Leading with Purpose:

How the best-run organizations integrate

social, strategic, and environmental goals

August 2020

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Introduction
Managing for a higher purpose not tracked by
traditional performance metrics has become
an expectation at companies around the
world. But it takes more than good intentions
for these efforts to provide real value for the
communities they serve—and the companies
that sponsor them.
SAP and Oxford Economics set out in early 2020 to survey 3,000
executives about the value of creating and managing highly
interconnected organizations. We hypothesized that executives
who focus on the ways each part of a company and its business
ecosystem relates and responds to the other parts—an
approach known as systems thinking—will naturally extend their
attention to how the company fits into the wider world. We also
included questions about culture and purpose in a series of in-
depth interviews conducted with senior executives.
The results of the study suggest a connection between
systems thinking—including a focus on purpose—and business
outcomes. Companies that are managed holistically and
work with customers and employees to better society tend to
outperform their industry peers in areas including innovation,
employee retention, and profitability growth.
We also found evidence that “purpose programs” benefit from
a clear relationship to deeper organizational goals. As Harvard
Thinking beyond the enterprise
Mumbai-based Mahindra Finance earns
much of its $1.7 billion in revenue by making
loans in rural India, reaching many first-
time borrowers who lack established credit.
The company’s purpose programs build
directly upon this foundation, creating a tight
relationship between the core business and
all other operations. “First and foremost is the
business model itself,” says vice chairman and
managing director Ramesh Iyer.
Business School professor Rebecca Henderson said in a 2019
online presentation, “Thinking About Purpose,” “Adopting a
purpose will not hurt your performance if you do it authentically
and well. If you’re able to link your purpose to the strategic
vision of the company in a way that really gets people aligned
and facing in the right direction, then you have the possibility of
outperforming your competitors.”
Most of the executives we surveyed are still working on the
basics of systems thinking, including business processes that
work across ecosystems, new talent strategies, advanced data
management, and weaving purpose into the organizational DNA.
This paper highlights opportunities and challenges for executives
as they define their mission, outline strategies for fulfilling it, and
work to stay accountable to their goals and values.
Systems thinking
is a way of seeing the entire web of relationships
within and beyond the organizational firewall as a
unified entity that operates smoothly, dynamically,
and as part of a cohesive strategy.
To further both its business and social goals, Mahindra Finance
supports a series of educational programs in the communities it
serves, aimed especially at women. “We want to really increase
financial literacy at the rural level,” says Mr. Iyer. “We have made
some very strong commitments toward how we educate women
to understand the basics of financing.” Other courses aim to
increase independence for women by teaching them to drive and
service vehicles.
The organic relationship between Mahindra Finance’s lending
business and its purpose-driven investments represents systems
thinking at a high level. Not every company can boast the same
degree of interconnection between its operational and social
missions, but many organizations share similar priorities.
When survey respondents rated the importance of the UN’s
Sustainable Development Goals to their companies, gender
equity and reduced inequalities (like Mahindra is doing via
education and by introducing financing in rural India) topped
the list.
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 Fig. 1: Executives say inequality is top of mind
Q: The United Nations released a list of 17 Sustainable Development Goals. Which of the following are the three most important
goals for your enterprise? Select up to 3; not all goals are listed.
Gender equality
Reduced inequalities
Responsible consumption and production
Decent work and economic growth
Sustainable cities and communities
Good health and well-being
Affordable and clean energy
Climate action
Quality education
It is striking that climate action does not register as a higher
priority for our respondents, given the growing awareness of this
global crisis, consumer demand for sustainability, and a general
sense of corporate buy-in to the issue. (Our data shows that just
12% of respondents say that environmental factors are a top
influence on business strategy.)
One reason for this lack of emphasis may be that the UN global
goals offer multiple opportunities on this front—for example,
“sustainable cities and communities” and “affordable and clean
energy” (both options on our list)—which could be seen as
elements of the broader “climate action” imperative. Executives
also may prioritize goals more within their direct control, like pay
equity, for which they can demonstrate more accountability, rather
than issues that extend far beyond the organization’s walls.
But tackling climate issues—like reducing carbon footprints and
participating in circular economies—should remain in focus. Our
survey respondents acknowledge both environmental and social
issues as major concerns for employees, and an important driver
of reputation and recruitment. Reducing their carbon footprint has
proven to be an excellent business decision for Hydro, the $11
While over two-thirds of respondents have entered the piloting stage of
incorporating sustainable alternatives for all products and processes, just 12%
say they have fully implemented these initiatives.
43%
39%
35%
35%
33%
31%
29%
28%
27%
billion Norwegian aluminum and renewable energy company. In
an interview conducted for this survey, chief information officer Jo
De Vliegher outlined how producing aluminum in plants powered
by hydroelectricity emits 75% less CO2 than the global average.
That means automotive companies and other major customers
can tout the environmental merits of their products made with
Hydro aluminum to their own customers. “It definitely gives us a
competitive edge,” says Mr. De Vliegher.
When it comes to overall purpose, our respondents are relatively
confident about their efforts. Over half say they have created and
acted on a clear, consistent, purpose-driven vision, and more
than three-quarters say they have effectively provided employees
with a sense of purpose.
Dig a little deeper, though, and execution appears to lag those
claims. While over two-thirds of respondents have entered
the piloting stage of incorporating sustainable alternatives
for all products and processes, just 12% say they have fully
implemented these initiatives. Creating purpose-driven projects
with real impact and relevance to the corporate mission—and
staying accountable to those goals—is clearly a work in progress.
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Purpose-driven leadership
We sifted through our 3,000 survey responses Leaders are far more likely than other respondents to say they
to identify companies that are outperforming have integrated communication and data-sharing processes
across the business, increased transparency into operations,
their peers by certain key measures of systems
broken down organizational silos, and invested in collaborative
thinking, including purpose. This leader group technologies. Each of them reports that they have created and
makes up just 6% of all respondents, indicating taken meaningful action on a clear and consistent purpose-
that most companies are still catching up driven message.
to the immense management challenges of
breaking down silos across the organizations
and creating consensus on the strategic value
of purpose.

