Purpose: Make it a Nuanced Raison d’Etre, Not an Empty Buzzword

Hey you! Company! Why are you here, anyway? 

The answer is your purpose. By one definition, purpose refers to, “an organization’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,” (Hurth, Ebert & Prabhu, 2018: 2). 

The concept of purpose has become popular recently. With practitioners ready to give it a try, it is starting to colour what businesses are thinking  Academics have already segmented it into types, antecedents, consequences (Ebert & Prabhu, 2018; Basu, 2017; Rey, Bastons & Sotok, 2019) and measures (Gartenberg, Prat, & Serafeim, 2019). Consulting firms stand at the ready to help firms reflect on their identity, consider stakeholder perspectives, connect to core competencies, relate to organizational culture, track and improve and potentially even shift toward governance structures that allow more space for non-economic value creation (BCG, 2022; McKinsey, 2020). While generally positive, and a nice step toward ideals of a more sustainable world, purpose can read like another positively-spun wrapper for the same old issues, just without taking them seriously. Ideas like ‘the business case for… X’ (e.g. Keller, 2015), while well-intentioned to nudge corporations in the right direction by articulating the many benefits, also ring familiar, and thus, questionable, to critical observers. All of this is still on the buzzword side of things, and there are few notable attempts to replace the talk with novel action and serious investment.

Imbuing purpose with substance is up to the organization—just like any social or environmental efforts. Buzzwords are only buzzwords when enough organizations deploy them symbolically rather than substantively. Yet, unlike prior corporate responsibility concepts, purpose comes of age in an increasingly complex, connected world where organizations are increasingly being held to account for doing harm, or not doing enough good. Understanding a bit of context and deploying new strategy tools can help firms move forward with purpose.

Business and society over the years

The notion of corporate responsibility followed the rise of modern multinational firms and globalization, as a voluntary response to issues arising from operating outside of home countries and legal systems. “Corporate Responsibility refers to corporate policies, practices and outcomes related to issues including employee well-being, climate change, human rights or diversity,” (Bartosch & Raab, 2022). Companies aimed to regulate themselves and reacted to issues, for example, forced labor, by first publishing Codes of Conduct, which became the precursors to modern sustainability reporting (Vogel, 2006). Over the past decades, firms have been adopting sustainability reporting, and now many public interested and listed companies, banks and insurers, particularly in Europe, are required to disclose their impact in some form or another. Still, sustainability disclosures are not always integrated with activities (Thijssens, Bollen, & Hassink, 2016) - firms are not always acting with social or environmental responsibility truly integrated, let alone driven by such a purpose.

At the same time, a growing movement has seen many firms work to align activities with social and/or environmental outcomes, and do so with integrity towards their employees. New legal forms and governance structures, such as the Community Interest Corporation (UK) or the BCorporation have emerged, offering guidelines and external verification (Metz & Rathert, 2022). Structures, as well as practices that integrate different forms of value in accounting practices, for example, are emerging dimensions of responsible innovation, which aims to help firms not only avoid harm, but produce desirable outcomes (Stilgoe, Owen, & Macnaghten, 2013).

It’s an incredibly confusing time to be a company

The forests are burning. Society is plagued by social unrest and polarization; having lived through the COVID pandemic, workers demand fulfilling work, where and when they want to do it. Corporations are not only facing increasing shareholder, regulatory, consumer, environmental and other stakeholder pressures, their decisions or indecisions on hot button issues and global conflicts lay legitimacy landmines, and they are increasingly asked to respond to employees who want a meaningful and balanced work life. 

In this increasingly complex, and also connected context, ‘purpose’ is not necessarily just the next buzzword in a line of fraught attempts to remedy the relationship between profit-minded organizations and society across the last decades. Yet, one can hardly blame critics for thinking so, when there’s no clear blueprint for how to fix this relationship, nor the overall capitalist system in which it exists. However, arguably, it is unproductive to blame well-intentioned organizations for not having the tools to react and reorient in this unprecedented time.  Rather, there is an opportunity to use this concept as a thought-provoker, an agitator, a muse, that can inspire firms to explore who they want to be for the future, and what they want to stand for.

