— August 9, 2019
Defining your purpose
Why does your organization exist? To make a profit, sure. That could be said of every other company on the planet. But what are the deeper reasons for its existence? What, other than competing for market share or aiming to provide the biggest return to investors and shareholders, is driving the business forward? What is at the heart of the business? What are you doing this for?
These questions are at the forefront of many leaders’ minds nowadays, particularly culture-driven leaders. The old understanding of “profit as purpose” is dying because the pursuit of profit alone is not enough. Jim Barksdale, the former CEO of Netscape, once remarked that, “Saying that the purpose of a company is to make money is like saying that the purpose of being alive is to breathe.” Breathing is of course fundamental and instrumental but is not a reason for existing.
Purpose matters. But why?
Several complex and interlinked factors have contributed to the increasing emphasis and non-negotiability of clarifying and then operating by your company’s purpose. Here are four contributing factors.
- For decades now, bureaucracy, command-and-control hierarchies and red tape have all too often stifled creativity and sucked the sense of meaning out of work, leaving people feeling more like pen-pushers than agents of meaningful activity. The craving for purpose is a backlash against that.
- As the world feels increasingly complex, chaotic and unpredictable, people want to know that the place where they spend the most amount of time–work–is making at least some kind of positive, genuine difference.
- We are bombarded daily with aspirational narratives and images of inspirational, influential, powerful and picture-perfect lives. That’s even the case on LinkedIn, where it seems that everyone has won an award or reached dizzying heights of success.
- There has been a proliferation of messages and conversations about “living your purpose” or “making a dent in the universe” that have been filtering into the collective conversation over the last couple of years. The conversation about living meaningful lives is here and it isn’t going anywhere.
The research agrees
A myriad of studies confirms that there is a collective push towards purpose and how important it is for companies to get it right. For example:
- According to a Deloitte survey, 87% of executives believe companies perform best over time if their purpose goes beyond profit.
- An EY survey of 474 executives found that 90% of executives surveyed said their company understands the importance of purpose. 89% of executives surveyed said a strong sense of collective purpose drives employee satisfaction; 84% said it can affect an organization’s ability to transform, and 80% said it helps increase customer loyalty.
- An HBR article reports a sizeable piece of research that found that that 9 out of 10 people would be willing to earn less money in exchange for the chance to do more meaningful work.
- Research has found that employees who find work highly meaningful are 69% less likely to plan on quitting their jobs within the next 6 months.
- 85% of employees at Fortune 100’s Best Companies reported that their work has “special meaning” and is not just a job. These people are 11 times more committed to staying at their organization and 14 times more likely to look forward to coming to work.
In other words, companies that struggle to answer the purpose question, or that only answer it in terms of hard metrics–profit, market share, shareholder returns and so on–are more likely to encounter a variety of difficulties: lower engagement, higher turnover and an uninspiring culture, to name just three unwanted consequences. Interestingly, research suggests that it doesn’t matter if a company has prestige, market dominance or great potential for growth. If it doesn’t offer meaningful work or isn’t values-driven and supportive, people will coast at best and leave at worst.
On the contrary, companies that have a clear sense of purpose beyond just making a profit see a reduced risk in turnover (as much as 24%, one study suggests), higher levels of engagement, and deeper engagement. Jim Stengel and Millward Brown conducted a 10-year research project looking at the 50 fastest growing company brands which built the deepest relationships with customers and achieved the greatest financial growth from 2001-2011. The study clearly demonstrates the relationship between a company’s ability to serve a higher purpose and its financial performance. Investment in the Stengel 50 over the past ten years would have been 400% more profitable than an investment in the S&P 500. So there is a clear business case for it in the starkest economical terms. Thinking more holistically, these companies also can make a positive dent in the universe at a time in human history when we are facing a multitude of complex and urgent issues.
Take (Purposeful) Action
So, what can companies do to become purposeful beyond the pursuit of profit? Here are three starting points for culture-conscious companies.
Start with why – and start at the top: Simon Sinek’s book and immensely popular TED talk have imprinted this three-word phrase onto people’s minds. Invest time and effort into articulating why your company exists. What mission are you here to fulfill? What is your reason for existing? It might not be enough to do this work, however, unless your leaders are fully on board. The trickle-down effect is real. Although challenging, it also provides a clear non-negotiable: to lead here, you must be on board with the company’s values and reason for being.
Get clear on–and then live–your values: If your values are simply on a poster on the wall but are not a living, breathing part of the culture, then something is off. Values provide an anchor and a compass in culture-driven companies and feed into how you execute on your purpose.
Explore these questions: What is our core focus? What difference do we want to make in the world? How can we connect our individual employee’s sense of purpose to our collective organizational purpose? What is non-negotiable?
A great purpose is aspirational and often unachievable. It is a “North Star” that focuses and motivates the team while working with the values as a framework for decision making. The bottom line is clear: it’s up to the leader to create meaningful work for people in a company that is focused on more than “just” making money has no downsides.
Originally published here.