Even though the information industry is still in its prime, discussions about the next driver of the global economy are already picking up steam. Terms like the ‘sharing economy’, the ‘feedback economy’ and the ‘green economy’ have been coined, predicting that social networks, Big Data, and alternative energy would be the next big thing.

But well-known social entrepreneur Aaron Hurst has his own idea—“a human-centered economy that is focused on humans not being a means of production but being the reason why we do everything we do”, as he describes it. He calls it the ‘purpose economy’, in which finding ‘purpose’ for businesses and their employees becomes the mandate. This stage arrives when the lower levels of human needs, described by Abraham Maslow in his Hierarchy of Needs, are fulfilled. “A lot of it has to do with the kinds of problems you want to solve and what you feel makes progress go forward,” says Hurst, who also believes that jobs with purpose are going to differentiate employers in the competition for top talent. Companies that ignore this change “are going to have the same challenging problem 20 to 30 years (later) when they are going to find themselves the way Detroit was in the 1980s and 1990s,” he adds. “Decreasingly relevant.”

Hurst, whose upcoming book is titled ‘The Purpose Economy’ (February 2014, Russell Media), was in Beijing recently. During his visit, Hurst, Founder of the Taproot Foundation and now CEO of Imperative, told CKGSB Knowledge how the purpose economy works and what his organization is doing to help individuals and businesses identify and “own their purpose”.

Excerpts from an interview:

Q. What is the purpose economy?

A. The research I did in the book basically makes the hypothesis that purpose, the actual creation of value for people in terms of serving others, the planet, building community and expressing yourself and developing, will be the next evolution of the global economy.

And that fundamentally changes everything about how we think about innovation, how we think about investment and how we think about management. Between the industrial economy and the information economy—how we marketed, how we did HR, how we managed people, how finances work—has all changed radically. And I suspect similarly, we will see as big a transition in how we operate business and organizations as we move into the next economy.

Business schools and companies, the ones that will survive and thrive for the next 50 years will be the ones that don’t just stick to the information economy and think technology and information is the final solution, but (those that) recognize that’s just one transition in our economic evolution and that there is this ‘next economy’. And they need to restructure their staffing, they need to restructure their thinking to succeed in this new economy.

(Watch the video below:)

Q. In what ways can we see the change?

A. So (education), medicine, social services; these are all core purpose jobs and they are all very much growing, critical industries within the economy. So that’s a really strong base. Then you’ve got the whole next wave of technology over the last 10 years, which has actually been in transition to purpose. So looking at social media and how people have been building communities and expressing themselves is really less about technology and information. It’s more about the need for purpose in people’s lives—you see that as a major driver.

Then you have another phenomenon that is fascinating: more often than not both parents in families (are) working now, which is required economically—you see the outsourcing of childcare and elder care. Previously this was done largely by women in the household but it was never counted in the GDP because it wasn’t respected. Now that work is being outsourced it starts having economic transactions around it and it starts to factor into how we think about the economy. So this huge amount of work, which is basically all the work that is done in the family that never showed up anywhere before is becoming part of this purpose economy because the work we do at home with our family, taking care of our kids and our parents is the most important purpose work there is.

Then you see something very interesting that’s different from the information economy and the industrial (economy), which is labor itself is not just a means to an output, but also becoming a part of the economy. And that the creation of jobs that give purpose starts to become a mandate. So you see radical change in every industry around how you maximize purpose for your employees the same way with this last economy where we asked: “how do you use technology to build efficiency and have greater data and make those changes?” We are going to start moving towards a question of “how do I maximize purpose for my employees, how do I maximize purpose for my customers?” It will require a similar transition that will come in many ways at odds with the information economy, which is all about efficiency, and purpose is often not as efficient. It’s interesting to see how that will change with the structure of the economy.

Q. Why do you think such a transition is happening?

A. It ties (with) psychological theory, where once people have their basic needs met, they start looking towards actualization. Look at Maslow’s Hierarchy of Needs: (when) people are not worried about food or shelter, they start worrying about “why am I here?”, “what is my purpose in life?” And they start making that the thing they fear. They fear dying without purpose; they fear living a life without purpose. That starts to be a thing as a company you can sell and address that need. As an employer, you can recruit to address that need. You see that over and over again in hiring now. A lot of it is “tell me what purpose I am going to get out of this work?” If you can’t answer that question, it is hard to recruit the top talent coming out of Harvard Business School or Stanford, etc.

