We are frequently told that putting purpose first makes the strongest companies. But this implies that any purpose will do, ignoring the sea of implausible purpose statements. Confusion about purpose is a major barrier to success. Here we tackle the misconceptions that lead many companies to miss their actual purpose and address it in name only.

No amount of resources devoted to activating or integrating a flawed purpose will be successful: with company purpose development, foundations are everything. Our global multi-sector experience over several years has consistently highlighted three inputs vital to ensuring the purpose initiative is met with universal trust and support.

There is a gulf between successful purpose-driven companies and those with merely a purpose statement. Our research indicates that fewer than 10% of company purpose statements are effective in driving either impact or performance. Correspondingly, Mercer’s global talent survey revealed that only 13% of employees believe in their organisation’s purpose. Read about the five fundamental causes of purpose failure.

Against the backdrop of finite industry lifecycles that sees companies plateau and lose profitability as they fight for market share, purpose reframes the role for the firm in a broader playing field of its own. When defined literally (as the purpose of the business, not an add-on to it), the effect on performance is best seen through four lenses: Growth, Customers, Culture, and Transformation.

Culture can seem nebulous and hard to manage with precision. The focus is often on business basics like ethics and accountability, rather than the competitive performance associated with strategy. Yet a sustainable firm manages to achieve both. Defined properly, company purpose sets out why and how a firm will remain valuable: vital for investors, employees and boards - unifying culture and strategy. 

Purpose is often seen through an external lens of brand positioning or CSR, but chief executives in mature organisations often turn to purpose for more fundamental reasons. Purpose can support the inherent differentiation of a company, but there are challenges to getting it right. Here we share some tips based on our experience of helping an S&P 500 corporation establish its purpose.