Understanding why we do what we do at work can bring benefits within – and beyond – our organisations.
Not everyone will have heard of the Welsh jeans manufacturer Hiut Denim Co. but those in the know often consider the company to be a prime example of a purpose-driven business. It certainly has a clear strategic focus, making a virtue out of doing just one thing well: making jeans. And it has interesting views on the importance of purpose.
When co-founder David Hieatt wanted to explain to shareholders why he was setting up the company, he crafted a clear 'user manual' that, to this day, encapsulates what he wants to do, how and why. When it comes to the 'why', he’s just as unequivocal as he is about the 'what':
“I believe great companies change something as well as make something. They have a purpose and it propels them forward. We want to get this town making jeans again. This town is our ‘why’ we are in business. It’s good to know that. And it’s good for everyone else to know that too.”
Hiut Denim Co. is based in Cardigan, a small Welsh town that used to have Britain’s biggest jeans factory – until it closed. Hieatt started the company to bring manufacturing and life back to the town; to use all of the skills that would otherwise go to waste; to have the biggest impact on his community while also seeking to have the lowest impact on the planet.
That’s quite a story. It certainly supports the idea that organisational strategy is not developed in a vacuum; it’s a process defined by a series of logical steps that needs to take into account the world we live in. And it begins by defining an organisation’s identity and purpose.
Much contemporary thinking sees purpose as something of a strategic holy grail. Never mind strategic planning: having clarity of purpose is the factor that differentiates successful companies from the rest.
For others, this focus on purpose is overstated. It might be a useful hook for a marketing or comms campaign, but most stakeholders, the counter-argument runs, don’t really care about higher purpose, shareholders just want to maximise their returns, and customers just want a supply chain as efficient and cost-effective as Amazon’s.
It’s a debate unlikely to be resolved any time soon. Whatever side of the debate we favour, though, it’s clear that articulating purpose is important for a whole host of reasons, whether or not it’s really that holy grail ready to take over where strategic planning has failed.
Having clarity about why we do what we do at work is not just a precursor for strategic planning, important as that might be. It can also be essential for recruiting and retaining people, for giving them meaning and creating high performing teams. Daniel Pink, for example, ranks purpose as one of the three key elements of his Motivation 3.0 model, an essential factor when it comes to motivating people at work.
It’s also increasingly related to the wider sustainability agenda and to stakeholder perceptions about what we stand for, how we do business, and the social good – the wider purpose –our organisations have beyond the bottom line. The prevailing business model of shareholder capitalism (that prioritises investor returns) is being challenged by the broader concept of stakeholder capitalism.
In this new world, companies exist to create value for all of their stakeholders and not just the people who hold the purse strings – whether that’s about investing in employees, dealing fairly with customers and suppliers or protecting the environment.
Purpose, then, is an important but often elusive concept. As leaders, we need to understand its potential and pitfalls; how we can develop and articulate it and how we might harness it to best effect.
A good place to start is with some definitions. What exactly is a company’s purpose and how is different from, and related to, things like mission, vision, values or goals? The terminology can be hazy at times, with terms often used interchangeably.
At Future Talent Learning, our view is that:
Purpose is why an organisation exists.
Vision is what we want the world to look like when we achieve our purpose.
Mission is how we get there.
Research by the Chartered Management Institute (CMI) and A Blueprint for Better Business has defined purpose as:
"An organisation’s meaningful and enduring reason to exist that aligns with long-term financial performance, provides a clear context for daily decision making and unifies and motivates relevant stakeholders."
The research also gives five reasons why a strong sense of purpose matters:
For author and speaker Simon Sinek purpose is all about the 'why'. He firmly believes that people don’t buy what we do or how we do it, but why we do what we do. A strong sense of purpose is a differentiator and creates competitive advantage.
Sinek has created what he calls his golden circle to reinforce his idea that purpose-driven organisations are best placed to meet the challenges of today’s business environment.
Most of us are able to identify what we do; we might know how to do it. But fewer of us focus on the why. Since the what is easier to articulate, most leaders and organisations start there.
Sometimes, they will discuss the how. Often, the why comes a poor third. In golden circle terms, that’s working from the outside in. For Sinek, this is the wrong way around: we need to work inside out, starting with the why and working from there. Identifying a clear purpose is the foundation of success, for individuals as well as organisations.
