Why Purpose Must be at the Heart of Business Strategy

Purpose matters. But if it’s to deliver on its promises, purpose must be authentic, strategic and lived throughout the organisation. How can businesses avoid paying lip service to purpose, and instead harness its power to drive transformational change?​

So much for a gentle start to the new year. Early 2019 has been a challenging time for those of us who strive to make organisations a force for good – whether we call it purpose, CSR, sustainability or inclusion.

We kicked off the year in the midst of heavy fire from Anand Giridharas, journalist and author of Winners Take All, who dismisses corporate purpose as “an elite charade” designed to shore up the power of the wealthiest in society by changing nothing. Then, in mid-January, Gillette launched a campaign engaging with the #MeToo movement and challenging stereotypical ‘masculine’ behaviours, drawing criticism from who felt they were under attack, and those who derided the campaign as virtue-signalling. Finally, at the end of January, historian Ruger Bregman became a viral sensation by calling out business leaders at Davos for skirting the issue of tax avoidance in favour of the safer topic of philanthropy.

As someone who is convinced of the power of business to drive positive change, it’s tempting to go on the defensive, protecting my field against those who would criticise it. But, instead, I find myself strangely uplifted by the opportunity to reflect on whether there’s some truth at the centre of these claims.

Because we all know, don’t we, of more than one company that deserves criticism like this?: Those whose purpose doesn’t feel authentic for the company; and those who have a strong purpose but do not demonstrate it through their actions.

There are remedies for both of these ailments. The good news is that these remedies are simple. The bad news is that ‘simple’ is not the same as ‘easy’.

Finding an authentic purpose

The arguments for being (or becoming) a purpose-driven organisation are compelling. Companies led by purpose are now outperforming their competitors by over 200%, and Unilever’s purpose-driven brands continue to grow nearly 50% faster than the rest of their business. So it’s no surprise that companies often want a slice of this ‘purpose stuff’ – and they want it as quickly as possible. That’s what is behind many of the purpose fails of the past few years: a purpose statement developed by the board, or (even worse) a marketing agency.

Companies that do this have fundamentally misunderstood the nature of purpose. An authentic purpose starts not from what a company has to sell, but from a deep understanding of its role in the world, the unique skills and competencies it offers, and the societal needs it can serve. Articulating a company’s purpose needs to happen from three directions: top-down (strategic direction from company leadership), bottom-up (involving as many employees as possible), and outside-in (engaging those already working to change the world).

Neglecting even one of these inputs can lead to a fatally inauthentic purpose. The marketing team at McDonald’s, for example, presumably didn’t check in with their employees before flipping their famous M logo into a W for International Women’s Day… at the same time as female employees were accusing the company of failing to respond appropriately to sexual harassment claims.

Living an authentic purpose

The risks of failing to ‘live’ your purpose are significant, even if you escape the public backlash that some brands have experienced in the last few years. The longer-term journey is all about placing purpose at the heart of business strategy – and that means transforming operations, culture and even products to ensure they are in alignment.

Importantly, the first people to notice – and care about – a lack of commitment to your purpose will be your employees. Kin&Co’s own 2018 research found that 53% of employees say that their company’s purpose marketing does not reflect reality, and 68% say that talking purpose but not living it has a negative impact on their work, loyalty and/or trust in leaders.

There’s one simple question that reveals immediately how deep purpose goes: How does your purpose drive your business decisions? Authentically purpose-driven companies will be able to identify – and will likely be promoting – examples of where this has happened.

For example, on the same day as Apple took steps to protect the details of its self-driving vehicle, Tesla released all its patents to help others combat climate change. Its founder Elon Musk explained that the decision was inspired by the company’s purpose: “Tesla Motors was created to accelerate the advent of sustainable transport. If we… inhibit others, we are acting in a manner contrary to that goal.”

There are still too many companies who don’t get purpose right – whether it’s through public promises that are not lived internally, programmes that don’t have a measurable impact, or lobbying positions that don’t align with company values.

Every time one of these examples hits the headlines, it’s bad news for all of us. That’s why we must be (constructively) critical of those companies who are not articulating and living an authentic purpose – and help them to find a better way forward.

That’s when we’ll be ready for a new year without any surprises.

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