Phil Preston has been a member of My Business since November 2020
If you are new to this topic or reviewing purpose in your business, what steps should you take to ensure you are on the right track? I provide an outline of what purpose is, why it’s important and a 5-step checklist you can use as a guide.
A Harvard study of 28 companies with compound average growth rates of 30% or more over the previous 5 years found ‘purpose’ was central to their performance. Global research by Fortuna Advisors and CECP found that higher purpose companies have higher market valuations, and the size of the gap has widened during the pandemic.
In Tribal Leadership the authors find that a common trait of serially high-performing companies is that employees see themselves as part of a team pursuing a social mission – they become motivated and excited by their work and the results flow.
If you’ve ever felt that sinking feeling when workers are more concerned about their own power and ego than they are about customers or colleagues, purpose is the ideal mechanism for turning it around and building high-performance cultures.
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Purpose is essentially the promise you make to your customers about solving their problems and improving their lives. People want to know what you stand for and your purpose must be recognised, revered and practised thoughtfully by everyone – it becomes your guiding light when difficult decisions and trade-offs must be made.
Purpose statements express the desired outcome – not an activity. Describing your purpose as making cars is quite different from creating sustainable transport solutions.
At a practical level, a small company I recently worked with had several reasons for clarifying its purpose including the need to attract younger workers, energise its staff and succinctly communicate its direction to shareholders and business partners.
One of my favourite purpose statements comes from Cochlear, which aims “to help people hear and be heard”. Another is from the junior mining company, EQ Resources, which re-processes mining waste for strategic metals with the purpose of “resourcing the new economy for a better tomorrow”.
As a service provider myself, I’m helping executives and leaders “develop profitable businesses that support the lives of people and the planet.” Size of the organisation doesn’t matter when it comes to purpose.
When crafting or reviewing your own purpose statement, I suggest you first ensure that it conveys a benefit to society and then check that it inspires employees, resonates with customers and has the right scope in terms of what you do and don’t want to do.
Unfortunately, crafting a great purpose statement isn’t enough on its own, you have to follow through and embed it into everything you do if you want to harvest the benefits and it’s not as hard as you might think. To help visualise the process, I advise business leaders to focus on these five steps:
To avoid follow-through failure, make sure that everyone from the highest levels down to the front line knows what it means for them. You have to help them convert it from an abstract feel-good thing to something that’s tangible to what they do in their role.
How will you know if your business is achieving its purpose? What would you expect to see happening / not happening? What quantitative indicators should you monitor? What are the values and behaviours that you expect to see if you are on track? Ultimately, these indicators need to flow into peoples’ KPIs.
Purpose can be liberating because it gives your people permission to think outside the square with customers front and centre in their mind. For example, when a pet food company clarified that it’s creating “a better world for pets”, it saw an opportunity to expand into pet health services.
Nothing of value ever comes easy - you’ll find that it takes discipline, energy and perseverance to get it right. However, I guarantee that the amount of uplift you’ll get will be significant if it is done well. A process to monitor progress, review what is and isn’t working and making refinements is strongly advised.
The great thing about purpose is that it makes intuitive sense and brings clarity to why your business exists and the positive difference it can make in people’s lives. It is increasingly viewed as the engine room for success in our complex and ever-changing world, and I trust this outline will help you put purpose into practice and grow your bottom line.
The views expressed in this article are those of the author and do not necessarily represent the views of My Business.
Phil traded in a high flying corporate career to help businesses become more profitable while also supporting people and the planet. He is a speaker, facilitator and strategist, and the author of Connecting Profit With Purpose.
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