Purpose as a growth lever for SMEs

(by Bettina Gebhardt)

What does the term ‘purpose’, which is so often used, mean? At its core, the search for purpose, also known as corporate purpose, is about finding out and describing exactly why the company exists at all. What intentions and objectives does a company pursue and what benefits does it offer third parties. In short: The company purpose says why and what a brand or company stands for. Profit as the sole raison d’etre is therefore no longer sufficient. Stakeholders such as customers, employees, the media and increasingly also owners and suppliers today demand more.

In addition, a clearly defined purpose enables a modern approach to leadership. The classic ‘command & control’ management style is superfluous where employees move in a “commonly specified direction”. Purpose is therefore a key to self-organization and enables maximum decision-making autonomy. The purpose is the supreme authority and the central point of orientation for all teams, employees and managers and is therefore the cornerstone of modern leadership and work culture.

Behind the ambition to allow more meaningfulness to flow into the economic activity through purpose and to enable a more contemporary management style, there is not only a longing for more ‘feel-good’ moments at work, but entrepreneurial considerations. At least since Simon Sinek we know: “People don’t buy what you do, they buy why you do it”. Studies* by Accenture and McKinsey show that companies with a clearly defined and adequately communicated corporate purpose are more successful in the long term.

Customers consciously choose a brand when buying a product

From my point of view, SMEs in particular can use Purpose as a resource. When competition and market pressures increase, there is a temptation to focus on sales and profit-oriented communications. However, real customer focus and trusting customer relationships do not arise from a blatant appearance. Customers primarily identify with and make a conscious decision in favor of a company and a brand when they buy a product.

But how much do SMEs actually deal with their purpose? The short answer is: far too little. However, small and medium-sized companies have clear advantages in this respect, which they are often hardly aware of and therefore rarely use.

At SMEs, the employees are close to everything and ready to get involved

The frequent proximity of the workforce to the company founders or the company management enables direct, personal communication about the company’s purpose, values and corporate culture. In day-to-day interaction, the example behavior of managers communicates much more than well-placed purpose posters in the company’s reception area. This is both a curse and a blessing.

In summary, what can a purpose do, culturally and economically?

Purpose answers the question of meaning and thus enables the most diverse stakeholder groups to identify with the company and its brands.

Purpose allows authentic communication and leads to stronger customer loyalty.

A common overarching goal strengthens the WE feeling and thus teamwork. This success can be felt and measured internally and externally.

Modern management and work culture, because clarity about the common direction and the purpose of the economic commitment promotes decision-making autonomy and a higher degree of self-organization.

I say SMEs: Dear entrepreneurs, share your ideas with your employees

In conversations with SMEs, I notice again and again how clear the company’s purpose and values are for the individual managers, but how rarely this often implicit knowledge is shared with employees. There is an understanding that clarity about this would be a matter of course. I often experience SMEs as rough diamonds that could shine more beautifully and more brightly with manageable use of resources. I have therefore made it my personal mission to help SMEs that have the courage to break new ground, to work out this precious treasure and to communicate it internally and externally.

Why is it so important to me to support SMEs in developing and communicating the company’s purpose? The answer lies, among other things, in my own experience as the founder and managing director of the communications consultancy Kontx. Every day I work with a lot of energy and enthusiasm. In the initial phase, I was occasionally surprised and slightly disappointed that my team chose a somewhat more neutral approach to work. In many conversations, I finally realized that the reasons for my inner drive and my motivation were crystal clear to me, but not obvious to my co-workers.

My credo: involve your own team in the purpose process – make it “their”.

Together as a team, we have developed the purpose of our company in the form of a vision and values. The values were hung on the office walls as posters for everyone to see and experience, together with an internal code of conduct and action. They accompany us every day in the office and remind us of our common mission. It is much more important that we try to live the values in everyday life and constantly question them. To my surprise, the commitment of the individual employees increased significantly through the joint development of the direction and what we stand for. Today we live more decision-making autonomy and therefore a higher degree of self-organization. This experience showed me what an art it really is to translate the implicit knowledge about values and purpose of the management to the employees.

With some of our customers I was able to observe how silo mentality and ‘I’ thinking can change to a ‘we’ feeling through good purpose activation. Despite the crisis, these companies will also become more economically successful. Today, I bring my knowledge as a small entrepreneur, coupled with my many years of experience as a communications consultant for global corporations and SMEs, to the discussions with companies.

How exactly do we at Kontx proceed in this consultation process?

In the first phase, an analysis of the current situation and the current business and working atmosphere is carried out through individual interviews and employee surveys as well as in-depth interviews and a possible stay in the company.

In the second phase, we clearly work out the company’s purpose and values in workshops.

The third phase is about the implementation of this content in internal and external communication and its implementation in the everyday work of each individual. Depending on the company and the situation, the respective phases take different lengths of time.

Why is work important, especially in difficult economic times? The inner drive of employees to do their best despite opposition is closely linked to recognizing the meaningfulness of their work. Stick to the point when things don’t go according to plan. Overcoming obstacles is a lot easier when the vision is clear and the mood in the office is not exclusively linked to the monthly result.

Instruments such as purpose workshops, purpose days, internal purpose activation campaigns for employees, etc. are therefore part of the good manners of modern corporate management in large companies. Now it is time for SMEs to devote themselves to this topic and to a resource that has been underestimated up to now to use.

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Links to studies:

Accenture: https://www.accenture.com/us-en/insights/strategy/brand-purpose?c=strat_competitiveagilnovalue_10437227&n=mrl_1118

McKinsey: https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/purpose-shifting-from-why-to-how

Neuspur: https://neuspur.com/brand/purpose-branding-bei-kmu-unternehmen/