I have recently been reading about the history of outdoor clothing and gear company, Patagonia. There are a number of stories about Patagonia that perfectly illustrate the power of purpose in business. Examples include:
- Suing the US President over the reduction of protected national parkland.
- Abandoning their most profitable product line due to environmental concerns.
- Telling their customers: don’t buy our products, encouraging them to instead repair and reuse when possible.
Patagonia is an organisation that knows who they are and why they exist. Their purpose: “We’re in the business to save our home planet” is clearly and authentically owned by their people. It is this clarity of purpose that gives people in the organisation the conviction and confidence to unapologetically go against the norms of business. While Patagonia certainly has its critics, they are OK with this, and are happy to turn away willing customers who don’t share their views.
The great news is that purpose driven organisations like Patagonia don’t need to trade off purpose against performance. In fact, it turns out that organisations deliver better financial returns when they focus on purpose over profit.
We always take the long view. We don’t look at things on a quarterly basis. Long-term thinking allows us to make smarter and more responsible decisions. We’ve found that when we put the planet first and do the right things for the planet, it winds up being good for business. It has proven itself over and over again.Corley Kenna, Patagonia’s Director of Global Communications
Purpose driven organisations
A purpose driven organisation is not necessarily a charity or not-for-profit, although it is true that these organisations are often (but not always!) clearer on purpose than their for-profit counterparts. Instead, a purpose driven organisation is simply one that has a clear and overriding reason for existing beyond pursuit of profit alone. A company’s purpose isn’t always altruistic or noble, and being purpose driven does not necessarily make for a good corporate citizen. Companies that are often considered to be purpose-driven include Amazon, Unilever, Starbucks and Airbnb.
Whether it is referred to as purpose, mission, a manifesto or something else – purpose driven organisations are those with a clear answer to the fundamental question:
Why does our company, organisation or team exist?
Your organisation’s purpose is not a slogan, tagline or positioning statement. It’s not even really about the product or service you provide. Purpose goes much deeper than what you do and instead goes right to the heart of why you do it.
The next (and more challenging) elements of becoming a purpose driven organisation are to articulate the answer to this question, and then use it meaningfully in decision making.
The case for purpose
We believe that clarity of purpose is critical for any company that wants to be successful. But don’t just take our word for it:
- In his book The Advantage, Patrick Lencioni states that being clear on why an organisation exists is a cornerstone of “organisational health”, which is in turn the single greatest advantage any company can achieve (you can read our summary of The Advantage here).
- A recent survey by PwC showed that 79% of business leaders believe that an organisation’s purpose is central to business success.
- Harvard Business Review has also conducted research in this area, publishing The Business Case for Purpose. This research provides evidence that revenue growth and innovation are enhanced in organisations where purpose is a driver of strategy and decision-making.
While getting clear on your organisation’s purpose is worthwhile, identifying and articulating purpose can be challenging. However, we have a few tips that can make the process a lot easier.
Finding your organisation’s purpose
There’s no right or wrong way to identify your purpose, but here’s a few techniques that we have found to be helpful.
Keep asking “Why?”
In Built to Last, renowned business writers Jim Collins and Jerry Porras say that in order to find a company’s core purpose the question that needs to be asked over and over again is “Why?”. The first answer to the question “Why do we exist?” is invariably something quite tactical – an accurate description of what the organisation does, not why it does it. But by asking “Why?” again and again, you’ll eventually approach your organisation’s reason for existing.
The Advantage provides a great list of “categories of purpose”. Working out which category your organisation sits in can give a very strong clue to your fundamental purpose. These categories include:
- Customer – does your organisation exist purely to serve the needs of customers, or a particular type of customer?
- Industry – does your organisation exist because the founders simply love a particular industry?
- Greater cause – this should be fairly self-explanatory, and is a good place to start for charities and not-for-profits
- Community –does your organisation exist to make a specific geographical location better?
- Employees – does your organisation exist primarily for the benefit of your employees?
Could an organisation’s purpose simply be to make money for its owners? We hope not. Of course, many owners would say that this is the purpose of their organisation, but this is hardly inspiring to either the members or customers of an organisation and it’s a narrow view of how an organisation contributes to making the world a better place. In his TED Talk, Start With Why, Simon Sinek explains that making a profit shouldn’t be confused with purpose: instead a profit is a result of an organisation delivering on its purpose.
Recently we’ve experimented with an unconventional use of value propositions to help identify and clarify purpose. An organisation’s value proposition defines who a business exists for and how it delivers value to them. We like to think of the value proposition as a vivid description of purpose, similar to the vivid description of your vision proposed in Built to Last. To borrow from Jim Collins and Jerry Porras, a vivid description of purpose is a “vibrant, engaging, and specific description of what it is like, or will be like, when you are delivering on your purpose. A vivid description of purpose translates from words into pictures, creating an image that people can carry around in their heads”.
The benefits of using value propositions in this way to create vivid descriptions go beyond just identifying your purpose. It also provides a basis for powerful communication of your purpose to employees, customers and other stakeholders. For some suggestions on how to develop great value propositions, check out our article here.
Hopefully we’ve convinced you that building a purpose driven organisation is something that you both should and can do – it is both valuable and achievable for any organisation.