Take Apple, for example. The company's what is fairly simple: it makes computers. Its how is also pretty clear: it makes products that are beautifully designed and easy to use. But that could be said for other manufacturers too. Sinek believes that what has really made Apple such a success is its why, its purpose: to challenge the status quo and do things differently. It’s this that underpins everything Apple does.
He even considers neuroscience to be on his side: a focus on purpose and meaning appeals to the part of the brain that deals with our emotions and feelings, meaning that loyalty and trust are built in along the way, whether that’s for customers or the people we work alongside.
According to Sinek, starting with why is also key to being an inspiring leader, able to engage and bring people along with us. If we want people to follow us not because they have to, but because they want to, then a sense of purpose will create that shared meaning and values that underpin better engagement at work.
Unsurprisingly, Sinek’s evangelical approach to purpose is not universally accepted. Some thinkers believe that true competitive advantage comes from focusing on the who – our customers.
Others point out that there are plenty of businesses – such as Amazon – whose success is at least as much down to the how, those processes, as the why. And there is also concern that too much why can leave too little space for the commercial imperatives and discipline needed to drive us forward.
But the golden circle remains an interesting reminder that, even if purpose is not the only consideration when it comes to strategy, it is certainly an important and, as we’ll see, an increasingly relevant starting point.
Writing in Harvard Business Review, academics Christopher A. Bartlett and Sumantra Ghoshal suggest that defining and articulating purpose must be a leader’s “first responsibility”.
Bartlett and Ghoshal exhort us to look beyond a world bounded by top-down strategy, formal structures and management-as-control, which they consider to be out of step with the needs of a rapidly changing business environment. In their research, they identify companies that have successfully moved away from this more traditional approach to strategic planning and implementation.
This involves building a “rich, engaging corporate purpose” rather than an exclusive focus on strategic plans, developing effective management processes rather than rigid structures, and offering opportunities for people to learn and develop rather than looking to control them. Success comes from “a more organic model built on the development of purpose, process, and people”.
In this model, everything comes from purpose. If we want our people to be engaged and loyal, we need to appeal to them emotionally, to go beyond the merely contractual or financial to help people feel like committed members of a purposeful organisation: “Employees don’t just want to work for a company. They want to belong to an organization.”
Author and philosopher Robert Rowland Smith similarly calls for strategy to be refashioned. He posits the conundrum that strategy is, of necessity, about the long term but that, these days, this focus on the long terms runs the risk of organisations “being eaten in the short term”.
His answer is to shift the focus of strategy from 'what to do' towards 'how to be'. The 'what to do' will always be in danger of being buffeted by fast-moving events, but, our choices about 'how to be' need not be quite so volatile.
It’s about relying on ourselves rather than on strategic projections, to be adaptable and resilient, “budgeting psychologically” for things going differently from how we expected. If we focus on our capabilities, we’ll be better placed to prosper.
That doesn’t mean that organisations should jettison entirely their strategic planning processes. But strategy can be a tricky and sometimes elusive thing. Apart from the difficulties of creating plans that are resilient and adaptable enough, research suggests that up to 95% of people in organisations are unaware of the strategy their organisation is following. A clear – and shared - purpose can bridge that gap. Management consultants, McKinsey & Company call this the North Star, a reference point that helps people to feel “personally and emotionally invested”.
If we start our planning with purpose, the rest of the strategic planning process – from organisational-wide analysis through to personal goals and objectives – is much more likely to make sense, and to stick.
Purpose must also be sincere and embedded in everything organisations do. It’s not just a matter of posting a purpose statement on a website or ticking ESG (environmental, social and governance) reporting boxes to keep shareholders happy.
This is especially true when organisations are looking to harness purpose in a wider societal or environmental sense – in Hiut jeans terms, for example, bringing those jeans back to its community and producing them with as small an environmental footprint as possible.
This can be a tricky area to navigate. Thinker Wayne Visser has identified what he calls the “four DNA elements” of sustainability:
Value creation – the economic element
Good governance – institutional effectiveness, ethics and leadership
Societal contribution – knowing and focusing on our stakeholders and communities
Environmental integrity
These elements may have had different origins, but we need to take them all into account if we are to embed purpose in our organisations to benefit a wide range of stakeholders and create sustainable organisations for the future. Visser is clear that companies don’t exist to make money; they need profits to survive, of course, but their underlying purpose is (or should be) “to serve society by creating value through products and services”.
Visser's research has also identified some key characteristics that define leaders. Think Paul Polman, ex-CEO of Unilever, with his purpose "To make sustainable living commonplace", or the senior team at outdoor clothing company Patagonia, who have blazed a sustainability trail.