(The) purpose economy at the end of the day is about a human-centered economy that is focused on humans not being a means of production, but being the reason why we do everything we do. So it’s a fundamental shift in priority. I think that’s the big piece. And then it’s looking at what generates meaning for people, both as employees and again though as customers. And it’s moving away from consumption. You see this in Europe–in Europe now it went from being a status symbol to drive a BMW, to now having a car among millennials is considered a negative status symbol. You should be sharing a car–you don’t want that overhead, you don’t want to be seen as a consumer.

It’s a fundamental shift in values. In some ways it’s not as far along in China because of the evolution of the economy here, but I believe it will come because it’s very much in keeping with Chinese values. But seeing the quality of life is much more important than just status and speed. We are just seeing it everywhere in the US, everywhere in Europe, and I just have strong confidence that it will be the next economic evolution.

Q. So how can executives prepare for this shift?

A. For executives in this new economy, I think the first step starts with themselves. If they don’t know what their own purpose is and what gives them purpose, they cannot lead others and they cannot understand the purpose for customers. So the first step for them is to stop and really think about “what is your purpose?” And that’s why a lot of the work we are doing is helping build the diagnostic tools and the consulting and coaching to help executives understand purpose for themselves.

Once they do that, they need to start looking at what is the work their team is doing and where can it generate purpose, and what is the purpose of the people on their team so they can really maximize that purpose. Because purpose is not just for social workers and doctors, there’s purpose in every job. It’s a question of maximizing that and being able to be conscious about it. For an executive that’s a really critical process.

There’s a lot of work to be done once we understand—and we are working on this gulf, creating a database of purpose for all employees and consumers—and start to think about segmentation and marketing segmentation by purpose type. So traditionally we have done segmentation based on income, race, where people live. Increasingly, it will be important to segment by purpose type. In doing that, you will be able to better target employees, consumers, etc., to really be able to connect with them at a more profound level.

Q. And how should companies adapt to it?

A. Detroit’s auto manufacturers ignored the information economy for decades and their car quality went down, they couldn’t attract top talent. They were at the verge of bankruptcy, if not bankrupt, because they ignored the change. Companies that do the same thing with the purpose economy and say “that’s not real”, “that’s not real business”, are going to have the same challenging problem 20 to 30 years (later) when they are going to find themselves the way Detroit was in the 1980s and 1990s—decreasingly relevant, not able to attract the customers and talent they need.

So if companies want to be successful, they have to figure out what this next economy is and how they are going to be relevant. BMW moved from being an automotive company to a mobility company and they’ve changed their whole strategy by realizing that they couldn’t continue just to operate in the manufacturing and industrial economy, but they also couldn’t just operate in the information economy. They need to move into this purpose economy, and BMW has taken steps to really change their strategy, one to look less at car and automobile ownership and sharing and more at how does someone get from point A to point B in a way that minimizes environmental impact and maximizes community and social impact.

You are seeing a lot of different companies that are not fully there, but are starting to realize that the information economy is not the last stop on the train. It’s just one of many stops—and purpose is the next one.

Q. So how is your organization facilitating the transformation to the purpose economy?

A. The work we are doing is really broken into three different parts. The first is for individuals, because as I said, purpose begins with personal understanding. So in January we are launching a diagnostic tool and a website that really helps people own their purpose. (It) will really give us an army of professionals who are empowered with purpose. They can work with us to help with this transformation and their own self-awareness in that process. And that’s really the core of our business: this platform for individuals.

Then we are starting to work with companies. We are already working with many companies in the US and many of the leading purpose economy companies to help them think about “how do you maximize your value to your employees and customers in the new purpose economy?” We are doing that through consulting, but also through research and trying to really understand trends and best practices in this new economy so companies can thrive in that economy. We’re seeing a lot of action there too among older companies that are realizing they need to change to be successful. And they are seeing that market pressure and they see us as one of the few organizations that’s authentically a purpose economy company.

The third part of our strategy is around the different markets in the purpose economy and figuring out how do we accelerate these markets so that the overall economy change happens faster. So (we are) doing a lot of research work with universities, with foundations and others who are interested in the evolution of the whole marketplace so we can find ways to really ensure that more people are getting purpose faster.