We are all accustomed to answering the question “What do you do?”—and we usually have a pretty good answer. But rarely do we hear “WHY do you do it? What is the purpose for your business, the reason you started this journey called entrepreneurship (whether that journey began decades or weeks ago)?”
Or another way to ask that question, the George Bailey version of the question: “What would your community look like without your business? What does your business contribute to your community, industry, customers that no one else does? How do you create or add value for your customers and your employees?”
“Authenticity is everything – you can’t fake purpose.”John Repogle, CEO, Seventh Generation
Purpose is not what a business does, but why it exists. For example, an IT company sells their services to solve technical issues, but its purpose is to help their customers be more successful by using technology to achieve customer goals and success. Your purpose guides how you engage with your customers, which partners you work with, and how you develop your people and nurture your culture.
Being a purpose-driven organization requires first knowing your purpose; next, communicating it to your stakeholders (internal and external); and then, staying true to it. Identifying your company’s purpose, embracing it and championing it within your organization is important. On an operational level, your business’s purpose helps answer questions about what type of business entity will you set up, how you will organize and manage your people, what type of leadership you will need, even where you will locate the business.
A recent study done by the Korn Ferry Institute discovered that focusing on purpose impacted companies’ profit, employee engagement, and customer relations. Purpose drives performance and inspires people, and hence the business, to do great things. When inspired, people and businesses focus huge amounts of energy that results in high level performance. They study found that purpose-driven businesses are able to engage “people in a profound manner, contributing to society and establishing new criteria for organizational success.” The study found that the impacts of being a purpose-driven organization were undeniable.
Companies who focused their team’s efforts around their purpose had annual growth rates nearly three times the annual rate for the industry.
The survey found that 90% of people who worked in a purpose drived business reported felling engaged in their work, compared to only 32% of employees who worked in companies who didn’t focus on purpose. It also helps encourage increased collaboration, innovation and effective decision making.
Attracting and Retaining Customers
Customers want to know that the companies they are buying from are committed to service and improving their communities. For example the KIND company’s purpose statement is “to do the kind thing for your body, your taste buds, and your world. We’re on the mission to make the world a little kinder, one snack at a time.” This well-articulated purpose statement makes customers loyal to the concept of kindness, as well as the product.
Purpose matters because your business’s values are a direct product of its purpose. As a business grows, sometimes these values get lost. By communicating, acting and making decisions around purpose, you continually connect your purpose with your goals and performance. Your well-articulated purpose inspires customers, brand loyalty and establishes commitments to goals, as well as increases employees’ engagement and loyalty to the company.
It is not enough to know your purpose; your business has to live it. An organization’s purpose, values and expectations should permeate every facet of business because doing so continually reinforces the why and how you do business to all.
Resources and Tools:
Business Model Generation, Osterwalder and Pigneur (Self-Published, 2009) and the Business Model Canvas (link)
Dare to Serve, Cheryl Batchelder (Berrett-Koehler Publications, 2015)
The 360 Degree Leader, John Maxwell (Thomas Nelson, Inc, 2005)
Purpose Meets Execution, Louis Efron (Bibliomotion, 2017)
First, Break All the Rules, Buckingham and Coffman (Simon and Shuster, 1999)
Good to Great – Why Some Companies Make the Leap and Others Don’t, Collins (Harper Collins, 2001)
“The Power of Purpose Driven Companies” (CUNA News Podcast, May 24, 2018)
“How to Build Your Influence” (Entreleadership #240, Clay Scroggins, December 31, 2017)
“Resilient: Purpose-Driven Organizations, Interview with Daryl Brewster” (Deloitte)
“Turning Purpose into Performance” (HBR Ideacast, July 24, 2018)