With leadership increasingly distributed throughout organisations, and all of us having a role to play when it comes to influencing and making things happen, it’s a list we might all take on board when looking to understand and make the most of our core purpose.
In the rush to be seen to be doing something, some organisations have been accused of purpose washing, focusing on brands, products or stories rather than proper plans and actions. When, for example, McDonald’s launched its McPlant meat-free range in 2020, critics pointed out the company’s previous inaction on sustainability issues plus the lack of a clear link between the new launch and its current sustainability plan and the wider organisational context.
We all have to start somewhere, but it’s not always possible to ignore the elephant (or cow?) in the room. For Apple, that might be the fact that its devices have built-in obsolescence, no matter how dynamic its ‘Think different’ “why”.
To avoid the perils of purpose washing, we need to think holistically about the role our organisations play in society. It’s not just a matter for the marketing department; it’s a strategic imperative that needs attention at all levels – from the C-suite to the shop floor. It’s about reframing what organisations are for, going back to basics about the reasons why we exist.
Like Visser, the independent charity Blueprint for a Better Business believes that profit should not be the purpose of a business; rather, it’s an outcome of a “well-run business living out a purpose that benefits society”. Blueprint’s aims also reinforce the idea that people are never purely self-interested; they can and will have an eye to the wellbeing of others if they feel respected and connected to a meaningful organisation.
That needs us to ask “why”. For Blueprint, a purpose-led business:
Organisations need to set out clearly how society benefits from their existence, providing inspiration, offering a practical reference point for strategy and decision-making, and creating and an authentic connection between what we say we believe and what we actually do.
That might be easier said than done, especially for organisations with a long history, legacy supply chains, reluctant leaders or complicated chains of command. But it’s clearly not impossible, as Hiut Denim Co and a whole host of other businesses have shown. For example:
Patagonia is a pioneer in sustainability, with a stated purpose to be “in business to save our home planet”. That manifests itself in a range of activities, including facilitating the sale of second-hand Patagonia clothing, encouraging us to repair rather than replace, and transparency about its supply chains and its use of recycled materials.
In 2022, its founder Yvon Chouinard, his wife and their two adult children, transferred ownership of Patagonia to a specially designed trust and a nonprofit organisation. These were created to preserve the company’s independence and ensure that all its profits (equating to some $100 million a year) are used to combat climate change and protect undeveloped land around the globe.
Similarly, nut butter brand Pip & Nut’s purpose is to “help people love food that loves them, and the planet. We keep this front of mind in everything that we do, whether that’s developing new products, running an event or finding new suppliers.”
The founders of online toilet paper sellers Who Gives a Crap started their business when they realised that more than two billion people didn’t have access to a toilet. They donate 50% of their profits to campaigns for improved access to clean water and toilets around the world.
Another thing these organisations have in common is that they are certified B Corporations (or B Corps), part of a worldwide network of organisations that support the move towards a new stakeholder-driven economy. Run by B Lab, B Corps are companies that meet “high standards of social and environmental performance, accountability, and transparency”.
For B Lab, more organisations need to balance profit with purpose, shifting the global economy to make it more inclusive, equitable and renewable. Through its standards and certification programmes, it sets out to encourage more organisations to get on board with its aims – giving purpose the attention it feels it deserves, and making sure that all stakeholders are fairly involved and engaged with why an organisation does what it does.
The other side of the equation is that stakeholders themselves are increasingly prepared to look for those standards and to make public their disquiet if they’re not met. In 2021, former staff at brewers BrewDog took to Twitter to post an open letter to the company to expose what they saw as a “culture of fear” at the company and a “toxic attitude” to junior employees.
And, as the dangers of purpose washing have shown us, consumers are all too ready to vote with their feet if they feel that a company's or brand’s purpose story is not backed up by a real commitment to champion under-represented groups, support society or lessen environmental impact.
So, purpose matters. But how can we make this a reality on the ground?
The CMI/Blueprint report offers three key steps we can take to start our own purpose journey.
The first step is to identify what our overarching purpose is. Purpose is about asking questions such as; “What is our business?”, “Who are our stakeholders?” and “Which of their needs and wants should we serve?”. Undertaking a stakeholder mapping exercise will help us to identify those stakeholders, understand potential conflicts of interest and to assess different priorities.
