This story originally appeared on SAP News Center.
There has been perhaps no greater question explored throughout art, philosophy, and religion than the meaning of life. For centuries, scholars and researchers have reflected on what we are here for.
According to Barbara Langes, researcher at the Institute for Social Science Research (ISF München), this question of purpose has now been taken up by Silicon Valley giants
Barbara recently participated in the second SAP Research Round Table held in the SAP AppHaus Berlin, alongside other business leaders and representatives from academia, politics, and the public sector.
The question of purpose has been taken up by Silicon Valley giants.
According to Barbara, whose field research took her to the heart of the Silicon Valley, “Tech companies are now taking a serious look at their own purpose, their reason for being; whereas during our last visit, two years ago, they seemed to take for granted that they were leading the way in improving the world. This new reflectiveness means that they are taking responsibility – beyond technical solutions and profit – for impacts on society. The Silicon Valley has grown up.”
Tech companies are taking a serious look at their purpose. This new reflectiveness means that they are taking responsibility for impacts on society. The Silicon Valley has grown up.
The SAP Research Round Table was designed by the SAP Innovation Center Network to bring together diverse perspectives and explore questions such as: How do we define purpose in an organization? How do we ensure the purpose is lived throughout the organization? How can we measure it? How can software solutions help operationalize purpose? And how do we structure work in the future to support a purpose-led organization?
These questions and more were parsed by participants in a so-called ‘world café’ format designed to build on the first roundtable while capturing new ideas and developing a concrete action plan.
Increasing Revenue Just Isn’t Good Enough Anymore
But why is purpose important? Isn’t increasing revenue good enough? According to a recent Ernst & Young paper, companies can create more value for shareholders and society over the long term by acting on a purpose than by pursuing purely financial goals or a narrowly defined self-interest.
To operationalize this abstract topic we see companies breaking it down into concrete areas for action. But how does such a statement ideally come to life? And who needs to create a company’s purpose?
The panel’s consensus was that this exercise shouldn’t be relegate to the Corporate Social Responsibility or Marketing departments. It needs to be born out of a dialogue with all parts an organization and its stakeholders — employees, leaders, partners, customers, external stakeholders, and especially people who will challenge the outcomes to ‘keep it real’ and make it meaningful.
Why meaningful? “Because purpose-led companies have humans at the core of their efforts,” explains Norbert Koppenhagen from the Future of Work team in the SAP Innovation Center Network.
Purpose-led companies focus on employees as value generators not cost factors.
“A number of things set purpose-led companies apart. They focus on employees as value generators and not cost factors, they live partnership as a search for benefits for both parties, not exploitation, and transparency is key.”
Purpose instills strategic clarity, channels innovation and taps a universal need; something fundamental in human nature, according to Ernst & Young.
Creating and Measuring Purpose – But How?
The panel agreed that a proven process to create a purpose-led organization is crucial. While the outcome will be different for each, the path toward the purpose needs to be based on a best-practice process that generally begins with a crisis. That may be a financial, environmental, or legal challenge that makes people wake up to a new reality.
Getting a small but critical mass of leaders, employees, external stakeholders, and other influencers onboard to define the current situation and determine where they really want to be in the future is next. Opportunities to engage people at all levels through communication, participation, coaching, training, recognition, and rewards really “make the purpose stick.” Reflection and evaluation through continuous check ups, audits, and feedback loops are needed to evaluate efforts and adjust them to keep people engaged and focused.
Measuring how well a company is achieving its purpose was one of the more controversial topics the panel tackled. Ideas like having a purpose balanced scorecard, using the UN Sustainable Development Goals, assessing things like the ecological impacts, composition of a company’s shareholder portfolio, long and short-term partner relationships, co-innovation efforts, company culture, employee learning indices, and media coverage were just some aspects explored. Some members even suggested that we will see standardized purpose indices across companies in the future, like sustainability indices.
“I expect companies will decide to be more transparent about social and ecological criteria in annual reports. For example, if a company endangers lives with a chemical spill, this needs to be considered in relation to overall financial gains,” says Christian Hiss, the CEO of Regionalwert AG, a company that brings together investors with the purpose of building a sustainable regional economy by combining economic, social and ecological considerations.
Christian continues: “Integrating social and ecological criteria into our annual reporting is something we already do at Regionalwert to show shareholders the impact of financial decisions on the socio-ecological aspects of doing business and demonstrate that it’s possible to invest sustainably. It is something more and more shareholders want.”
You Can’t Manage What You Can’t Measure
Here’s where software solutions come in. They can help in at least five ways, starting with improving employee engagement. Doing away with the traditional once-a-year survey and replacing them with frequent, flexible surveys that offer real-time results that show correlations between actions taken by the company and changes in engagement is the way to go. For example, does introducing home office options to employees correlate with increased engagement? Software can tell us that. It’s what SAP’s planned People Insights application aims to do.
If you are serious about becoming a purpose-led company, you need to make it part of your product development and portfolio management.
“If you are serious about becoming a purpose-led company, you need to make it part of your product development and portfolio management. Tracking not only financial KPIs like target costs, but also environmental and social KPIs can be the basis for choosing who to do business with for many consumers and companies,” emphasizes Jochen Mayerle, program lead for Future of Work at SAP.
In 2014, CVS Health made waves by announcing it was the first national retail pharmacy chain in the U.S. to stop selling tobacco products because it conflicted with their purpose of helping people on their path to better health. Selecting suppliers based on shared values and auditing them to make sure they comply with one’s own purpose is the way of the future, the panel agreed.
Quantifying impact on the customer experience and brand perception is next. Do consumers perceive a company to be living their purpose? “You need to measure and prove that your company is living its purpose. Cheating is not an option in the era of social media,” adds Jochen.
Enabling leaders to make decisions based on financial and non-financial impacts is one of enterprise software’s essential functions. Needless to say, with 76% of the world’s transaction revenue touching an SAP system, SAP is positioned to lead the way.
So back to that age-old question: “What are we here for?” To that SAP has found its answer and its purpose: to help the world run better and improve people’s lives.