The definition of the purpose-driven economy

Think:Act Magazine Purpose
The definition of the purpose-driven economy

August 7, 2018

Purpose economy expert Aaron Hurst on the economic evolution that’s changing how companies do business

Interview

by Janet Anderson
artwork by Camille Kachani

When noble aims are exposed as shams, customers vote with their feet. People don't like to feel they are being fooled. What do businesses have to do to counter this? We ask Aaron Hurst, author of the 2014 book “The Purpose Economy” and the founder and CEO of Imperative, an organization that defines itself as a "human-centered career platform that helps businesses and workers develop meaningful careers." In other words: Its purpose is to empower people to find and build their own.

The market has matured – you can't fake social impact, says Aaron Hurst.
The market has matured – you can't fake social impact, says Aaron Hurst.

Think:Act: You have said you believe the economy is shifting to a new model – one driven by purpose. What are the signs that this is happening?
Hurst: I grew up with conversation about economic evolution. My uncle, Stanford economist Marc Porat, coined the term "information economy" in the 1970s to describe the shift that was happening then from the industrial economy. The information economy model allowed for efficiency and scale but it was missing a sense of connection – it was too sterile. People started to spend money to bring connection back into their lives. In every industry we have studied we have seen the change, and not just on the retail side – we have seen it on the employment side too. People don't go to work just to get a paycheck; they want to feel what they are doing matters to the world and that they are growing in the job.

85% of purpose-driven companies show positive top-line growth. The figure drops to just 42% when looking at non purpose-led companies.

What does a genuinely purpose-driven business look like?
There is no one kind. We have identified three key types, however. There is the values-driven organization: Here values are at the core of all decision-making and "what is the right thing to do?" is the question behind every critical decision. There is the organization striving to build excellence, where the purpose is its craft and its focus on quality work. Then there is the impact-driven organization that takes responsibility for its impact on its stakeholders and proactively seeks to optimize that impact. Within each of these types of organizations are individuals who make the choice every day to work with purpose at the forefront. The organizations that are doing well are the ones that help individuals to have that self-awareness about purpose and connect it to the organization's purpose.

How is this trend evolving?
Early on, having social impact could be a differentiator. Now that the market is mature, it's tougher – you can't fake it. You have to compete with people doing the same thing and stand out in that context. Purpose raises the bar. It's not just about having engaged employees anymore, it's about having inspired employees.

Further reading
Other TAM Purpose articles
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What does purpose mean to you and your business? Our Think:Act magazine on purpose addresses changing values in the business world.

Published July 2018. Available in
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