“For any individual company, determining the purpose of its purpose is fundamentally a business decision and must be anchored in strategy. Corporate purpose requires clarity about the trade-offs being made and should result in something that is internally coherent. “ Jonathan Knowles, B. Tom Hunsaker, Hannah Grove, and Alison James| HBR
Defining your corporate purpose is an opportunity to demonstrate how your company adds value and can satisfy your customers’ requirements.
Find Your Purpose
- Identify the internal constituencies relevant to your purpose. Leaders will want to see that their interests are adequately considered. The four main interests and their constituencies are demand generation (sales, marketing, channel management), employee engagement (HR, employee networks), governance and sustainability (legal, operations, corporate communications, investor relations, community relations), and strategy and business valuation (the CEO, the CFO, risk management).
- Purpose can be defined in three ways. Initial discussion should establish a common language around purpose and explore the various ways in which each of its three domains—competence, culture, and cause—is relevant to each of the constituencies represented. How might a culture-based purpose be articulated with the interests of communities in mind? Or a cause-based purpose with the interests of investors in mind? These discussions should take as expansive a view as possible of the range of options for defining corporate purpose, making authenticity the binding constraint.
It is important to recognise that only executives experience purpose as a top-down phenomenon. Most other stakeholders experience it from the bottom up.
This approach acknowledges that each type of purpose has advantages. A competence-focused purpose presents a clear value proposition for both customers and employees. A culture-focused purpose creates internal alignment and collaboration with key partners. A cause-focused purpose aligns customers, employees, and communities around the societal benefits that the company generates..
- Connect purpose to strategy. View all the possible ideas for the purpose that will have the greatest impact on the company’s future success.
Develop a clear sense of the business objective that the purpose will support. How can it enhance the relevance and sustainability of your value proposition to customers and other stakeholders?
- Go beyond isolated thinking. For the purpose to be authentic, it should not be motivated only by self-interest and opportunism. During deliberations, each member of the working team should have discussions with other stakeholders—employees, suppliers, business partners, community leaders to ensure that the eventual purpose statement is authentic, relevant, and practical.
- Implant purpose in behaviour. Senior leaders should model the new modes of behaviour that bring the purpose to life. This should also be reflected in performance reviews and promotions, recruitment, business decisions, and the culture.
The full potential of purpose is achieved only when it’s aligned with a company’s value proposition and creates shared aspirations both internally and externally.