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The Harvard Business Reviewconducted an eight-year study examining three key strategies known to drive corporate growth: creating new markets, addressing a wider swath of stakeholder needs and changing the rules of the game. What they found surprised them. All of those expected drivers boosted growth at the organizations they studied, but there was a fourth driver they hadn’t considered. That driver was purpose.
Like a building’s foundation, purpose is the platform brands build on. It reflects upon how you exist to serve your customers and society. It answers the daunting but crucial question “Why do we exist?” and serves as the compass guiding every facet of your organizational decision-making.
When purpose is authentic and relevant, it helps companies create deeper connections with consumers, better cater to the communities they serve, attract and retain talent and achieve more significant results and impact.
In the 21st-century world of information transparency, purpose is essential to any organization’s growth. But nowhere is it more critical than in the legal cannabis industry. It helps people differentiate between thousands of products with the same active ingredient. It helps build trust as the cannabis industry emerges from 70 years of misinformation and misunderstanding.
Building Consumer Relationships
Many consumers see the products they buy as an extension of their own personal brand. Today’s consumers want to know the story behind the company, what it stands for and its role in society. Consumers buy products from companies like Apple, Harley Davidson and Whole Foods because those companies stand for what those consumers believe in.
The more specific a cannabis company can define its purpose (and the population that can most benefit from it), the easier it becomes to drive revenue through storytelling, perceived value and brand loyalty.
Take CBD company Charlotte’s Web as an example, which led with a medicinal purpose of helping control seizures in children. (Full disclosure: Author formerly advised Charlotte’s Web in 2015.) Its widely reported mission was covered by international news outlets and helped pave the way for potential medical applications of cannabis. Then there is cannabis brand Viola, run by former NBA player Al Harrington, who started using cannabis for pain relief and is now propelled forward by a social justice mission. (Full disclosure: Al Harrington is an advisor to author’s company.)
Purpose-driven companies lay the groundwork for company growth by contributing directly to the pillars of successful relationships:
• Story: Brands are stories, and purpose drives the narrative that companies share. Brands need to show consumers who they are and who they serve. If the consumer sees their life purpose reflected in a company’s mission, they are more likely to see this brand as a way to establish or support their own story.
• Perceived Value: Value is no longer simply based on a price-quality ratio. For today’s customers, value is also about access to information, user experience, convenience, choice, and, of course, purpose. The degree to which a consumer aligns with why a company exists factors into that consumer’s valuation of the company’s products. Thus, when two products offer a very similar solution, purpose is often the deciding factor.
• Brand Loyalty: The cannabis industry is a challenging market to stand out in, and purpose helps brands articulate what problems they’re aiming to solve. Whether social justice, the environment or creative performance, a bond is formed when a customer’s values align closely with a company’s purpose, creating a loyal customer and brand ambassador.
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Cementing Corporate Culture
Company culture is a powerful driver of profits. Purpose-driven company cultures often become more profitable than less inspired ones, not just in terms of growth but also through retention strategies and employee focus.
Recruiting And Retention: Employees like to be proud of what they do and what their organization stands for; it keeps employees engaged. Employees who work for mission-driven companies often feel more engaged and committed to their work, which helps attract talent and elevate productivity. According to the HBR study, 86 percent of the Fortune 1000 executives surveyed agreed “that today’s top talent is more inclined to work for companies that have a demonstrated commitment to social issues compared to ones that don’t.”
Goal-Setting: When people understand how purpose fits in the big picture, it makes them feel that they’re part of something greater than their job or even the product they are selling. It helps them stay on track and know what is essential to pursue. It provides clarity and makes goal-setting easier, making challenging decisions clearer because decisions align with the purpose.
Purpose Leads to Profit
For cannabis companies, a well-defined, resonating purpose can rewire perceptions, inspire stories, create brand loyalty and help attract and retain top-flight talent. And, as it turns out, focusing on purpose over profit leads to moreprofit than a profit-first mindset does. TheHBR study found that “companies with high levels of purpose outperform the market by 5%–7% per year.”
The goal of any business is to make money. But, for a company’s goals and objectives to be successful over time, it must also have meaning beyond financial success. Cannabis companies that want to stand apart from the pack need to emphatically and enthusiastically be able to answer the question, “How do we keep score other than money?” The answer to that question will help bond people across siloed parts of the organization, identify your strategies for customer engagement, cultivate a diverse culture, and define and refine who you are in the world.
In short, put humans at the heart of the decisions at your cannabis company. When a company authentically leads with purpose, it can achieve a “trusted status” with its customers, workforce and partners, opening up new connections while increasing growth and revenue in the process.
