Principles: It is an intermediate type of organization (for-profit and non-profit) that generates revenues from commercial activity to support its social mission and reinvests a portion of its profit to further its social mission. It can also be a cooperative effort between a for-profit business and a non-profit organization for mutual benefits.
Advantage & Challenge: The main advantage is that purpose-driven companies inherently understand why they exist and who they are best built to serve regardless of what they sell today. For the employees, it gives meaning to their work, a trend that is growing more and more today. For the company, it tends to greatly enhance their brand image. However, purpose-driven companies may face profitability problems if they have to give back a part of their turnover.
Evolution of the business model & maturity: Carol Cone, who founded the first social impact consultancy for businesses, nonprofits, and foundations in the early 1980s, is known as the "godmother" of social intent. Since then, this business model has grown significantly along with the social awareness of consumers. With the restrictions of Covid-19, it has further developed to support causes more impacted than usual by the pandemic. Currently, It's no longer a question of whether or not a company can lead with purpose; it's a question of how.
Product adapted to the business model: Purpose-driven business model is particularly suitable for consumer goods in various fields. The one thing they have in common is a clear understanding of what they stand for, and a willingness to take a stand in ways that create long-term value for their company and all the people they serve. The arrival of digital has transformed its field of application. Today, consumers can be directly involved in the responsible projects carried out by companies thanks to web sites and online payment.
Key figures: According to PwC, 79 percent of business leaders believe that purpose is central to success. In Deloitte’s survey of 2,447 global consumers, 79% of respondents recalled instances of brands positively responding to COVID-19 to help their customers, workforces, and communities Take CVS Health. In 2014, what was then called CVS Pharmacy became the first U.S. drugstore chain to stop selling tobacco products. While CVS lost $2 billion in annual cigarette sales in the first year of its new policy, its pharmacy sales jumped – and are up more than four percent in the last quarter.
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