Stream | Defining a Purpose
Companies having a “purpose” is not recent development, in fact all good branding agencies will tell you that a true brand is the definition of an organisation or product’s purpose.
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Purpose

Defining a Purpose

“Efforts and courage are not enough without purpose and direction”

– John F Kennedy

 

Companies having a “purpose” is not a recent development, in fact all good branding agencies will tell you that a true brand is the definition of an organisation’s or product’s purpose. That said, in the past purpose has tended to be seen as the responsibility of marketing or CSR by the boardroom and a “nice to have” whilst the organisation gets on with its real job of making money and keeping shareholders happy.

 

What we have seen over the last 12 months or so is a shift in the perception of the benefits having a purpose can bring. Organisations are realising that to create a sustainable and profitable business, the impact it needs to have is more than just a financial one. This is probably best summed up by the letter that Larry Fink – Founder, Chairman and Chief Executive Officer of Blackrock (one of the world’s largest asset and investment management firms) sent to all the CEO’s of their investments:

 

…public expectations of your company have never been greater. Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.

 

Without a sense of purpose, no company, either public or private, can achieve its full potential…

 

What does he mean? Take a look at the cover of most annual reports and in many cases you will read “Realising shareholder value” or “Maximising shareholder returns”. These statements however are simply a measurement of a well-run business, not its purpose. The purpose of an organisation should be why it exists and the need it is meeting.

 

So how does an organisation identify its purpose? Well this is very simple, what need does the organisation meet? For example, if an organisation makes widgets, then the purpose of that organisation is not to make money from its widgets, but to make life better for the customer by meeting or exceeding their needs (the money will come from fulfilling that purpose).

 

Once an organisation knows why it is in business, it can define a sustainable long-term strategy. The problem is that as many businesses do not know or have not defined their purpose, they do not have a fully realised long-term strategy. The strategy of most listed businesses probably read “Realising our growth potential” and “Maximising our profit opportunities”. This is not a strategy. Any successful company should be realising its growth potential and maximising its profit opportunities, if it does not then it is not going to be around for very long! These are not strategic aims; the strategic aims should be what an organisation does to meet its purpose.

 

For example, if we take our widget company, now it knows what need it is meeting, it can set sustainable strategic objectives about how it is going to continue to meet those needs and grow. This could be through product improvement, investment, international expansion, a merger or acquisition, stronger market positioning or diversification. In fact, once defined, knowing the purpose of an organisation is a powerful corporate tool. Not only can it be used to define the strategic direction of an organisation and its market positioning, but it can also set the marketing style and how it communicates and motivates employees with a strong and meaningful internal culture. It is no surprise that the organisations with the strongest sense of purpose are also the most successful.

 

A clearly defined purpose and strategic direction can then be extended into responsible business; how an organisation meets its purpose. This is the positive impact an organisation has on individuals, society and the world in meeting its purpose and strategic direction. Both the organisation and all of its stakeholders benefit when an organisation knows what it wants to achieve and how to achieve it..

 

For example, responsible business at our widget company can be:

  • Anticipating customers’ needs to ensure it is futureproofing its offering;
  • Health & wellbeing and training & development of its employees to increase retention;
  • Productivity and innovation to make it an attractive employer;
  • Supply chain and production management to ensure the most cost-effective ways for sourcing and producing its widgets.

This should be complemented with environmental initiatives (such as reducing its carbon footprint and water usage, which also save money) and limiting its impact on society through volunteering and charitable work (which are nice things to do).

 

In the words of Mr Fink:

 

Companies must ask themselves: What role do we play in the community? How are we managing our impact on the environment? Are we working to create a diverse workforce? Are we adapting to technological change? Are we providing the retraining and opportunities that our employees and our business will need to adjust to an increasingly automated world…?

 

If an organisation understands why it exists then it is much easier for everyone else to understand why it exists and to communicate the benefits it brings.

 

If you make widgets or are thinking about looking at your corporate purpose or long-term strategy or would like to know more about responsible business and the positive effects it can have on your organisation, then please do not hesitate to get in touch. We would love to hear from you!

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