Aaron Hurst: “The key is to determine whether a company’s purpose is truly authentic.”

Aaron Hurst: “The key is to determine whether a company’s purpose is truly authentic.”

Nearly a decade ago, American entrepreneur Aaron Hurst published the book *The Purpose Economy*, in which he explains why “purpose” is the fundamental element in companies and businesses in general. Today, the concept has taken hold not only in the startup world but also among large companies that are either dabbling in or directly embracing a sustainable approach. “When I wrote the book, it was nothing more than an idea. But as I began to explain it and connect it to economic value, it really started to take off,” Hurst acknowledges.

As part of the celebration marking the 15th anniversary of the consulting firm Almabrands, which will take place on Tuesday, May 30, in Santiago, Hurst will be the keynote speaker.

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

During the 2019 “Business Roundtable” meeting of senior executives, an agreement was reached that a company’s purpose is key. And I think that was one of the most important changes. It was impressive to see CEOs come together and agree on that. In addition, I think the pandemic also served as a catalyst for understanding the importance of the human aspect of work. That helped accelerate this shift overall.

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

I think that in the past, “purpose” was more closely associated with volunteerism and philanthropy. Later, it came to be viewed through the lens of ESG. Then, the idea shifted toward recognizing that perhaps we needed to look at the entire company in a more holistic way and ask ourselves: Do we really have a purpose? Do we create value for society? That’s when companies began investing heavily in defining their purpose. But often that effort felt rather superficial, since it was just marketing.

And how did we get to where we are today?

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

How can you tell when a company is using the concept of purpose solely for marketing purposes or as greenwashing? Is there a certification for this?

Certification is difficult because there are a lot of companies that do one thing well but do a lot of other things poorly—just like human beings. So it becomes, more than anything, a matter of prioritizing—as a society—what we believe is most important and how we certify that those standards are being met. My wife is the head of Amazon’s sustainability office in Seattle. They created the climate commitment 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 illustrate, in a way, how certification works. But even with that, there might be 20 different certifications for different products because not all products are the same.

For example?

Some can be very good. That is, companies that offer excellent opportunities, good products, and good working conditions. However, they can be very bad when it comes to environmental issues—and vice versa. This raises the question: How can you fully verify a company’s environmental performance? I think that’s much more complicated, and I feel it’s an area where the government should be more involved, because I don’t believe companies are capable of monitoring and controlling that on their own.

But there are companies that don’t necessarily provide a benefit to the environment or contribute to sustainability in some other way, yet they have helped improve conditions for humanity—such as telecommunications companies, medical technology companies, or even the automotive industry, which has made distances shorter. Are they doing the right thing?

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

Why has the concept of purpose become associated with startups?

It’s due to a lot of factors. Startups are usually founded by younger people, and the younger generations are much more concerned with purpose. There are a lot of new economic opportunities in the field of sustainability, and as a result, many startups are working in that area.

Is that perhaps why it’s harder to incorporate purpose into large companies?

It’s much easier for a startup where the founder is personally involved. The team is much smaller, which fosters a sense of history and a feeling 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. That way, 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 embody 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 you start reaching the point where the company begins 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 that product.

Aside from 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 because it’s necessary, and there are major business opportunities there. But it’s also because the companies that are embracing this idea the most are the ones that have a clear understanding of what consumers want and where the market is headed. BlackRock has said that the biggest investment opportunities—as well as the startups—are centered around sustainability. And those who can extract value from that will be the unicorns of the new decade.

Link to the article: https://www.latercera.com/pulso/noticia/aaron-hurst-la-clave-is-it-possible-to-determine-whether-a-company’s-purpose-is-truly-authentic/Y5LJBH6UWRBQPE5MA2CEMZOM4U/