Building a business is hard work. Making it last is even harder. In 2017 the average age of companies in the S&P 500 was 20 years, down from 60 years in the 1950s. For small businesses the average lifespan is even shorter. A sustainable business built to last requires not only great products, but also purpose and people.
With current economic headwinds business leaders are preparing for a downturn. The focus is on managing costs, often in a reactive way, while continuing to invest in future growth and innovation. Companies that do so are much better positioned to thrive once the downturn is over. This is also a good time to refocus on proven business fundamentals. Jay Sung, operating partner and CMO at private equity firm Brentwood Associates, emphasizes a balance between fundamentals and future opportunities when looking at investment opportunities ahead.
Innovation guided by purpose is a strong foundation for building a sustainable business. Take Good-Loop as an example. Founded in 2016 by Amy Williams its purpose is to provide effective advertising as a force for good by letting people who watch an ad make a free donation to a brand relevant charity. She not only designed her product but the full company around this purpose.
Large companies like P&G also use their purpose as a north star for innovation. For P&G, improving the lives of the world’s consumers includes investing in sustainability projects such as Holy Grail, a digital watermark for packaging to make the recycling process more efficient. The concept is easy to understand, but making it work requires a long-term commitment to invest and build partnerships across industries.
Kathy Abusow, president and CEO of the Sustainable Forestry Initiative, also has a purpose. She is on a mission to save forests, by having people buy more wood products. As it turns out sustainable forests thrive when older trees are replaced with new ones, as she explains in her Signal 2021 presentation.
The most critical part of any sustainable business are its people. The turbulence and uncertainty of the last few years have elevated the importance of mental well-being. Adding an economic downturn creates additional anxiety, focusing us even more on being productive in our work. In our first Signal360 guest column Arianna Huffington, founder and CEO of Thrive Global, argues that we’re more productive and more creative when we’re recharged. This starts with redefining success, working smarter and more sustainably by nurturing our health and well-being, our relationships, our capacity for wonder and joy and for giving back.
We hope that this Signal360 issue will help you recharge with inspiration for building businesses that will make a difference for years to come. Until next month.
Stan Joosten & John Battelle,
Editors-In-Chief, Signal360 / Co-founders, Signal P&G
