There remains a perception amongst some that purpose and profit don’t mix. To the contrary, the data tells us, purpose-led organisations are more profitable. This got us thinking, perhaps there is a misconception about what purpose is, and what it looks like when it is properly put into practice.
Firstly, we’d like to acknowledge that it is true that purpose doesn’t work when:
- It is inauthentic.
- It is just a tagline and doesn’t go deeper.
- It is only owned at the marketing level or advertising agency rather than the Executive and Board.
- It is utopian or unachievable.
When organisations attempt to have an ineffective purpose like this it doesn’t work, because your people, your customers and your competitors will see straight through it and call you out (and so they should).
- What is purpose?
- Why did purpose become a thing?
- Who should own purpose?
- And the question that is often forgotten - is profit counter to purpose?
- Is purpose meant to save the world?
What is purpose?
Let’s start with the Cambridge dictionary definition of Purpose: “why you do something or why something exists”.
So, purpose in its purest form is a clear definition of the reason why your organisation does what it does, why your organisation exists: the value your organisation brings to the world.
It makes sense then that having a clear purpose should be foundational for starting a business or, once it exists, developing the business strategy.
Why did purpose become a thing?
In the past, businesses only considered their value as profit. But they were short-changing themselves. People are not motivated to make more money for their boss, nor are customers motivated to buy from businesses to make them more profitable. When valuing a business on profit alone basic human needs were ignored, as were intangible assets like ‘brand’.
Purpose looks at the full value of an organisation, beyond just making money. Purpose considers how and why you are making money. It is a question born in the post ‘Nike sweatshop’ era, when organisations’ ethically weak practices were exposed and they were forced to become more transparent. It is a movement that has then accelerated through the introduction of social media.
A purpose is only effective if it is reflected through the actions of the business and its leaders. It is not enough for Nike to just say they “move the world forward through the power of sport” if their corporate actions and products do not reflect this. The words in your company’s purpose are important, however ownership and alignment with your purpose are arguably more important.
Who should own purpose?
Purpose should be owned at the Executive and Board level of a business, because purpose should be enduring, not a changeable campaign line.
Once you have articulated your purpose, having clarity enables you to make good business decisions and as a result, you become better at the business you are in. Those business decisions should be at all levels of the business.
Purpose helps you do things intentionally in all areas of the business - HR, Finance, Operations, Marketing, Product development, ESG, Marketing, Legal and so on. When you do things ‘on purpose’, you become more efficient and more innovative in the right direction. You unlock new business opportunities and you are more profitable.
Moreover, when you have a clear purpose you attract the right people and motivate those already in your business - and not surprisingly your people are more engaged and fulfilled in their role within the organisation. As a flow on effect, they tend to deliver a better customer experience.
So yes, purpose is linked to sales, because the whole business is aligned behind the purpose and delivering an authentic consumer experience.
Is profit counter to purpose?
No, purpose should deliver growth, sales and profit.
Take Coke for example, Coke is a behemoth and could happily sit and consider its purpose to just be make as much money as possible converting as many drinking occasions as possible through sheer scale. But Coke realised their value was more than just carbonated brown sugar liquid in a bottle, it is about ‘refreshment’ and that includes the whole usage occasion. Once Coke identified its purpose “to refresh the world” they had a platform to springboard into new products, brand experiences and markets that link to satisfying that purpose.
Purpose not only leads to greater profit opportunity, but defends against reputational damage and potential profit loss. That’s because an authentic purpose when put into practice effectively also aids to strengthen corporate reputation. It consistently guides what you say and how you act as a business, and sets expectations of what your staff, consumers, and shareholders come to expect from you. It preserves consumers’ trust in your brand as it guides consistency in the products that you develop or the services you provide.
This is evident as Coke staff and consumers are more engaged with the brand and find it easier to defend even when the impact of sugar on health is highlighted in the media. It is easier to defend because ‘refresh the world’ is authentic - Coke are not claiming to be a healthy choice; their products reflect their purpose.
Purpose is not here to save the world
Purpose does not need to be some kind of utopian claim to save the world. In fact it shouldn’t be - unless you have a plan to deliver on it. Don’t pretend to have a purpose that is not your specialty.
Not every business to exists to save the world. It could aim to do less damage, but not every business should be a saviour.
Take Kmart as an example. Their purpose is “Giving families easy access to the everyday items they need, at the lowest possible prices.”
This is a great purpose. Is it great for the environment? Probably not. Is it great for families trying to make ends meet? Absolutely. Are there ways Kmart can minimise their impact on the environment, avoid modern slavery and support diversity and inclusion while they deliver on this purpose?
Yes. Should they try to do those things, if they want to maximise their consumer base? Yes. Which brings us back to purpose, looking at the full value an organisation brings to the world. It considers all the checks and balances in how the organisation does business today, and its ability to endure in the future.
Purpose is about clarity, and driving greater connection
At some point ‘purpose’ has become confused with ‘utopian greenwashing’ and while an organisations purpose can often have a bigger role than selling more stuff to more people, organisations shouldn’t over-reach. Having purpose is actually about being able to confidently say yes to the right business decisions, and no to things that are not in your area. Because when you do something ‘on purpose’ you do it intentionally, not by accident.
To recap:
Purpose should provide clarity of an organisation’s role - why it exists.
Purpose should provide inspiration.
Purpose should cut out the confusion.
Purpose should drive internal efficiencies.
Purpose should help customers choose.
Purpose should help executive teams and boards make great decisions.
Purpose should empower employees to come up with great new opportunities.
Purpose is not greenwashing.
When more business leaders understand what purpose is (and what it isn’t), more businesses will unlock their true growth potential. Businesses can benefit enormously when they not only have a true purpose, but by effectively putting it into practice. To learn more about putting purpose into practice from a brand strategy consultancy, get in touch with Brand Council today.
Article References:
https://hbr.org/2016/10/the-type-of-purpose-that-makes-companies-more-profitable
https://hbr.org/2024/03/what-successful-purpose-statements-do-differently