Aaron Hurst: “The Key Is to Identify Whether a Company’s Purpose Is Truly Authentic”

Aaron Hurst: “The Key Is to Identify Whether a Company’s Purpose Is Truly Authentic”

Nearly a decade ago, American entrepreneur Aaron Hurst published “The Purpose Economy,” a book explaining why “purpose” is the fundamental element of companies and business in general. Today, the concept has taken over not only the narrative of the startup world, but also that of large corporations that are flirting with, or directly embracing, a sustainability lens. “When I wrote the book, it was nothing more than an idea. But as I kept explaining it and connecting it to economic value, it started to grow quite a bit,” Hurst acknowledges.

 

As part of the celebration of consultancy Almabrands’ 15th anniversary, to be held on Tuesday, May 30 in Santiago, Hurst will be the keynote speaker.

 

Why has the concept of “purpose” become so popular in recent years?

 

At the 2019 “Business Roundtable” meeting of top executives, they agreed that a company’s purpose is key. And I think that was one of the most important shifts. It was impressive to see CEOs come together and agree on that. I also think the pandemic accelerated our understanding of the importance of the human side of work. That helped speed up this change overall.

 

How is that different from what was happening ten years ago?

 

I think purpose used to be associated mostly with volunteering and philanthropy. Later it came to be seen through the lens of ESG. Then the idea shifted toward understanding that perhaps the whole company needed to be viewed more holistically, asking: do we really have a purpose? Do we create value for society? That’s when we started seeing companies invest heavily in defining their purpose. But that work often felt rather superficial, since it was just marketing.

 

And how did we get to where we are today?

 

What we’ve seen since then are the following steps. The first is recognizing employees’ personal purposes. The second is that organizations must build the systems and operations that allow purpose to be truly internalized, and ultimately embed it into their operations.

 

How can you tell when a company is using the idea of purpose only as marketing or greenwashing? Is there any certification?

 

Certification is difficult, because many companies do one thing well but a lot of other things poorly, just like a human being. So it becomes, more than anything, a question of prioritizing, as a society, what we believe matters most and how we certify that it’s being delivered. My wife heads Amazon’s sustainability office in Seattle. They created climate pledge labels for their products. That way, when you shop on Amazon, you can see which products meet sustainability standards. I think that’s an example of trying to show, in a way, how certification works. But even so, there could be 20 certifications for different products, because not all products are the same.

 

For example?

 

Some can be very good. That is, companies that offer great opportunities, good products, and good working conditions. However, they can be very bad on the environmental front, and vice versa. So the question becomes: how can you certify a company as a whole? I think that’s much more complicated, and I feel it’s an area where government should be more involved, because I don’t believe companies are capable of overseeing and controlling that on their own.

 

But there are companies that don’t necessarily deliver an environmental or other sustainability benefit, yet have helped humanity be better off, such as telecommunications, medical technology, or even the automotive industry, which has shortened distances. Are they doing it right?

 

That’s a very complicated question. We’re not asking an automaker to close its doors just for being an automaker. I think the best employees and the best leaders will want to work for the automakers making the most progress in innovation and sustainability. I think there’s a group of companies doing wildly unethical and even illegal things. But there are others genuinely making an effort to be better, and it’s authentic. I think that’s what it comes down to: the key is identifying whether a company’s purpose is truly authentic.

 

Why has the concept of purpose become associated with startups?

 

It comes down to many variables. Startups are usually created by younger people, and new generations are much more concerned with purpose. Many new economic opportunities lie in sustainability, so a lot of startups are working on that.

 

Is that perhaps why it’s harder to embed purpose in large companies?

 

It’s much easier for a startup where the founder is directly involved. There’s a much smaller team, which allows for a certain story and a sense of meaning around the product. Also because, often in the early stages, the project isn’t even real yet. It’s like a ghost you’re trying to bring to life. So you’re constantly creating meaning as your number one priority. You have to create it for investors, customers, and employees until there’s something of real value that can hold that meaning. That culture starts to dissolve once you’ve grown large enough, which, according to research, is when you reach 150 employees. That’s when the company starts to lose its culture and purpose. On the other hand, what happens with larger companies is that they diversify their products. Most startups have a single product, so it’s easy to create meaning around it.

 

Beyond BlackRock, are investors demanding that large companies have a purpose?

 

I think there are plenty of signs that investor interest in this has grown. A big part of why investors are interested in ESG is that it’s necessary, and there are major business opportunities there. But also because the companies embracing that idea the most are the ones with clarity about what consumers want and where the market is heading. BlackRock has said that the biggest investment opportunities, like startups, revolve around sustainability. And those who can extract value from it will be the unicorns of the new decade.

 

Link to the article: https://www.latercera.com/pulso/noticia/aaron-hurst-la-clave-es-identificar-si-realmente-el-proposito-de-una-empresa-es-autentico/Y5LJBH6UWRBQPE5MA2CEMZOM4U/