A Response to HBR’s Latest: What’s the Purpose of your Purpose?

Lately, all the cool kids have purpose.

It’s well documented that purpose-driven firms outperform their competitors. Customers want to buy from companies that stand for something bigger than just their quarterly targets, and employees want to be part of something bigger than themselves.

In an era where BlackRock’s CEO, Larry Fink, and others are “urging executives to articulate a role for their companies beyond profit-making and implying that doing so will affect their valuation,” the stakes are high. It’s crucial for organizations to get their purpose right.

Yet, while there’s widespread understanding on why organizations need to have a purpose (employee engagement, market reputation, long-term strategy) there’s less clarity about what a purpose is and how to best leverage it.

This month’s Harvard Business Review features one of the best pieces about purpose I’ve seen (and trust me, I’ve read just about all of them). In it, the authors describe the challenge writing, “Too often, discussions of managing with “purpose” can be frustratingly vague. What exactly is purpose? It sounds great in an annual report, but how do leaders actually use it, day by day, to make difficult trade-offs, engage customers, energize employees, and attract investors?”

The authors Jonathan Knowles, B. Tom Hunsaker, Hannah Grove, and Alison James

suggest that one reason for the confusion around purpose is because leaders misunderstand what type of purpose is appropriate for their organization. The authors cite three distinctly different “senses of purpose” that emerged from their research: competence (“the function that our product serves”); culture (“the intent with which we run our business”); and cause (“the social good to which we aspire”).

In my experience working with teams to define purpose, I often see a tendency to “kitchen sink” a purpose statement- throwing everything in but the kitchen sink, trying to be all things to everyone, which usually amounts to, we want to make money, please everyone, and be good people while we’re doing it. The aspiration, while well placed, lacks the specificity to accomplish much.

The HBR piece cites examples of how the three types of purposes play out:

This is one of the most clear and helpful pieces about organizational purpose that I’ve seen to date; It provides concrete advice for leaders about how to articulate and leverage purpose, along with the benefits and potential pitfalls.

However, I do have one slight difference of opinion with the authors.  While many firms have successfully built organizations on a culture-based purpose, in the current climate, I think it’s dangerous to lean heavily on an inward-facing ethos.

I’ve seen too many firms say that their purpose is to become a great place to work, be the employer of choice, or even champion DEI. While these are noteworthy aims, in the current climate, the pillars of a good culture are well-known, and thusly, easier to replicate. A cause or competency purpose that is focused outward (on customers or the world) is more likely to create differentiation in a competitive market.

Many moons ago, only a handful of leaders understood business strategy. Now it’s hard to imagine running a firm without a clear strategy; it has become an expectation.  The same is now true for purpose.

The business benefits are clear. But the human benefits may be even greater.  There’s a widespread movement gaining traction. People are no longer willing to live their lives in the service of profits.  Money matters, but living a meaningful life, and making a difference in your work, matters just as much. This timeless wisdom has now become part of the business conversation.

We’re lucky to be living in an age, where we can take the best of what we know about the human spirit and bring it into the world of work. We owe it to ourselves, and the people we work with, to do our best to get it right.