Purpose enters into this evolving landscape as another way of considering the relationship between business and society that shifts focus to an important question - why. Why does a firm exist, really? Purpose could be yet another simple framework to symbolically signal adherence to evolving norms. Or, purpose can be a mirror to companies, forcing them to confront their role more directly, and to think about it differently. The existential crises facing organizations today cut deeper than marketing and disclosure. How to maintain the license to operate, define purpose authentically, legitimately and … still make money?

How can firms define and work on their purpose with care?

Dusting off some Heidegger, Camus and Sartre, batch ordering cigars and booking a board-level retreat - is one option. But we can simplify it for you. Based on the premise that doing the same thing and expecting different outcomes is one definition of insanity (famously attributed to Albert Einstein), we suggest six ways firms can take to re-think their purpose, substantively, which implicitly involve strategizing differently for more substantive outcomes. Most firms still generate strategies based on typical strategy frameworks and tools that have been in use for decades. Many of these are of course still useful, but fail to incorporate alternative paradigms of value creation and capture and, crucially, are built on assumptions about the world that are shifting like sand under strategists’ feet. 

1. Internalize the idea that escaping vilification is too low a bar

We’re in an age where everyone is demanding more. People are no longer content with buying clothes - they want clothes which are produced in a way that doesn’t cause water pollution or child labor. Everything that used to be a cute marketing strategy is table stakes. Not doing harm is the baseline. This simple mental shift can help firms approach their ‘purpose strategy’ and activities with intention. Simply signaling will not help firms navigate the complex environmental and social world and the stakeholders who vote with their shares, their wallets and their employment contracts.. It sounds obvious, but no one is doing it. Awareness is the first step! 

2. Unearth new ‘purpose assets’ or Rubix-cubing impact opportunities

Firms are rife with hidden potential for purpose. For example, during Hurricane Katrina, Walmart exposed its impressive logistics network for social purpose; the COVID-19 pandemic saw countless firms quickly pivot to produce hand sanitizer or masks. It doesn’t have to take a crisis to leverage untapped capabilities for articulating, designing for and delivering additional dimensions of purpose. For example, finding alternative ways to leverage logistics networks, office spaces or branding assets, can help firms understand their assets in new ways. Yet, purpose assets can be tricky to spot, and must be partnered with opportunities aligned with long-term strategy and based in contextual nuances of a firm’s future operating environment. Careful analysis can ensure purpose assets are carefully articulated and new opportunities identified will be sustainable in the evolving social context.

As shifting a line of boxes in a Rubix cube exposes and arranges colors in new ways, strategists can shift what already exists into a form that is more coherent and aligned.

3. Re-think purpose relationally

Organizations are terrible at defining themselves in relation to other stakeholders. This issue isn’t new, but its implications are heating up. Applying analysis tools that incorporate networks, relations, and various levels of impact can help firms understand who they impact, why, and if they want to. Legitimacy in the future means responding to new demands organizations have not considered. Firms can investigate their role in a wider context by incorporating tools from organizational sociology, - anthropology and theories on legitimacy. Academic disciplines that have not traditionally neutered the strategist’s toolbox can help a firm see itself differently - and thus be prepared for new layers of impact, and potential for purpose.

Think about what your boundaries are - appropriately engage with what’s nearby.

4. Redefining your purpose for the Imagination Age - or staying true to the social fabric of the future 

Throughout economic history, value was created from land, from labor, and later from data. As the basis for economic value shifts further, firms can consider the social consequences of a production system based on different types of assets, and how it may be cause for re-alignment of purpose. No matter what organization or industry, AI or automation in general will create an impact.. But what is the impact from that impact? And how can your firm react to that? How can purpose be part of your offer, in new ways as people are organized differently?

5. Say no to Strategizing in a Vacuum (about a playing field of the past)! Evaluate your strategy in the evolving social and psychological context

Strategy is about your firm’s activities and playing field (“where to play - how to win?”). But where exactly is that playing field in time? Often, strategies around concepts like social responsibility, or purpose are unintentionally based on what society, shareholders and other stakeholders deemed legitimate in the near or or even distant past. Strategy can be like a balloon being carried by a swiftly moving CEO - it’s floating above the social context behind you, rather than lofted ahead, guiding action and decisions for the future reality. You have designed it for the social context that existed moments or years ago. 

