Simon Sinek has been communicating the importance of “WHY” or “PURPOSE” for many years now, and from experience, if a business can ‘nail’ this, it can be very powerful as part of operating a successful and sustainable business.
WHY can serve as a business’s anchor, and a clear reminder of their core identity which grounds employees, customers, and other stakeholders, who may feel adrift at times, and enabling them to focus on addressing critical problems.
The coronavirus pandemic has prompted many businesses to reconsider what work and which organisations are essential to society’s function, and any new initiatives will be most effective if they involve alignment to purpose.
Regardless, articulating a statement of purpose has long been considered vital to success, and an important part of my strategic planning workshops with business owners.
It provides a justification for a company’s existence, as well as a blueprint for navigating what that company does. The marriage of why and what has become increasingly important: Cultural attitudes toward business have broadened, from a focus on shareholder value to the need to also contribute to society, and emerging generations of employees often prioritise meaning over money.
An effective purpose statement makes this why–what connection clear, but unfortunately, I see the majority fall short: They lack any meaningful sense of purpose.
Simply stating something does not necessarily make it so. But a meaningful purpose statement that has ethical, emotional, and rational appeal should be likelier to influence a good purpose in practice than one that does not.
An example is the CEO who stated that the purpose of his organisation is “to create daylight, fresh air, and a better environment for people’s everyday lives” compared with the CEO whose purpose is “to produce goods of as a high a quality as possible, with as low as possible production costs.” The former (from an environmental services company) provides a reason for the company’s existence, identifies a beneficiary, and alludes to the organisation’s unique contribution to the world. The latter statement, though practical, is uninspired.
Some purpose statements from some of Australia’s iconic brands;
NAB – Back the bold who move Australia forward
Caltex – To make life easier
Medibank Private – Better health for better lives
Following these three steps, leaders can create their Purpose statement with strength and meaning.
- Clearly state the business’s reason for being. Purpose is ultimately about why — and its connection to what, how, and who. Simon Sinek suggests that communicating why companies do things (“respecting the environment and protecting natural resources”) is more effective than merely emphasising what they do (“produce high-quality and low-cost motor parts”) or how they do them (“through innovation”). Moreover, answering why should also go beyond financial performance, which is increasingly understood to be a means to business success but not an end in and of itself.
- Identify the primary beneficiaries of the business’s work. Putting the beneficiaries at the forefront and showing how the organisation’s work benefits those beneficiaries is crucial when crafting a purpose statement.
- Ensure the purpose statement is balanced. Statements of purpose typically range from overly abstract (“creating a world-class organisation”) to overly specific (“to deliver steel structures for the [regional] market”). Those that find the golden mean (“designing buildings and cities to allow society to develop responsibly and economically” or “to provide choice and affordability to meet our customers’ evolving energy needs”) between these extremes are likely to be more successful in communicating the company’s purpose and inspiring others to act on it.
Developing a powerful purpose statement establishes what is unique and non-replicable about a business and can provide a competitive advantage. This is especially important today, as business leaders guide their organisations through unprecedented challenges, and will continue to be a defining act moving forward.
Of course, stating purpose for the sake of improving performance isn’t the point. Even the strongest purpose statements must be bona fide, authentically reflecting organisational pursuits that walk the talk.
