The High-Purpose Company (Part 1)

As we push further into the 21st century, the corporate world continues to evolve in front of us. Themes such as sustainability and corporate social responsibility (CSR) gain traction as we witness first-hand how the business world is (or is not) embracing new ways of thinking. In her book, The High Purpose Company, Christine Arena defines this next-generation theme and breaks down the sweeping changes that are starting to take hold in the private sector.

Before defining what a high-purpose company is, we must debunk some of the myths of CSR:

  • Myth #1: CSR is always about doing the "right thing":   

In a way this is true, but what is the "right thing"? Arena argues that good CSR is not so much prioritizing the environment over shareholder interests as much as it is solving environmental problems in a way that serves shareholder interests. We have touched upon this philosophy many times before at The Panelist. but given that it is our major underlying theme, we cannot reiterate it enough. Corporations cannot choose one cause over the other, rather they must simply engage in a continuous cycle of self improvement.

  • Myth #2: Making the world a better place is the top priority of CSR:

A concerted effort should not be made to "giving back" to the community, rather a company's first priority should be eliminating the damage done through its most basic business activities. How environmental, social, and governance risk is reduced and later eliminated should be how business is conducted. The "right thing" will follow.

  • Myth #3: Competitive distinction is the top benefit of CSR.

Will actively engaging in CSR practices separate one brand from another? What happens if everyone engaged in similar practices? Companies might lose focus of what they are originally in business for. Instead, innovation is the top benefit of CSR. Practicing CSR at a high level incites companies to produces higher-quality products, services, operations management, and strategic management. A slightly higher brand equity pales in comparison to what innovative thinking can bring.

  • Myth #4: CSR doesn't always pay

Arena argues here that many companies approach CSR in a superficial and compartmentalized way where CSR is nothing more than a public relations ploy or as a mode of compliance with regulatory standards. These particular initiatives are often defensive and narrow and miss the broader point. They are not created in order to put more health into the company or help a company reach its ultimate business goal. Thus CSR, in these cases, is not seen as mission critical (in cajun terms, CSR is simply "lagniappe" to the well capitalized companies that can "afford" to put forth CSR initiatives). But the reality is that at the end of the day, if a company wants CSR to pay, then it has incorporate that into its design. Just as important, this same company has to be patient enough to reap the rewards over the long term, for they will not appear overnight.

With this in mind, just exactly what is a "high-purpose company"? The author sums up the underlying theme of the book in three consise sentences:

High-Purpose Companies are driven by purpose to the extent where purpose becomes a dominant force for corporate performance and development. In such companies, the concept of a higher purpose — of somehow serving society or protecting the environment — is so integral to the fabric of the organization that if you removed that thread, the company would start to unravel. Without their higher purpose, these firms would have difficulty competing in the marketplace, or even surviving.

Well said, Ms. Arena. The company's purpose should be its lifeblood. CSR should be ingrained into a company's business model. Here, at The Panelist, we write about such companies all the time. To get a feel of how such companies that we write about intertwine with those mentioned in this book, stay tuned.

Financial Rainbow
Photo:DanelleMac, Creative Commons, Flickr