit; rather it is that purpose delivers profit.

To return to the navigation analogy earlier, purpose provides that point on the horizon towards which businesses can navigate, and provides a constant against which all the immediate decisions can be judged.

In a world characterised by ambiguity and uncertainty, purpose provides a fixed point against which decisions can be taken. And that is why purpose has the flexibility and capacity to innovate in a world where new rivals emerge from where you least expect them.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.