Purpose stimulates and drives a business forward. Yet many business leaders do not express purpose explicitly in their strategic statements and are thereby not able to communicate it properly to exploit its power.
Purpose answers why we are in business and what society need our business is there to serve. We frame the answer in the so-called purpose statement—a clear, pithy, and inspiring conviction—that aims to communicate our company’s existential why to everyone inside and outside the company: “We exist to accelerate the planet’s transition to sustainable transport.” Tesla; “Entertaining the world.” Netflix; “Organize the world’s information.” Google’s first purpose.
Unlike the mission statement that tells of what our company will do and for what customers, and unlike the vision statement that expresses our aspirations as to where we aim to reach, purpose tells of our reason for business not from the inside-the-company view but from the outside, from the society’s vantage point. It precedes all the other company statements and, very importantly, serves to guide and infuse them with its spirit.
Not every kind of purpose will do the job. Purposes that a company drafts to be in vogue and that are used only in wall signs, what HBS prof Ranjay Gulati calls “shallow purpose”, will not work. Companies need as Ranjay says, “deep purposes”, purposes that reflect why the company exists and that are communicated to and shared by everyone in the company. People, regardless of position or rank, understand and embrace the purpose, remember it every time they put themselves to work, and get inspired knowing that they work for a purpose that has its roots in the needs of their society.
Purpose is not making money nor is it only applicable to social institutions. Profits and money, though important for sustaining a business, cannot serve as the raison d’être of a business. Such a kind of purpose, besides sounding selfish, will not help to distinguish a company among its peers when they all strive for the same goal: money. Nor will it be motivating for its people. What appeal will a purpose like that have to other than the top suite of the company when people are told that the aim of their everyday labor is to make money for the shareholders?
Properly thought and managed, purpose can leverage a company to success with benefits to all stakeholders, including financials: Best Buy’s purpose helped to boost the company’s share price in multiples (ref. Hubert Joly former chairman and CEO of Best Buy); companies with high levels of purpose were reported to outperform the market by 5%–7% per year (ref. HBR article of Aug 20, 2019, by Cl. Gartenberg and G. Serafeim). Also importantly, working for an org with a purpose seems to allow people to get meaning and value out of their work.
What steps can you then, as a CEO, take to manage purpose to produce results?
Exhibit your company purpose in signs on walls; but it shouldn’t be left only to that. Make purpose work on the soul of the business by embedding it into everything your business does. A narrative to remind you of key areas of attention could go like this: “Start as a Believer who transforms next into an Evangelist promoting purpose as a North Star in a business environment that is Social as well.” Four key words to help you gather around them the needed actions: Believer, Evangelist, North Star, Social imperative.
- Believer: Be a strong believer yourself in your company purpose, being aware that it conveys the company identity to the people inside and outside; make yourself its exemplary practitioner allowing it to permeate all facets of the org life and protecting it from being construed as having any ulterior motives.
- Evangelist: Communicate the purpose downward to all people in the company—to the middle management and the front-line workers; make your purpose meaningful, inspiring, and easy for all your people to remember and recite and use.
- North Star: Train your people to use the purpose as a compass to select strategic initiatives and make day-to-day decisions; align with it the company’s other strategic statements such as mission, vision, strategy, values, and objectives.
- Social imperative: If you want everybody to espouse the purpose and act on it like you would, cultivate a culture of respect for people and their ambitions, and avoid provocative rank differentials or other injustices.
And you will know when you are there, successfully having and embracing purpose, when in your company people tell of stories like the encounter of President Kennedy with a janitor during his visit at NASA: asked by the President what he does at NASA, the janitor replied, “I’m helping, Mr. President, to put a man on the moon.”