Fig. 2: Data-sharing supports strategic goals, including sustainability

Q: To what extent do your data-sharing practices improve your ability to do the following?
“To a great extent” and “To a transformative extent” responses combined.

Connect with citizens or customers 89%

62%
Innovate existing products and/or services 83%
56%
Exceed performance goals (e.g., speed to 82%
market, brand recognition) 53%
Increase visibility into suppliers and 75%
sub-suppliers 47%
Meet sustainability targets 74%
46%

Leaders All others

The economist Alex Edmans writes in his new book, Grow the Pie: How Great Companies Deliver Both Purpose and Profit, that
organizations with a primary focus on social value instead of the bottom line often turn out to be more profitable than others, in part
because they make long-term investments that are not measured by financial results. In this scenario, business is not a zero-sum
game, but can grow along multiple dimensions at the same time.

Our leaders are more focused than other organizations surveyed on culture and social initiatives and, in keeping with the observation
that purpose should flow naturally from the underlying business, are more likely to say their approach to social issues is rooted in how
they organize the company. Our research does not establish a clear causal link between behaviors and outcomes, but we can say
leaders greatly outperformed other respondents in areas including innovation, employee engagement and retention, and profit margin
increases over the past three years.

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Purpose and people
A clear, consistent purpose helps humanize
businesses by making qualities like empathy
and collaboration part of their brand identity.
Consumers and employees respond positively
to shared goals and values, and increasingly
make decisions about where to shop and work
accordingly.
In an interconnected world, it is not enough to do the right
thing within an organization itself. Consumers and employees
want to know that a company’s suppliers and partners reflect
the same corporate values, in areas including sustainability,
labor practices, and ethical sourcing. This makes it even more
important for executives to gain visibility across entire business
ecosystems and spread the value of purpose up and down the
value chain.
Our survey respondents emphasize the importance of purpose
in attracting and retaining the right employees and developing
a healthy corporate culture, a trend reported in several recent
academic studies. Creating and acting on a clear and consistent
purpose-driven message is a top driver of industry reputation
for 37% of executives in our survey—and 70% say their social
reputation provides an advantage when searching for skilled
talent, with similar numbers reporting that their environmental
focus is valued by current staff.
A promise without a plan can backfire, though; companies must
deliver on their promises instead of just playing to public opinion
(e.g., greenwashing, or wrapping an unfriendly environmental
policy in eco-friendly messaging).
One example of the disconnect between intention and action:
despite recognizing the importance of culture, only 11%
of executives say they have fully implemented a feedback
system for employee suggestions, and just 35% say employee
satisfaction is a significant influence on business strategy, with
only 7% saying it is the top driver. Perhaps this is a reason
half say securing skilled talent is a major barrier to carrying out
strategic change initiatives—the top such challenge in our survey.

Fig. 3: A culture disconnect?

72% 13%

69% 11%

Intention However, Action

72% agree that corporate culture has a
positive impact on their ability to provide
best-in-class products and services.
69% agree that employees are attracted to
their company culture.
13% say they have fully implemented personalized
experiences for employees.
11% say they have fully implemented a feedback
system for employee suggestions.

