Why Is “Purpose” So Important?
Last week, our CEO posted a blog addressing the definitions of vision, mission, values, and purpose and how they work together to define an organization. So let’s talk specifically about “Purpose”. Why is it so important to an organization to define and communicate their purpose?
The concept of defining why you do what you do, or your “purpose”, is not new. In 2002, Rick Warren published a book called “Purpose Driven Life” which unpacked the question of why we are here. In October 2009, Simon Sinek published his book “Start with Why: How Great Leaders Inspire Everyone to Take Action". His TED talk is listed as the third most popular TED presentation of all time. I recall in my early days as a marketing professional that a brilliant strategist once asked a group of leaders a powerful question. He asked them this: “If we wake up tomorrow morning and your company does not exist, how would the world be different?” So before the word “purpose” started to become commonly used with marketing and business strategists, he was asking about the company’s purpose or why they did what they did.
Only recently have organizations started to place their focus on purpose when defining their brand, strategy, and culture. For too long, cultures and brand promises have been focused on the “what” and the “how”. The result is a limiting definition of the brand that brings back memories of companies that identified themselves with features and benefits that became obsolete or dated as technology and product offerings evolved. AOL was the premier internet provider at one time, but was quickly overcome by other providers who focused on connectivity, or the why they do what they do, instead of the product they were offering… internet availability and speeds.
There are three primary reasons why it’s important to focus on purpose when defining your organization.
- When you define the organization by “why” you do what you do, instead of “what you do” or “how you do it”, you create a sustainable strategy that is not subject to being irrelevant as technology and product offerings change in the market. Boomers will remember the age-old example of a company that defined itself as a “buggy whip company” and was rendered obsolete when automobiles were introduced, instead of positioning itself as a transportation company. More modern examples include record and cassette companies that were rendered irrelevant when CD’s were introduced and CD companies that struggled when digital music became popular. Those organizations that defined themselves as music or entertainment providers were able to shift their product offering to remain a viable organization.
- It’s well known by now that within the next few years, millennials will constitute over 50% of our workforce. With that in mind, many organizations are spending a significant amount of time and resources identifying ways to attract, develop, and retain this important segment of the workforce. Research from top research organizations will confirm that millennials are attracted to companies that make a difference and have an impact on the world around us. So those organizations who take the time to define and communicate their purpose are much more attractive to this important segment.
- As we all know, there is a significant amount of empirical evidence that proves that a highly engaged workforce outperforms one that is disengaged in significant ways as it relates to about every business metric you can imagine, including EPS, growth, turnover, customer satisfaction and loyalty, and shareholder value. When employees know and understand a company’s purpose, they are more engaged, innovative, and confident in the company’s growth.
Below are some of the key findings from a study conducted by Deloitte in 2014 on culture and core beliefs.
As Allan said in last week’s blog, vision, mission, values, and purpose must all work together to define an organization and its culture. But more and more companies are realizing that it all has to start with defining your purpose, or why you do what you do, instead of what you are going to do and how you are going to do it. It then becomes clear to employees, potential employees, customers, and all stakeholders that your strategy is founded on something much deeper than a current product offering, which may or may not be relevant in the near future. So if you woke up tomorrow morning and your company did not exist any longer, how would the world be different?