Home STRATEGY & MANAGEMENT Change Management A New Generation of Entrepreneurs: Moving with Purpose

A New Generation of Entrepreneurs: Moving with Purpose

July 18, 2023

By Fernanda Arreola and Gregory Unruh

Have you ever noticed how successful entrepreneurs seem to be driven by a kind of inspiration? But where do they get that inspiration, and how can an entrepreneur be sure that their proposition has the innate value that will carry it towards success? In this article, Fernanda Arreola and Gregory Unruh uncover the power of the “why”.

The past 50 years have witnessed major shifts with regard to what fuels entrepreneurial drive. The type of new businesses that emerge have been moving from a low-innovation and opportunity-led entrepreneurship into a new quest for originality and impact. The result is new entrepreneurial strategies and concepts incorporating sustainability concepts, including reuse, recycling, repair, product sharing, ergonomics, circular economy, and so forth, demonstrating an emerging concern for the social, economic, and environmental impact of firms. The result is a new trend of emerging entrepreneurs: those that move with purpose.

In this article, we attempt to share three leading patterns that define these entrepreneurs. First is falling in love with purpose. Second is living their purpose. And third is creating a laboratory for experimentation and innovation inspired by purpose. But first, a little review of how the evolution took place and led business creators to care more about reasons and less about form.

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A short history of how we started caring

Although it would be impossible to trace the exact moment when new sustainable and responsible initiatives started to consolidate, we can identify key moments where first-movers started giving greater importance to purpose than just profit. The first steps go all the way back to the 1960s and 70s with a shift in government policies, specifically with the inception of the Environmental Protection Agency, and the Occupational Health and Safety Administration in the United States. These new regulations forced business leaders to incorporate social and environmental considerations into their decision making. Some decades later, a trend began, with large corporations giving visibility to their sustainability impacts, such as the Body Shop’s Values Report in 1995, which publicly and voluntarily disclosed the social and environmental impacts of the business. Around the same period, emergent “online whistleblowing” rendered public a legal dispute against McDonald’s regarding some of its traditional practices, which included child employment and animal cruelty.

Living by purpose means becoming an example of the entrepreneur’s aspirations. These founders become speakers, ambassadors, and emissaries of the reason why the firm exists. It is inspiring others by becoming the soul of the purpose and defending it unlimitedly

As such examples became more present, they impacted the content of classes and courses in business schools. In early 2000, pioneering programmes were incorporating sustainability and, by 2006,¹ the first ethical code of conduct within a business school was signed. By 2007,² the United Nations Principles of Responsible Management Education were launched and gained thousands of business schools as signatories. As the discourse and examples continued to develop, so did students’ and young people’s interest in questioning the justification for the existence, prosperity, and success of businesses. Students wanted to know “Why?”

Start with why

A lot has been said about the practice of starting with why. The speaker Simon Sinek³ is one of the voices popularising the idea that, for leaders to inspire others to act, they must start by justifying the reason why they should act. In our most recent research, we have explored the notion that responsible entrepreneurs tend to start with a powerful why. Our search indicates that the success of why comes from three powers of purpose: love, live, lab.

Love the purpose!

Entrepreneurs who start with purpose tend to fall in love. However, this love is not with an idea, but with the reason that the idea exists. This reason (or purpose) is an intention, a resolution, a higher objective, a meaning, and a motivation. It is therefore not a concrete object, but the compelling desire to make a situation change. Take the example of Alejandro Souza, founder of the social enterprise Pixza.⁴ The company is a “social empowerment system, hidden behind a pizzeria” with an underlying purpose of helping homeless people find a way to employment and personal independence. Inspired by an college assignment that asked him to write the life of a homeless man named Joe, Alejandro fell in love with the idea of finding a way to support homeless people in developing self-reliance. And the idea – a pizzeria that hires homeless people in hopes of letting them start a new life – came later as a natural outcome of his purpose.

Live by the purpose!

The second characteristic of this new generation of entrepreneurs is the notion of “living by the purpose”. Living by purpose means becoming an example of the entrepreneur’s aspirations. These founders become speakers, ambassadors, and emissaries of the reason why the firm exists. It is inspiring others by becoming the soul of the purpose and defending it unlimitedly. An example is the CEO of Lush, Mark Constantine. In 2021, he took the decision to shut down all social media in recognition of the negative impacts on users. To this end, in his eyes, “I’ve spent all my life avoiding putting harmful ingredients in my products. There is now overwhelming evidence we are being put at risk when using social media.”⁵ Living the purpose of Lush implies bold choices, because respecting the reason why a firm exists often means defending the purpose against mainstream attitudes and trends.

Lab the purpose!

Our final discovery is the need to lab the why, that is, to create a real laboratory for exploration and experimentation that allows entrepreneurs to test the various opportunities that exist for making purpose a reality. And when we speak experimentation, we do not speak about expensive R&D. Take the example of Sal Khan,⁶ the founder of the non-profit Khan Academy. While tutoring his cousins on their maths homework, he received some unwanted feedback: they preferred seeing him online to in person. Instead of taking this as an insult, he instead decided to experiment with his tutoring delivery and improving the education opportunities of young children. Kahn’s 10-minute YouTube tutorials became a huge success, and his dream of impacting millions of children and teachers with free access to pedagogical support a reality.

An opportunity for a new design

In conclusion, our “triple-L” model suggests a simplified perspective that can help entrepreneurs question the feasibility of their purpose-led ideas. First, they need to make sure they love the purpose (or reason) behind their idea. Second is to be ready to live by such purpose, representing and exemplifying its meaning daily. Third is to enable a laboratory for innovation, one that admits new ideas and permits quickly testing new possible products, services, and business models that can let the purpose exist.

This article was first published on November 22, 2022.

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About the Authors

Fernanda Arreola is the Dean of Faculty & Research at ISC Paris. She is also a Professor of Strategy, Innovation & Entrepreneurship and a researcher focusing on service innovation, governance, and social entrepreneurship. Fernanda has held numerous managerial posts and possesses a range of international academic and professional experience.

Dr Gregory C. Unruh is the Arison Professor of Values Leadership at George Mason University and an expert on sustainable business strategy. He currently serves as the Sustainability Editor for the MIT Sloan Management Review.