Purpose: The Key To Success in the Cannabis and Hemp Industry

“The only consumer industry categories I’ve seen reach $5 billion in annual spending and then post anything like 25% compound annual growth in the next five years are cable television (19%) in the 1990’s and broadband internet (29%) in the 2000’s.”

 - Tom Adams, Arcview

Rarely a day goes by without the news bringing us yet another item about the growth of the cannabis and hemp industry. Investor money is pouring into the space and M&A activity is through the roof. According to Viridian Capital Advisors, there have been more than 400 capital raises as of 9/28/18 totaling $6B (vs 279 for $1.8B in all of 2017) and almost 250 mergers and acquisitions reported already this year.

On the surface, all market indicators are strong and pointing upward. But, this kind of rapid growth is already creating a series of cultural challenges that, if overlooked, could result in a replay of the dot-com boom and bust. 

Together, BrandFoundations and The Purposeworks have identified three emerging cultural challenges that threaten to undermine the industry’s near- and long-term growth and success.  And we believe there is one strategic tool that leaders can easily embrace now to address these challenges: a well-defined organizational “higher purpose.”


Challenge #1: Aligning and Shifting Cultures

Let’s face it: the cannabis and hemp industry is emerging from the shadows and many of its most experienced operators would have been considered criminals just a few years ago (and still are according to certain federal statutes). For the industry to thrive, organizational cultures and mindsets need to embrace a common code and become  ambassadors of trust. Business operations need to be “by the book” not “off the cuff,” and airtight infrastructures for security, documentation and data integrity will be essential.  This is a new mind-set for many industry veterans and old habits will be hard to break.  An inevitable culture clash is emerging between outside investors/executives with more traditional management paradigms and the more progressive attitudes of industry veterans and a younger, millennial workforce.  Already, we’re hearing examples of the these groups referring to each other as “the kids,” “the stoners,” or “the suits.” Left unchecked, this dynamic will undermine camaraderie, reduce team effectiveness, lower performance and diminish investor returns.


Challenge #2: Overcoming M&A-Driven Operational Dysfunction

It’s widely acknowledged that 50-80% of mergers and acquisitions fail to deliver on the promise investors had hoped for… and the #1 reason is linked directly to people and culture.  M&A activity is hugely disruptive to both the workforce and operations.  Employees become protective of their “turf,” silos form and politics cascade across the organization, often driving talent to leave for a more stable company. Leadership effectiveness is undermined, creating confusion and inhibiting decision-making, communication and innovation. If not managed carefully, M&A has the potential to destroy more value than it creates.


Challenge #3: Talent Acquisition and Retention

Simply put: there is a global war for talent, and the cannabis and hemp industry is finding itself behind the curve. Recruiting is inherently more complicated in an industry with a patchwork of regulations and legal standards, tensions resulting from M&A activity, and the merging of a multi-generational and multi-cultural workforce. With the industry employee base is expected to grow by 150% in the next two years (according to ArcView), we are hearing from leaders that keeping up with talent demand is already a challenge. This results in rushed (and often poor) hiring decisions, pressure to promote younger staff before they are ready, added cost and lower productivity: none of which the industry can afford if it is to meet investor expectations.  Industry leaders will need to rethink the evolution of their work and workforce.


Why “Higher Purpose” Is the Answer

Let’s start by defining what we mean by higher purpose.  For us, it’s the reason a business exists beyond profit. To paraphrase Ed Freeman, Professor of Business Administration at the University of Virginia’s Darden School of Business, profits are to business as oxygen is to humans. We need oxygen to survive, but it’s not what we live for. We live to love others, to share experiences, and to touch lives.  Similarly, a business need profits to survive, and they should absolutely be an outcome of its activities.  But the reason a business exists – it’s “higher purpose” ­– is to solve big challenges, bridge gaps, engineer innovation and improve lives.

So how can purpose address the culture challenges facing the cannabis and hemp industry?   

Well, purpose gives meaning to work. It unleashes effort that goes “beyond the paycheck” and fulfills the needs we all seek at the top of Maslow’s hierarchy of needs. That meaning is also what binds people together, creating a strong culture of common values and enabling cultures to shift and adapt without imploding.  And it is what each individual and every organization builds their legacy upon.

Purpose is also among the most powerful tools a leader can use to help drive emotional “buy-in” to change across an organization.  A strong purpose will enable leaders to mitigate merger disfunction and effectively manage change. Purpose unifies disparate teams around a common platform, allowing everyone to be responsible for the evolution and growth of the business. 


Becoming More Purposeful

For industry leaders to make their organizations more purposeful, they need to follow a 3-step process of Purpose Discovery, Purpose Articulation and Purpose Activation.  BrandFoundations and The Purposeworks have come together to define this model and help organizations leverage a range of tools enabling greater growth at every stage.

If you’d like to learn more about the role that purpose can plan in your organization and the tools available to help you succeed, join us for a free webinar on November 14, 2018. Register at www.bfwebinar.com.



About JP Laqueur:
JP is the Chief Connector at BrandFoundations.us., a firm whose purpose is to help organizations “Build Solid Connections” by unleashing the value of their greatest intangible assets: brand and culture.


About Jane Lauterback:

Jane is the founder and Principal of Purposeworks.com.  Its purpose is to empower dynamic leadership by helping individuals and teams unlock gridlock and accelerate the velocity of results with ease, clarity and constructive action.