It’s easy to declare yourself a purpose-driven organization. It’s much harder, however, to identify just the right purpose, and to activate it throughout the organization so it naturally elevates your business strategy and operations.
Driven by stakeholder demands for companies to stand for more than profits, and a belief that businesses are more capable than governments of solving society’s toughest problems, organizations are trying to ensure that their values, brand strategy, business strategy and execution are all tightly coupled. It is the primary way that companies build trust with their employees and customers.
“People are more focused on purpose than I’ve ever seen in my entire career,” said Lisa McLeod, a consultant who has authored several books on identifying and activating an organization’s noble purpose. “There are two reasons for that. Customers are asking, ‘Are you here to help me or are you here to close me?’ And employees are asking, ‘Why does what we’re doing even matter?’”
So how do you identify and activate a purpose? Or decide on just one? Sustainability, diversity, equity, poverty, and upward mobility are all noble causes, but no one company can effectively address them all.
“Purpose doesn’t mean saving the world,” said Haley Rushing, co-founder and chief purposologist (yep, that’s a thing) of the Purpose Institute, a consultancy that helps organizations discover, define, and bring to life their deeper purpose. “But it does mean articulating why you exist and the problem you’re trying to solve for customers.”
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Defining your purpose
To identify a purpose, leaders need to consider what their stakeholders (both internal and external) are passionate about, what is needed in the community and the world, and what the company is uniquely positioned to deliver.
Your value proposition cannot be disconnected from how you actually make money as a company.
Nickle LaMoreau, Chief Human Resources Officer, IBM
Leaders need to look at what they’re already doing (a new product, service, partnership), and ask themselves how to use it as an opportunity to elevate and align it with a societal issue their stakeholders care about. They can then begin to articulate and fulfill their purpose in a more fruitful way.
Put succinctly, “Your value proposition cannot be disconnected from how you actually make money as a company,” said Nickle LaMoreau, Chief Human Resources Officer at IBM. “It needs to be what you actually do.”
Consider these examples, which are clear, precise, target real societal issues, and apply what each organization does well to address them: Sweetgreen’s purpose is “building healthier communities by connecting people to real food.” Tesla’s purpose is to “accelerate the world’s transition to sustainable energy.”
McLeod consults with companies to help them identify and activate their purpose. She begins most engagements by posing three key questions: How do we make a difference to our customers and our market? How do we do it differently? What do our employees love about their job?
Answering these questions helps organizations take a broader view while ensuring their purpose is not reduced to a marketing slogan or so vaguely grandiose that it does not address precise needs.
“The mistake that people make is they over-index on lofty language and under-index on specificity,” McLeod said.
Activating and elevating your purpose
Once you have articulated the unique “what” and “why” you do what you do, the next step (and indeed the bigger challenge) is activating it throughout the organization, mobilizing every employee to march to the same beat and integrate the purpose into their daily jobs.
If that challenge is not met, the company’s stated purpose can feel disconnected from its operations and strategy. Thus the purpose becomes nothing more than empty words, and trust is either never gained, or worse — lost.
“One of the most crucial roles for any leader is helping people at all levels of the organization make the connection between what drives them and the company’s noble purpose,” Hubert Joly, former CEO of Best Buy, wrote in Harvard Business Review in October 2021.
The goal is to drive employee behavior, not parrot the company tagline, by communicating how each person’s job helps the company achieve its purpose.
Rushing, of the Purpose Institute, has worked with many high-profile companies to do just that. One, a major apparel brand, wanted to move beyond just selling high-performance activewear to empowering customers to live active and sustainable lifestyles.
“As part of that strategy, we reinvented their retail experience, making sure the retail employees’ purpose aligned with the organization,” Rushing said. Its retail stores evolved beyond selling items stacked on racks to facilitating education and activity demonstrations — how to hike, how to camp with kids — by knowledgeable salespeople.
This serves two purposes: it shows their customers the brand can provide all the products and know-how to help them live healthier lives, and it shows employees that their jobs can be more fulfilling than selling sneakers and sweatpants.
