Purpose has become a topic du jour in the business world.
The idea that companies must engage in a higher purpose than merely earning money is commonplace. In January, Larry Fink, CEO of the largest asset manager in the world, sent a letter to CEOs insisting that “companies, both public and private, serve a social purpose.” Consumers expect companies to help improve society, he wrote, echoing Sir Richard Branson’s prediction a few years ago that successful brands will have a purpose beyond profit.
What is purpose? It is a powerful notion often reduced to touchy-feely corporate initiatives or nonsensical mission statements. In my conversations with executives, I find it more useful to start with what purpose is not: It is not a goal to be met or an objective to be achieved, nor a target to be hit, nor, even, a metric to be measured. In other words, it is not something at which you are going to arrive.
Purpose is what you are up to—the answer to the questions, “Why do we exist? For what do we exist? What do we serve?” Think of purpose as direction and not a destination. Click To Tweet Imagine that you and I are sitting in California. We agree to meet in New York City on a specific day. That is a goal or objective. A goal is a static, singular destination. But purpose is direction—always calling out for potent action and new ways of thinking and perceiving.
To further illustrate and continue the metaphor: Our purpose is going east. When we reach New York, our work is not done because we have more east to go. We arrive in Paris, and we still have more east to go. When we get to Hong Kong and are in the East, we still have more east to go. Then we get back to California, we have gone as far east as we can go, and we have all the east to go that there ever was.
Having purpose as direction, goals are used to measure progress, not as the end in and of themselves. A high-performing company creates goals and objectives to help employees plot and measure their progress. If the purpose is to move east, specific destinations are spelled out, but the methods by which they are reached need not be stipulated. You want to go to New York by train, I want to fly, and Mary wants to drive—that is all fine, as long as we all arrive in the city on the appointed day.
Moreover, purpose allows us to move in parallel, being aligned and independently responsible. You are going to London, Mary is heading to Madrid, and I am traveling to Tangiers. We are all going east, fulfilling our purpose and with different goals.
Therefore, people who work in purpose-led organizations are empowered. They are able to make decisions that line up with the purpose and be responsible for the outcomes of those decisions. If you are the CEO and know that I am aligned with the company’s purpose, you know that my decisions will move us in the direction that you want to take the company. If you and I are executive vice presidents in the C-suite, you know that we are moving in the same direction. As my boss, you can spend less time tracking my progress and sweating the small details of my timeline.
This is the beauty of working in a purpose-driven company: Employees and teams have greater autonomy and ownership—less need for frequent check-ins, follow-ups, and micromanagement. Autonomy is important to us humans; setting our own goals, making decisions, and being responsible for outcomes gives us the satisfaction of accomplishment. Executives know that the various functions and divisions of the company are aligned and not working at cross-purposes or sub-optimizing their functions. Trust is elevated.
Purpose is what you are up to—the answer to the questions, “Why do we exist? For what do we exist? What do we serve?” Think of purpose as direction and not destination.
Identifying your organization’s purpose is akin to breathing life into your company. Purpose is both aspirational and inspirational. The word “aspiration” stems from the Latin aspîrãre, to breath in or inhale, which connects to pneuma, the ancient Greek and Biblical word for both breath and spirit and soul. Breath is life. Across faith traditions, the act of inspiring someone is equated to breathing life into another by touching their soul, awakening their spirit.
Creating or designing a purpose is hard work. “Why?” is critical to wrestle with as you clarify your purpose. Why do customers turn to you? What emotions does your brand elicit? What motivates the company’s leaders—to exist, to persevere, to expand? Why keep going and keep growing? Go back to the beginnings of the firm; why did our founders start the business? Look to the fourth horizon; in the future, why will we still exist and flourish?
Identifying your organization’s purpose is akin to breathing life into your company.
The why becomes a bigger guiding force than the how, when or what ever could. It is hard to do either unless you understand what moves you. The resulting purpose must move, touch and inspire people who are the enterprise to have any real potency.
Years ago, when Land Rover was spun off from British Leyland (The Rover Group), the newly appointed general manager saw the opportunity for a restart. He took on the mission to create a purpose for his company. He personally interviewed almost every employee as to why they worked at Land Rover and what Land Rover stands for. Patterns began to arise from the responses. Working from the responses and with a team of employees from every level and function, an aspirational and inspirational purpose was forged. The effort was a year and a half of work. The general manager said that it was the hardest work he had ever done.
