Entrepreneur Aaron Hurst, author of the purpose economy, explains why it is the next stage in the world’s economic development. Businesses that fail to differentiate their products based on purpose will not survive.
When the American futurist and entrepreneur Aaron Hurst coined the term “the purpose economy” to describe the world’s fourth major economic development, he was following in a grand family tradition of pinpointing trends. Hurst’s financial soothsaying was inspired by the work of his uncle, the entrepreneur Marc Porat, who formulated the term “information economy” back in the 1970s to describe the third stage in the global economy.
If Hurst turns out to be as prescient as Porat, the purpose economy will soon be the phrase on everyone’s lips. In the early days of the tech revolution, Porat predicted the rise of Silicon Valley. The technology boom he described is still ongoing, but Hurst believes the next stage of economic history is emerging. He sees the purpose economy partly as a reaction to the downsides of the information economy, which has left people feeling alienated by technology and hungering for greater connection and meaning.
In Porat’s theory, the information economy was preceded by the industrial economy, which lasted 200 years. Before that, the agrarian economy lasted 12,000 years. Back then, it wasn’t usually of critical importance to react quickly to changing times. But, clearly, economic history has picked up speed and companies unprepared for the rapid transition to the purpose economy will be left behind.
“Businesses have to take the purpose- driven economy into account, or they won’t be successful,” says Hurst. “I work with the CEOs of major retailers and they all realise the only way to sell their commodities will be to differentiate based on purpose. Whether you’re a clothing retailer, or a local restaurant, or even a consulting firm, there’s a lot more competition now. Companies need to humanise their products to survive.
“Customers don’t want to be anonymous anymore and that’s reflected in their choice of consumer goods. They don’t just want to be someone on Facebook no one knows in depth. They want to authentically know their neighbours, and they want to make an impact on society.”
The meaning of the ‘purpose economy’ is not as obvious as it sounds at first hearing and it’s useful to understand the misconceptions surrounding the word ‘purpose’. “There’s a major myth in society that ‘purpose’ has to be about causes, but I intend it in a psychological sense,” says Hurst. “So, for example, I was meeting with a large company and they were tied to creating ‘purpose’ through cause-based marketing. I said ‘that’s actually not going to be successful because it, too, is trying to make purpose into a commodity’. Instead, I told them to focus on how they were improving relationships and impacting personal growth. It was a breakthrough for them. They realised they didn’t need to do new things, but amplify what they were doing already.”
Hurst’s ideas about purpose have evolved over the course of his varied and successful career. He is the grandson of the economist Joseph Slater, who turned the non-profit Aspen Institute into a global platform for philanthropic ideas. Hurst took inspiration from Slater’s civic engagement when he founded the Taproot Foundation in 2001. Applying an industrial model to “pro bono”, or voluntary, work, Taproot rapidly became the world’s largest non- profit consulting firm.
“Purpose is about strengthening relationships and making an impact on your community and the world at large. It’s largely about personal growth.”
But the restless and imaginative Hurst remained unsatisfied. He wanted Taproot’s influence to extend further than the non- profit sector and in 2008 he and other activists launched A Billion + Change, a campaign for commercial companies to pledge pro bono work. By June 2013, more than 500 companies had promised nearly US$2 million and Taproot became a fully-fledged pro bono marketplace.
By this stage in his life, it was apparent to Hurst that there was a widespread hunger to carry out pro bono work to gain a sense of purpose. This realisation was brought home to him most forcefully while he was working as a consultant for LinkedIn in 2011. Hurst was tasked with helping the company to work out how pro bono work could become a part of its professional network. Within seven months of the launch, a million people had signed up and Hurst asked himself why, if so many people found satisfaction in voluntary work, the rest of the working day wasn’t like that?
His awakening led Hurst to write his book The Purpose Economy two years ago and also to found Imperative, a “human-centred career platform” that helps businesses and workers develop meaningful careers. His work is backed up by academic research showing that 70 per cent of the US workforce is disengaged. He has been especially influenced by the research of Dr Amy Wrzesniewski, from Yale University’s School of Management.
Wrzesniewski, and her colleagues, described three orientations that most workers maintain throughout their careers. The first is ‘job orientation’. Such people see work as a means to get enough money to pay for outside interests rather than an intrinsic source of fulfilment. Her second category is ‘career orientation’. These ego-driven employees define work as a means of achieving social status, achievement, and prestige. Wrzesniewski’s final category is ‘calling orientation’. This group finds work rich in purpose. They see it as a manifestation of their passions and a force for good.
“Wrzesniewski showed the third group has the highest job and life satisfaction. They also tend to be more successful and higher performers,” says Hurst. “As purpose-driven people, they seek colleagues who become like a second family. They see work as a means to help other people and make an impact..”
One company that embodies the ideals of the purpose economy is the West Elm furniture store, which trains staff to look for ways to enrich interactions with customers. The culture is apparent in West Elm’s home-decorating service, which sends design experts to customers’ homes at no charge. “One of the great realisations at West Elm was that people buying furniture are often going through major life changes. A lot of divorcees, for example, will go and buy more furniture. The shop assistants were acting as quasi- therapists and friends to customers, which made it profoundly emotionally satisfying for them, as well as for customers.”
Hurst says the breakthrough for West Elm in developing a deeper understanding of purpose came when the management asked its shop workers about their interactions with customers. “They got such beautiful insights about relationships, which were far more useful than the anonymous surveys many companies rely on,” says Hurst.
Even in the financial sector, Hurst says, there are companies embracing the purpose-driven mindset. He is an admirer of the Oregon-based Umpqua Bank which has overthrown the notion of banking as a staid and boring institution. “They realised that for the average millennial there’s little reason to visit a bank branch, but they have to maintain them. So they started doing movie nights in their branches, which are known as ‘stores’.
“They also enabled local NGOs to use the spaces to sell their products. On some days they offer fresh cookies and their own brand of coffee and customers get dog bowls full of water to encourage them to bring their pets. They also have walls where people can write what they love about their city. It’s really cool to go in there and see their community-centre approach. It’s also a lot more fun to work at an Umpqua store than in a ghost-town bank branch.”
The peer-to-peer e-commerce website Etys also expresses clear purpose. Clients are able to purchase handmade and vintage items, as well as unique factory-made ones. “The site enables craftspeople to distribute their products instead of struggling to monetise their unique goods,” says Hurst. “People buy authentic goods that create a meaningful connection between the personal craftsmen and the consumer. It’s a world away from purchasing mass-produced items at Walmart.”
Hurst says the purpose economy impacts all sectors, including education, healthcare and non-profit. He includes global businesses that support expression and community building, including Facebook and YouTube. Another striking example of purpose- driven business is the explosion in the global market for lifestyle of health and sustainability, now estimated at US$540 billion per year. Meanwhile, the peer-to- peer, or sharing market, is now estimated at US$26 billion a year.
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