Anthropologically and sociologically-informed foresight can help by uncovering weak signals that tap into how people are really thinking and feeling now, which have not yet been codified into clear needs or attitudes.

6. Rethinking purpose along new dimensions - location and time

The post-COVID return to work has raised new questions about what is meaningful to do, where. When can firms help employees find purpose - by not being at work? How can you rethink time and location for employees, and even for how products and services are linked with consumers. 

Social science for purpose.

Finding and articulating company purpose can be as simple as making a useful product, sustainably - and then making sure that is clear to all related stakeholders. People need goods and services. Yet, to do so authentically and clearly requires careful thinking about stakeholder impact, hidden purpose value, evolving social contexts, and new dimensions of time and location. Defining purpose can also drive hard reckoning and re-orienting firm activities, structures or designing new products or services that suit the evolving world and help ensure firm sustainability, in addition to environmental and social sustainability. 

Whether firms want to instigate dramatic changes, or grasp the moment and use it as a reflection point, purpose is about being brave enough to think deeply - not being afraid to look in the mirror, ask the question why, and come up with a serious response.  The result can be empowering to employees, and align activities and goals authentically. To do so requires thinking differently from past ways of working and charting a new course. Thus, to hink about purpose substantively involves new perspectives  and new tools not traditionally found in the business toolbox. Social science-informed foresight can help firms strategize for the context of the future, systems analysis and impact assessments can help firms develop 360 degree awareness of the interfaces between their activities, society and others. A purpose asset audit can help identify, elevate or invest in hidden areas of impact.

Sound challenging? We can help.

References

Bartosch, J., & Raab, J. (2022). Corporate Responsibility: An Overview in Angeli, F., Metz, A., Raab, J. Organizing for Sustainable Development: Addressing the Grand Challenges. Routledge. P.261-269.

Basu, S. (2017). Corporate purpose: Why it matters more than strategy. Routledge.

BCG (2022). Business and Organizational Purpose. Available online at: https://www.bcg.com/capabilities/business-organizational-purpose/overview. (Accessed October 18, 2022).

Gartenberg,C., Prat, A., & Serafeim, G. (2019). Corporate Purpose and Financial Performance. Organization Science 30(1):1-18.

Hollensbe, E., Wookey, C., Hickey, L., George, G., & Nichols, C. V. (2014). Organizations with purpose. Academy of Management Journal, 57(5), 1227-1234.

Hurth, V., Ebert, C., and Prabhu, J. (2018). Organisational Purpose: the Construct and its Antecedents and Consequences. Cambridge: Cambridge Judge Business School, University of Cambridge. Working Paper No. 02/2018.

Keller, V. (2015). The Business Case for Purpose. Cambridge, MA: Harvard Business Review.

McKinsey (2020). Purpose: Shifting from why to how. Available online at: https://www.mckinsey.com/business-functions/organization/our-insights/purpose-shifting-from-why-to-how (Accessed October 18, 2022)

Metz, A., Angeli, F., & Raab, J. (2022). Moving beyond fragmented traditions: towards an integrated view of organizing for sustainable development in Angeli, F., Metz, A., Raab, J. Organizing for Sustainable Development: Addressing the Grand Challenges. Routledge. p.261-269.

Metz, A. & Rathert, N. (2022). Responsible Innovation: the role of organizational practices and structures in Angeli, F., Metz, A., Raab, J. Organizing for Sustainable Development: Addressing the Grand Challenges. Routledge. p. 31-45.

Rey, C., Bastons, M., & Sotok, P. (2019). Purpose-driven organizations: Management ideas for a better world (p. 138). Springer Nature.

Stilgoe, J., Owen, R., & Macnaghten, P. (2013). Developing a framework for responsible innovation. Research policy, 42(9), 1568-1580.

Thijssens T., Bollen, L., & Hassink, H. (2016). Managing sustainability reporting: many ways to publish exemplary reports. Journal of Cleaner Production, 136: 86-101.

Vogel, D. (2006). The Market for Virtue: The Potential and Limits of Corporate Social Responsibility (2nd ed.). Brookings Institution Press.