The “Woke Economy” and its impact on the purpose economy

In recent years, the concept of the “Woke Economy” has gained visibility in public debate, especially as companies and brands are increasingly pushed to take stances on social and political issues (especially in American companies). But how does this phenomenon relate to the “Purpose Economy,” which seeks a balance between economic growth and social value creation? From my point of view, all “radicalism” does not favor the transformation of our economic model, which needs, more than ever, to build bridges between the corporate world and the major social and environmental challenges. Although at least there is debate… fifteen years ago, businesspeople looked at me like I was from Mars (the good kind… haha).

The “Woke Economy” refers to the business trend of adopting and promoting progressive values and inclusive policies in response to the increasing demand from consumers and employees for more social responsibility. Companies are pressured to address issues such as gender equity, racial justice, environmental sustainability, and LGBTQ+ rights, among others. The term “woke” comes from the English word meaning “awake,” in the sense of being aware of social injustices and systemic issues.

Some examples of actions related to the “Woke Economy” include:

• Brands publicly supporting social movements such as Black Lives Matter or Me Too.

• Implementation of business policies that promote diversity and inclusion in the workplace.

• Public commitments to carbon neutrality or sustainability initiatives.

• Partnerships with NGOs or social causes to address specific issues.

The Purpose Economy goes beyond the “Woke Economy” in its approach. While the Woke Economy largely focuses on responding to specific and often immediate social issues, the Purpose Economy has a broader and longer-term vision. In this model, companies not only seek to profit but also aim to create a positive impact on society and the environment, with an approach that aligns the interests of all stakeholders: shareholders, employees, communities, and the planet. Unlike the Woke Economy, which may be seen as a reactive response to social demands, the Purpose Economy seeks to build a business model based on values that are deeply embedded in the organization’s mission and vision. In this sense, it is a long-term commitment that permeates every aspect of the company.

There are several points of convergence between the Woke Economy and the Purpose Economy:

• Consumer and Employee Demand: Both trends respond to the growing desire of consumers to support brands that reflect their values and to the demand from employees to work for purpose-driven companies. Studies show that newer generations of consumers (particularly millennials and Generation Z) prefer to associate with companies that align with their ethical and social principles.

• Corporate Social Responsibility (ESG): Both the Woke Economy and the Purpose Economy recognize the importance of corporate social responsibility. Companies need to be transparent in their practices and accountable for their impact on society.

• Purpose-Driven Marketing: Marketing has become a key tool in both approaches. Brands that take stances on social issues use campaigns to highlight their commitment to certain values, attempting to create an emotional connection with consumers.

Despite their similarities, there are also tensions between the Woke Economy and the Purpose Economy. A common criticism of the Woke Economy is that many companies use it as a superficial marketing strategy or to improve their image without a genuine commitment to change. This has led to the phenomenon of “woke-washing,” where companies promote a progressive image without significant actions behind those messages.

On the other hand, the Purpose Economy, being more rooted in the fundamental values of organizations, tends to avoid this kind of superficiality. However, transitioning to an authentically purposeful business model can be slower and more complicated, as it requires a deep cultural and structural transformation within the organization.

The rise of the Woke Economy has had a significant impact on how companies operate and how consumers make decisions. Brands that take stands on social issues often succeed in attracting a loyal audience and gaining market visibility. However, they also risk alienating certain segments of their customer base who do not share those values. In terms of the Purpose Economy, its impact is deeper and more enduring. Companies operating under this model not only aim to maximize financial profit but also seek to generate a positive impact on society and the environment. This can lead to more sustainable business models in the long term and foster greater loyalty from both consumers and employees.

Ultimately, both the Woke Economy and the Purpose Economy are responses to a world where consumers, employees, and investors demand more responsibility and transparency from companies. While the Woke Economy may seem like a quick response to social pressures, the Purpose Economy has the potential to be a more comprehensive and sustainable approach. In the end, companies that manage to combine both approaches, maintaining a genuine commitment to social values while pursuing a positive long-term impact, will be the ones to define the future of the business sector. The real challenge lies in how organizations will demonstrate that their “awakening” goes beyond words and marketing, becoming a true force for change in the world, which is both necessary and urgent.