Even having created purposes for their enterprises, executives still have a lot of work ahead of them to fully reap the benefits of those purposes. Some 90 percent of business leaders, surveyed by EY and Harvard Business School, understand the importance of corporate purpose but only 46 percent say that it informs their day-to-day operations. A purpose that does not inform everyday decision-making is just a plaque on the wall.
Most publicly traded companies are profit-driven, not purpose-driven—even those with purpose statements. (Please be clear that a purpose statement is not a purpose.) I would argue that businesses do not exist to make a profit; profit making and rising shareholder value is a measure that a purpose is relevant and important and is being fulfilled. The purpose of a business is to create value and serve customers—“to create a customer,” as Peter Drucker once wrote.
Far too many executives make their decisions on what will help them meet quarterly profit targets. And far too many lay out financial targets as vision and that the purpose of the business is driving shareholder value. The problem is that numbers inspire almost no one, save your CFO and a few other executives.
Boosting shareholder value, for example, will not breathe life into legions of employees, all of whom have their own purposes, aspirations and ambitions. People want to be part of something important. They want their lives to matter. Being part of a purpose-driven company—an enterprise that is up to something big, important and difference making—and knowing they contribute to fulfilling the purpose will both engage and inspire most of your employees.
I had the privilege of running a small company, Submersible Systems, a manufacturer of small, high-tech breathing devices. Our founder, Larry Williamson, had almost drowned in a diving incident. The company was founded to make sure that never happened again; our purpose was to end drowning. We made all decisions from that commitment. We took a stand that our product, Spare Air, was a critical piece of equipment for safe diving, in the face of opposition and threats from our industry. We brought to our factory and recognized Navy and Marine Corps airmen whose lives were saved by our product. We worked tirelessly to strip out cost from the product to make it available to more people. Our ad campaigns were all about saving lives. Every employee knew that her or his work was saving lives.
To engage and inspire the entire company, a leader must stand for the purpose: elevating the condition of people, solving problems, improving lives, making life better. Again, people want to be part of something great; they want to work for a greater good, serving the company’s purposes inside of the context of serving their own purposes. That is why the highest-performing corporations build a purpose around people—both their employees and customers.
When purpose is alive and in motion, a company can quickly achieve unexpected results.
Ironically, companies that eschew explicitly profit-driven goals, more often than not, are the ones that end up the most profitable. This should not be news: Jim Collins and Jerry Porras found as much in their 1994 classic, Built to Last. The group of companies they examined, all of which were guided by a larger purpose beyond profit, returned six times more to shareholders than other companies between 1926 and 1990.
Horizon Creates Motion
When you have embraced purpose beyond the company’s current product portfolio or service offerings, a funny thing happens: Growth feels natural because purpose and movement go hand in hand. When you look beyond the nuts and bolts of daily business operations and reaching short-term goals, you can imagine—and manifest—a larger enterprise.
Take, for instance, Chobani. The American yogurt maker first launched in 2007 to bring classic Greek yogurt to the masses, who were used to thinner, sweeter fare. The company now is a poster child of explosive success, with several different product lines under its belt and a valuation hovering around $4 billion.
But Chobani’s purpose is not limited to “make the best yogurt imaginable” or even “be the yogurt in every American’s breakfast bowl.” Instead, the company’s purpose is to “provide better food for more people.” To that end, the company recently launched a food incubator program for small brands that align with its own purpose. In exchange for capital, mentors and oversight, Chobani is fostering an expansive network of the next generation of food upstarts. From shelf-stable bone broth to chickpea pasta, the resulting foods go beyond
Chobani’s own product line. But there is a similar ingredient—a shared purpose—that knits those elements and that expansion together. Investors feel it. Inventors feel it. And employees feel it. That last impact cannot be overstated: Being part of and contributing to the success of purpose-driven companies make employees proud. If the company’s purpose is in harmony with employees’ own convictions, they can animate the workforce.
Sure, you could stand over someone’s shoulder, setting one small goal after another in order to nudge them along a prescribed path, but it is far better to empower employees to soar on their own by pointing them toward the horizon. When purpose is alive and in motion, a company can quickly achieve unexpected results.