” Purpose is certainly not just a marketing issue or positioning of your brand image. Purpose should impact every aspect of the firm.” – Raj Sisodia
Today’s business focus needs to focus on innovation and continuous transformation, in view of digitalization, rapidly changing customer expectations, demands of new generation of employees for meaning in their work, challenge of effectively engaging and integrating diversity hires and a wider debate of role of companies in society.
All organizations, since the bygone era, have been incorporated with one common purpose, which is to solve customer problems. However, as companies grow and become big, there is a need to have a “why” for their existence, not to mention that to create passion across the organization, they need to have a purpose, vision and a mission other than that of making a fortune. Somewhere, along the line purpose has often been confused with the vision, mission and values and the distinction needs to be earmarked and clearer.
While purpose statement is about figuring the “why”, the motivation, about giving and about the company’s customers, the vision statement is about answering “where they want to go?”, what it hopes to achieve, the mission statement is about figuring out the “what do we do”, more for the benefit of employees, their roles and how they contribute to the larger goal while the value statement focusses more on the culture of the organization. Additionally, vision and values may help create a distinctive culture that helps the organization to gain a competitive advantage, attract talent and bag the title of best places to work in.
The global survey of 474 executives conducted by the EY Beacon Institute defines organizational purpose as “an aspirational reason for being which inspires and provides a call to action for an organization and its partners and stakeholders and provides benefit to local and global society.” Although 90 % of executives surveyed said that their companies understand the importance of purpose, only 46% said it informs their strategic and operational decision- making, thereby rendering it a powerful but under-utilized tool. 42% of the laggards reported flat or declining revenues over the past 3 years compared to 19% of developers and 15% of prioritizers of purpose, in the survey. 49% of the companies said that their organization had made a change in strategy development based on purpose. 58% of the companies who prioritized purpose experienced 10 % growth or more over the past 3 years apart from their ability to innovate and transform which included expanding geographically, changing their business and operating models, completing a merger and launching new products. 84 % of respondents said businesses with shared purpose would be more successful in transformation efforts. However, for this to happen, purpose needs to be better integrated in the organization with performance metrics and incentives being aligned with purpose, with better leadership development and training, in strategy development, in formation of communication of company culture and values, in talent management, in new market exploration, operating models and in branding and marketing. As Michael Beer said, “you can’t just adopt it….it has to be driven, operationally and in depth, by the CEO and the top leadership team. This takes a lot of skill and understanding to do well, which is why so few companies can pull it off.”
What comes out very clearly is that many companies globally are recognizing the significance of purpose and struggling with integrating purpose within the organization. In the world of VUCA, having clarity internally and articulating the same will help represent the purpose, vision, mission and values as a north star amidst the ambiguity and help companies build passion and a sense of purpose, collectively amongst the employees, subsequently increasing customer focus and hopefully, in the coming future, creating a business model of purpose over profits as an answer to social challenges.