No daylight between what you say and what you do
Business leaders need to be cognizant of business practices that undermine the credibility and integrity of their purpose. When stakeholders see a gap between what you say and what you do, you lose trust. But if you make a bold strategy move to align with your purpose, even if it requires a short-term cost, it’s an enormous boost to building trust and confidence in your organization.
“You need clarity of purpose for how you are going to improve life for customers and make a difference in the market, and you need values to guide your behavior,” said McLeod. “Your purpose is about taking what’s implicit in your business and making it explicit.”
A famous case in point — CVS/Caremark announced in 2014 that its new corporate purpose was “helping people on their path to better health.” That year it announced it was stopping all sales of tobacco and tobacco products, a move that cost it more than $2 billion in revenue.
“Tobacco products have no place in a setting where healthcare is delivered,” then-CEO Larry Merlo said at the time.
The move paid off. Long term benefits, like hiring and retaining talent, were easier to secure because people rallied behind the cause. The company was also able to sign on more business partners in industries like HR and insurance, which recognize the high cost of employing smokers, Helena Foulkes, then-executive vice president of CVS Health said in an interview a few years after the move. CVS, which purchased Aetna Health in 2018 for $70 billion, posted revenues of $268 billion in 2020, up from $139 billion the year it stopped selling tobacco.
Purpose as a proxy for trust with employees
The pandemic has accelerated many organization’s purpose-driven initiatives. In recent months, the Great Resignation has driven business leaders to motivate their workforce with clarity of purpose. When you consider the enormous importance consumers and employees place on trust and living your purpose, it’s easy to see why.
According to a global “Strength of Purpose” study by Zeno Group, consumers are four times more likely to trust and purchase from a brand with a strongly-articulated purpose. Moreover, they are 4.5 times more likely to champion the brand, and six times more likely to defend the brand in a challenging moment.
Corporations have all the power in the world. That’s what’s driving the ascendance of purpose in the corporate world.
Haley Rushing, Co-founder and Chief Purposologist, The Purpose Institute
At the same time, employees, emboldened and empowered by the tight labor market, prefer to work for purpose-driven organizations.
“Companies need to understand that they’re not getting anywhere unless they have an authentic organizational purpose,” said Naina Dhingra, a McKinsey and Company partner, on a McKinsey podcast. “Employees who say their organizations spend real time reflecting on the impact they make on the world are five times more likely to be excited to work for the company.”
PwC suggests business leaders ask themselves if their structure, systems and resourcing equips employees to bring the organizational purpose to life. Specifically:
Are you a magnet for the right talent, hiring and retaining people that allow you to excel at the capabilities needed to deliver on your purpose? Do you connect with intention across boundaries, breaking down silos so people across the organization can work together to achieve its purpose? Do you invest in your purpose, putting your money where your purpose is?
For example, a company that’s meeting all three criteria could hypothetically (as in the sports retailer example noted earlier) pitch itself more authentically to choosy job candidates, connect marketers to sports scientists, retail floor clerks and personal trainers in an interdisciplinary fashion, and allocate a percentage of its profits to underinvested communities.
Purpose as a proxy for trust with customers
Stakeholders, in particular customers, need to know and understand your purpose. Have you defined your purpose as a solemn promise to your customer? Remember, the world may not need more software, sofas or soap, but it does need companies to use their unique strength and passion to address real problems.
Not too long ago, a company’s trustworthiness centered primarily around protecting customer data, and its purpose was to sell products customers wanted. Not anymore. Customers have unparalleled choices, access to information, and a massive platform to share their opinions, whatever they may be.
If organizations can establish and constantly demonstrate their commitment to living their brand purpose to customers, trust will follow. Contrary to Milton Friedman, profits are not the total measure of success when customers, and in fact all stakeholders, judge corporations on so much more.
“Corporations have all the power in the world,” said Rushing. “There’s a much greater confidence in companies to step up and use their resources, power, ingenuity, and the creativity of their people to solve problems. That’s what’s driving the ascendance of purpose in the corporate world.”
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