Pitney Bowes, the $3.2 billion technology company based in Stamford, CT, aims for a solid alignment between its personnel strategies
and purpose work centered on talent development and diversity within its local communities. The century-old company, known for
producing postage meters and simplifying commerce for retailers, built its programs deliberately over many years. “We have worked
very hard to ensure that our workforce mirrors the diversity of the town in which we were building and operating machines,” says chief
innovation officer James Fairweather. “We are trying to help children become better educated in the fields of science, technology,
engineering, and mathematics, because that is essential to our sustainable future.”

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Data-powered and purpose-driven
Data is the lifeblood of systems thinking and
a source of enormous power in the digital
era. But keeping data safe and private—and
using it only as agreed to and understood
by consumers and partners—is an ethical
requirement as much as a legal one. Managing
the massive data flows associated with
increasingly essential technologies like artificial
intelligence and the Internet of Things comes
with a high degree of reputational and financial
risk, but it is essential to supporting purpose
programs.
For example, customers expect businesses to extend purpose-
driven initiatives along the value chain. Researchers at the MIT
Sloan School of Management have found that investing in supply
chain visibility helps companies gain consumer trust and can
even lead to increased sales from certain customers. “Increasing
supply chain visibility always strengthens consumer trust,” the
researchers write. “Furthermore, opportunities exist for a trust-
driven revenue benefit due to greater visibility.”1 The demand for
1
https://mitsloan.mit.edu/ideas-made-to-matter/supply-chain-visibility-boosts-consumer-trust-and-even-sales
Conclusion
Leading with purpose is more than a fad. It is serious business
that must be backed up with action and accountability, now more
than ever given current health, social justice, and climate crises.
Leaders, customers, investors and employees demand it. And, as
Alan Jope, CEO of Unilever has said, “Brands with purpose grow,
companies with purpose last, and people with purpose thrive.”
How can businesses reconfigure their operations to successfully
execute on both strategic and social goals?
• Align the mission. Organizations that seek to solve
societal or environmental problems related to their core
competencies are more likely to achieve their goals and
satisfy shareholders’ expectations for financial performance
as well.
• Create a culture of purpose. Effectively fulfilling a mission
is about more than the outcomes—it is also about how
the work gets done. An organization’s purpose should be
reflected in the values modeled by senior leadership, the
ways teams work together, and the products they produce.
transparency is apparent in our survey, too: 53% of respondents
believe their customers expect visibility into the sourcing and
manufacture of their products and services.
Doing this well takes data—and many of our respondents are still
working to modernize their operations accordingly. Only 27% say
they have changed processes around data cleaning and analysis,
and only 20% share supply chain data with relevant business
partners with moderate or rapid speed.
Ultimately, says Mr. Iyer of Mahindra Finance, data management
works best when it reflects a broader awareness of society.
“People who come with knowledge of local challenges make
a difference. Technology plus data plus understanding of the
people—these together build success.”
• Manage with metrics. Purpose and business goals
should be aligned, measurable, and include clear timelines,
with specific objectives defined for different parts of the
business—and executives must install accountability
protocols for all purpose initiatives.
• Apply systems thinking. Rather than creating a task force,
think about how each part of the business—from accounting
and HR to supply chain and logistics—can contribute to the
overall purpose of the organization.
• Extend values to the digital realm. Data is power, and
power must be used responsibly. Digital investments should
be deployed in ways consistent with an organization’s
culture, values, and purpose.
For more findings from our research study—including results
from 10 unique industry perspectives—see our research report at
www.sap.com/Oxford-Economics-IE-report
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About the research Contact us
Oxford Economics was commissioned by SAP Global headquarters
to conduct a survey of 3,000 executives about Oxford Economics Ltd
their progress toward systems thinking. The Abbey House
survey was conducted between March 2020 121 St Aldates
and May 2020 via computer-assisted telephone Oxford, OX1 1HB
interviewing. Respondents come from the United UK
States, Canada, Mexico, Brazil, France, Germany, Tel +44 (0)1865 268 900
the United Kingdom, Nordics (Norway, Finland,
Sweden, and Denmark), India, Japan, Singapore, London
Australia, and New Zealand. 4 Millbank
Westminster
All respondents come from organizations with
London, SW1P 3JA
over $500 million in revenue; one-third come from
UK
organizations with between $500 million and $999
Tel +44 (0)203 910 8000
million in revenue, one-third from organizations
with between $1 billion and $9.9 billion in revenue,
New York
and one-third with $10 billion or more in revenue.
5 Hanover Square, 8th Floor
We also conducted three in-depth interviews with
New York, NY 10004
senior executives to gain real-world perspectives
USA
and context.
Tel +1 (646) 786 1879 0
To learn more about SAP’s views on purpose, visit
www.sap.com/purpose Singapore
6 Battery Road
#38-05
Singapore 049909
Tel +65 6850 0110

Email: mailbox@oxfordeconomics.com
Website: www.oxfordeconomics.com

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