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Purpose, purpose, purpose?

Datum:13 oktober 2023
What approach to purpose suits your firm?
What approach to purpose suits your firm?

 Globally, the ranks of firms with an explicit corporate purpose statement are quickly growing. Advice on how to “get purpose done” is proliferating. Should you join the bandwagon? What approach to purpose suits your firm?

Pressure on companies is building to serve a larger purpose beyond maximizing profits for their owners. Among others the World Economic Forum and Business Round Table see a turn to purpose beyond profit as a solution to today’s social and environmental crises. Lary Fink – chairman of the largest global asset manager BlackRock – wrote in an open letter to CEOs: “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 contributes positively to society. […] Without a sense of purpose, no company, either public or private, can achieve its full potential.”

In tandem with these calls for purpose, recommendations on how to articulate and deliver on a corporate purpose statement are multiplying. While those offering up advice tend to agree that purpose is important and can offer strategic benefits to firms, their concrete advice on how to enact purpose diverges. In this cacophony of suggestions, it is hard to know what advice to follow.

In a recent research paper on the multiple facets of corporate purpose, I set out together with Prof. Marya Besharov, University of Oxford, to bring structure into this wild-growth of recommendations. We identify three primary ways in which firms are using purpose: to articulate their reason for being, as a corrective to one-sided profit maximization, or as a catalyst for systemic change. Each use of purpose is associated with distinct implementation challenges and requirements. As such, clarity on what you wish to achieve with purpose is essential. Our framework helps you anticipate what obstacles to expect and what opportunities to look out for depending on the use of purpose.

Purpose as raison d’etre

The first approach to purpose is as a means to express the reason for being of your organization. Clear communication of a unifying purpose can have considerable benefits for motivation, commitment, and coordination among employees. It can inspire creativity at work and encourages individuals to contribute to something bigger. NASA offers a great example. This purpose-driven organization makes sure employees of all ranks are clear on its ultimate purpose. This imbues even seemingly menial tasks with meaning and leads to productivity increases and absenteeism reduction. When asked what he is doing, a NASA janitor for example explains: “I am not mopping floors, I am putting a man on the moon”. However, if approaching purpose as a reason for being, align the purpose claims with the legacy of the organization and continuously emphasize the purpose, to avoid mundane tasks crowding out its benefits. If the purpose is too disjointed from the organization’s past, it may appear hypocritical and backfire.

Purpose as corrective

A second use of purpose is as counterweight to shareholder value maximization. Purpose thus contributes to a firm’s embrace of stakeholder rather than shareholder capitalism. This requires careful balancing and change management, lest resistance and tensions between supporters of conflicting priorities stifle the organization. When organizational structures, culture, and incentive plans are adapted such an approach to purpose can stimulate considerable innovation and new strategy development. Sustainable apparel company Patagonia is a case in point. This company is driven by its purpose “to be in business to save our home planet”. It has disrupted the outdoor and active wear industry and its innovative approach has become the envy of industry competitors.

Purpose as catalyst

A third way is to regard purpose as a means to catalyze systemic change. European utility giant Engie is pursuing its purpose “to act to accelerate the transition towards a carbon-neutral economy, through reduced energy consumption and more environmentally-friendly solutions”. An inspiring purpose helps convene other industry stakeholders to affect systemic change. It supports the implementation and adoption of innovations, like renewable energies or green hydrogen. This requires coordination and insight into the leverage points to affect changes in a complex system. It also necessitates legitimacy as a change agent. Otherwise, this approach will seem insincere and infeasible to collaborators needed to affect systemic change.

Given the distinct implications and requirements of each of these uses of purpose, it is essential to gain clarity on the purpose aspirations of your firm. Which approach befits your situation? Which advice on how to implement purpose is thus appropriate to you? The framework, discussed in more detail in our article (reference below) can serve as a tool to navigate proliferating suggestions and purpose playbooks.

Author: Bjorn Mitzinneck - b.c.mitzinneck


Besharov, M. & Mitzinneck, B. (2023) “The Multiple Facets of Corporate Purpose: An Analytical Typology” Strategy Science , 8(2): 233-244.