Purpose needs to reflect an entire organisation’s identity, so it makes sense to involve a wide range of stakeholders – employees, partners, suppliers, customers and others – in working out our ‘why’. This way, the purpose is likely to resonate as widely as possible with as many people as possible. One option, once we’ve mapped who our stakeholders are, is to construct and share a simple questionnaire followed up by focus groups.
Interrogating our history can also prove to be fertile ground. Service to society might well have been part of a foundation story, and can provide a strong connection to the present. Think about what makes our products or services unique in our markets (and why), capture powerful and thought-provoking keywords and experiment and test.
Identifying our purpose is one thing; communicating it, quite another. We need that sense of purpose to be fully embedded in our organisational culture so that it’s familiar to people and made real through day-to-day decision-making.
Purpose statements, as we’ve seen, are not necessarily the only tool we need to help embed purpose in our organisations, but they can be a useful start. A purpose statement is a single sentence that encapsulates the reason we exist. Its aim is to create a connection between our core products and services and the benefits they deliver to people’s lives. Unlike mission, a purpose is not something that can be achieved once and for all. Instead, it offers the potential for a whole series of missions and goals that can help us to move forward.
Brand purpose expert Afdhel Aziz ‘collects’ purpose statements and offers some key tips and examples for creating ones that really work:
Look to create something that’s memorable, aspirational and ambitious. For example:
Adidas: “Through sport, we have the power to change lives”.
NASA: “To discover and expand knowledge for the benefit of humanity”.
For example, contrast:
Netflix: “To entertain the world” with
Disney: “To entertain, inform and inspire people around the globe through the power of unparalleled storytelling.”
Or Zappos': “We deliver wow” with
Amazon: “To be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online”.
What role will our organisation play to create a desired outcome? Think about the impact we want to have on our stakeholders. For example:
REI (camping and outdoors supplier): “To awaken a life-long love of the outdoors”.
BT: To “We use the power of communications to make a better world”.
Aspirational doesn’t mean a vague statement about making the world a better place. Using plain language will help the purpose to resonate as widely as possible. For example:
Lego: “To inspire and develop the builders of tomorrow”.
Airbnb: “We help people to belong anywhere”.
Purpose statements should not be cast in stone; but they need to evolve and change as an organisation develops and changes too.
The acid test is whether the statement can be implemented and brought to life by people throughout (and beyond) our organisations. If a purpose statement is clear and has meaning, people will want to make it their own and become champions in its service.
We also need to provide 'proof points' that show when and how purpose has created success. Stories and examples of actions and behaviours – both positive and negative - can help to reinforce the benefits of our purpose.
This kind of transparency enables trust, builds relationships and can also help us to be more outward-looking. Being brave and “going public” with ambitious goals may invite public scrutiny, but it also creates a public commitment that can be galvanising and really make things happen.
Our purpose needs to be a routine part of goal setting and decision-making, to be a regular part of our day-to-day operations. For example, the learning company Pearson
has a clear purpose “to add life to a lifetime of learning”. But this was being challenged by student drop-out rates. When, in language centres in China, staff incentives were changed from being based on the number of students recruited to the number of people graduating, learner outcomes improved – and so did staff morale.
Purpose belongs to everyone – which means that everyone needs to be involved in keeping it up front and live. But this will be almost impossible with the commitment of senior leadership teams: “Publicly supporting the organisational purpose from the top signals advocacy and gives tacit permission to employees to act.”
The same goes for middle managers, who provide a gateway between senior leaders and the rest of the organisation.
So, we need to be clear about what our purpose is; to find ways of embedding it into our cultures and processes and to make sure key actors are on board to reinforce just how important we consider purpose to be.
On its own, purpose can’t solve all of the problems our organisations and communities face, even if we’re on board with how important it can be – hardly a given. It can only ever be part of wider set of solutions. But shining a light on its potential can help us to be absolutely clear about our ‘why’ – help to create meaning for our people and start us on a journey towards a more equitable stakeholder capitalism.
The American philosopher and writer Henry David Thoreau suggested that “It’s not enough to be busy. So are the ants. The question is: what are we busy about?”
Just ask Hiut Denim Co’s elite Grand Masters, making jeans in Cardigan again.
Explain the difference between shareholder and stakeholder capitalism.
Outline how organisational purpose relates to vision and mission.
Describe what is meant by purpose washing.
Reflect on your own organisation’s purpose statement (if it has one) or consider what it should be if it doesn’t. Is it inspirational? Does it succinctly encapsulate why your organisation exists? How might it be improved, if at all?