The ROI of Meaning Valuation

This is my third video on the ROI of meaning. It’s a soft topic. Some people think meaning and purpose, but I have found, the research I did shows that there’s some stunning facts and statistics on the hard positive value to business results that comes from having meaning and purpose and direction built into your business. I have this research because my new book that just came out, Radical Clarity is on that topic. How meaning and purpose can help accidental CEOs. Those are technical leaders who are now the CEO grow and succeed in that role. So I wanna share with you in this third video, the results in terms of long-term valuation of businesses that focus on meaning. By the way, the first two videos, one was on growth, revenue growth, the other was on employees engagement, retention. You can find those on my feed. So here we go on valuation first.

Super Long Term Stock Performance
There’s a study that shows that over 10 years, purpose-driven companies outperform the S and P 500 index by a factor of 10 in cumulative returns. They also achieved an average annual return on equity of 13.1% versus 9% for the average S and P firm.

Higher Profitability and ROA
Here’s some more great stats. Harvard Business School did a study that showed that when employees deeply understand the company’s purpose, it can increase return on assets by up to 3.9% per year. And organizations with a clear mission also tended to consistently outperform Fortune 100 peers financially. The dynamic here seems to be that companies with this focus have an internal compass that kind of unifies and aligns all of the stakeholders to be more efficient, to be more collaborative, to be faster and make decisions, better decisions.

More Patient Capital
And then third, companies that have meaning tend to have more patient capital. Their investors have more faith and more trust in them over time, and it gives them more room to succeed. Wharton professor Withhold Highness paper concluded that broadening a firm’s purpose beyond short-term profits to a higher societal goal can enhance long-term shareholder value. It creates what he said was a nexus of strong relational contracts. So it’s the, again, that web of players, stakeholders, trust each other more and, and give the CEO and the business room to take the chances and, and make the moves and have the time they need to succeed.

So there was one summary of this, this benefit for meaning and purpose. In the one paper I read, the Deloitte paper that I really liked, they called it the Purpose Premium. It really is, it’s a lift for the performance of, of companies and CEOs that prioritize this story, this truth about who they are and activate it in their businesses. It allows them to outperform their peers on a bunch of key financial indicators.