With the evolving discussion about corporate purpose, we witness a growing number of smaller and larger corporations exploring the process of defining their core reason of existence. We see some more and also some less successful examples – while a whole array of companies already managed to put the idea of why they exist into clear words, others are struggling with the task of articulating a precise and meaningful purpose. But, despite some advertising agencies claims, successful purpose development is not a product of chance or creative arbitrariness. Often it is also overlooked that the purpose statement is just a pointed verbal expression of a deeper concept behind.
Purpose development is a multi-stakeholder process
There is great value in going through a proper purpose definition process. In larger organizations, many corporate group functions and business units need to have a say in the process and their respective stakeholders must be adequately considered in the concept. If the purpose development process is carried out properly, the statement will reflect the wider ambition of the company, resonate with customers, investors, and the public, and can be credibly anchored at the core of the corporate strategy. This is necessary if you want to make a true difference with your corporate purpose and – as in many cases – initiate a fundamental shift in the culture of your company.
Drawing on our cross-industry experience from supporting many companies in their purpose development, we summarized the five most essential steps in developing purpose. A clearly structured process allows the core project team to stay in control of the development, while opening it up for participation from other parts of the organization just at the right time. On the contrary, unstructured processes most likely result in diluted versions of an otherwise good idea – and, in some case, produce severe reputational risks.
1. Reveal: digging deeper into what already exists
An authentic corporate purpose must be rooted in the corporate identity and aligned with its strengths. In a first step of purpose development it is therefore essential to develop a clear picture of what constitutes a company’s DNA and the path for future value creation. Is it, for example, extraordinarily innovative or even known for the invention of breakthrough technologies? Does it have an outstanding track record in sustainability and ESG related KPIs? And what is the company’s founding history or myth? Particularly important at this point is the understanding of the strategy and business model. A clear link to the business model is essential for any credible purpose and differentiates it from old-school CSR concepts that typically do not offer reasonable scalability. It is critical to keep in mind that a purpose is not something that needs to be pulled out of thin air. Often it already exists in various degrees within the organization and must simply be substantiated and sharpened. Only in rare cases, such as with disruptive business innovations or major turn arounds, it can be necessary to start the purpose development from scratch.
2. Involve: all your stakeholders are relevant to the definition process
Once you have built a good understanding of the business and its guiding principles, it is time to involve relevant stakeholders. Developing a corporate purpose based on a 360-degree perspective is important for the consideration of relevant aspects associated with specific stakeholder groups. Depending on the stakeholder you would reach out differently to collect the information. For example, with selected employees and management you could conduct semi-structured interviews, that are open enough for a free flow of conversation. This is our learning from hundreds of management interviews we have conducted in the context of purpose development projects. Allowing interviewees to unfold their own thoughts instead of forcing them into pre-structured answers is key to collecting insights for the development of a unique and meaningful purpose. And it helps you to get a feeling for the language and idioms used within the organization and among mid-level managers. However, for a wider audience, it could be wiser to consider a survey or other forms of engagement to kick the purpose ideation off. Whatever kind of engagement you prefer, remember: you need to make the organization speak from the bottom of the heart, otherwise they will only tell you what you need to know. Involving the most knowledgeable people from relevant group functions, the businesses as well as the main regions is key at this second step of purpose development.
3. Create: combine your gathered intel into a neat bundle
In a third step you should cluster the insights from the first two steps into thematic routes that answer your company’s “WHY” question. Each thematic route needs to be linked to a specific scenario about the future of the company – based on the corporate strategy and with an initial assessment of potential proof points for the activation of the purpose. Each option will go through several rounds of rigorous cross-checks and approvals to ensure that every group business is properly reflected in the concept. Eventually, you need to start crafting statements for the validated routes. The purpose statement should clearly reflect the higher aspirations of the collective, while being a clear extension of the company’s identity. It sums up the answer on the question ‘why do we exist’ in one brief and easy-to-remember sentence. Developing such a statement is not a simple task. It needs to be broad, yet specific enough. And it requires the readiness to find a compromise as well as the courage to abstain from abstract technical terms or phrases like ‘solution’ and ‘service’ – which, unfortunately, is sometimes considered the best compromise.
4. Align: all elements of your business identity should fit together
While developing a purpose statement, it is essential to align it to the other elements of your business identity, for example the mission and vision statements. More often than not, a purpose development process leads to a reformulation of vision and mission statements and it typically is also reflected in the corporate strategy. We are often asked about the differences between these concepts or if there is any difference at all, but if developed properly, each of these has a specific role to play. The purpose statement should not compete with the other statements that make up your business identity. Both internally and externally all elements must exist in harmony, and feed into each other, to ultimately strengthen the authenticity and power of your strategic positioning.
5. Prepare for execution: unveil and demonstrate your corporate purpose
While developing a purpose concept and statement itself might be considered a huge task already, it is only the starting point. The successful activation of a purpose requires a tailored messaging and well-developed narrative, aligned with all other positioning elements and the corporate strategy, and ultimately put into an activation plan. This is often forgotten, but as a long-term survey by scientists at Harvard Business School shows, purpose only develops its positive momentum if it is clearly articulated and embedded into the organization. Developing it just to communicate it to investors and putting it into a few CEO speeches alone will not suffice.
The messages need to explain the meaning behind each part of the statement, and ideally also for different target groups. And remember: a message is only as powerful as the proof points behind. Telling a convincing purpose story is not fiction but based on solid facts about your business model which you need to collect from within the entire organization. It is strongly recommended to have this prepared before critical voices start questioning the substance of your corporate purpose.
One thing we often encountered in organizations who just defined their purpose, is that they underestimated how great the explanation need is with such a new concept. And this gets more complicated the further you move down the management ladder. While top leadership is often involved in the purpose development or at least quite close to it, mid-level managers on the other hand often feel overwhelmed to embrace the statement in their daily management activities. What does it mean to make the world better when you operate the front-line activities with a team of four to five people? But exactly going this step in the activation is what it is all about in the end, otherwise the purpose statement will be nothing more than words on paper. While this is to a huge extent a communication exercise, management trainings for purpose-driven leadership can complement the activation and thus help to steer the purpose implementation successfully.