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Will Social Businesses Lead New Economy?

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In the past several years, a powerful shift in public demand has changed how we consume. We buy local and handmade products when we can. We share everything, from bikes and cars to office space and extra rooms in our homes. We are increasingly freelancing our expertise, rather than working for any single employer.

These shifts are being driven by our desire for more purpose in our lives —through serving needs greater than our own in ways that enable personal growth and build community. They are giving rise to what I call the "purpose economy" — the new context and set of ways in which entrepreneurs are creating value in this economy. Companies that are thriving in this new economy are finding innovative ways to engage both employees and customers while often tackling the most intractable social and environmental problems.  

Here are the four drivers of the purpose economy:

1. Rise of social innovation

In the past 10 years, social innovation has become a big business. The White House even has an Office of Social Innovation and Civic Participation. This change in priorities is evidenced by media outlets like the Solutions Journalism Network and GOOD covering social impact solutions, as well as established publications, from Fast Company to Germany's Capital, shifting their focus from business to an expanded focus on business and society. The Economist also entered the game with Matthew Bishop's "Philanthrocapitalism: How the Rich Can Save the World."

Harvard professor and corporate strategist Michael Porter launched the "Social Progress Imperative," a global index that strives to look beyond gross domestic product and provide a ranking of countries globally, based on the extent to which they are meeting the social and environmental needs of their citizens. It is one of several similar efforts, including the United Nations' Universal Periodic Review, that focuses on aspects such as human rights and social impact rather than economic factors, in order to evaluate nations' progress.

2. Changing conversation about work

With the emergence of new social science, such as positive psychology, and new search and recruiting firms focused solely on helping people find meaningful work, the conversation around work is rapidly evolving. Search firms like ReWork, On-Ramps, Idealist and Commongood Careers are thriving. Books like Adam Grant's "Give and Take" and Martin Seligman's "Flourish" are redefining not just what drives employee engagement and productivity, but what improves employee well-being. These concepts inspire different approaches to management and careers.

3. New models of business around purpose

In today's world, running an organization without an intentional emphasis on purpose for employees and customers is like running an organization in the early 1990s and failing to implement technology. A generation of purpose-economy pioneers, like Whole Foods Market's John Mackey and Virgin Group's Richard Branson, are creating new frameworks both to do well and to do good. Branson launched the B Team, a coalition that aims to put "people and the planet alongside profit." Mackey and his team are promoting a new model called conscious capitalism.

Pepsi CEO Indra Nooyi defined a mission of "performance with purpose" and has begun to link "healthy eats" and the environment to success. Deloitte, a consultancy, noted that successful companies must be "keenly aware of the purpose they fulfill for clients, employees, community and other groups," and have integrated these goals. Morgan Stanley recently announced the multibillion-dollar Institute for Sustainable Investing.

4. Purpose as the new currency

For many people, success is defined by what they can most easily measure: money. Sure, we need a certain level of income to meet our basic needs. But researchers at Princeton comparing Gallup data on U.S. households found that after about $75,000, money had no impact on happiness. In a household with two earners, that equals less than $40,000 each per year (although higher levels were necessary for happiness in markets like New York City).

This points to the fact that purpose — not the accumulation of money — is emerging as the currency of the new economy. As Courtney Hall, former captain of the NFL's San Diego Chargers and managing director for Hillcrest Venture Partners, said, "Purpose is the Holy Grail for organizations." Hill, like other venture capitalists, is seeing that organizations that understand and create purpose will be the leaders of the next economic era.

At its heart, the purpose economy generates purpose for people. It addresses the critical need for people to express themselves, be part of a community and be part of something greater than themselves. We are now in the process of making the next big step forward where meaning drives our economy.

Aaron Hurst is a globally recognized entrepreneur and CEO of Imperative, a career development platform that helps professionals discover, connect and act on their purpose in their work. This article is based on his latest book, "The Purpose Economy: How Your Desire of Impact, Personal Growth and Community is Changing the World". Hurst is also the founder and adviser to the Taproot Foundation, where he was the lead architect in developing the $15 billion pro bono service market. 

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