Reprinted from GreenBuzz, a free weekly newsletter. Subscribe here.
I’ve purposefully avoided writing about "purpose." Frankly, I’ve been on the fence about the word and all the meanings ascribed to it. It feels like yet another meme that companies can embrace and exploit without actually changing much. But the subject keeps coming up, so here goes.
Not that long ago, "purpose" was just another word: "the reason why something is done or used; the aim or intention of something," according to the Britannica Dictionary. While there’s no standard definition for its use in business, it seems to have taken on outsized importance in today’s world. Having a business purpose is fundamental and expected, at least in some circles.
But somewhere along the line, "purpose" became an all-purpose word, especially in the fields of sustainability and corporate responsibility. And, like some other words — see: greenwashing — it can mean just about anything, from the profound to the preposterous. Moreover, it is often used interchangeably with "mission," which is a different thing.
"Purpose-driven" is now used so frequently to self-describe companies that it has become a vacuous phrase.
So, what’s the purpose of purpose? Is it primarily a marketing tactic? When is a purpose statement purposeful, and when is it just another well-intentioned but ultimately empty slogan? How can companies that promote their purpose do so authentically?
'Purpose-driven' is now used so frequently to self-describe companies that it has become a vacuous phrase.
I’m not going to attempt to fully answer all these questions in the next 800 or so words — there are more books, blogs and podcasts on the subject, not to mention conference sessions and speeches, than I care to count. And there is similarly no shortage of articles on purpose-washing, a decidedly awkward neologism applied to companies and campaigns deemed to be inauthentic. Much like its etymological parent, greenwashing, the term is being used, overused and abused by critics to describe nearly any lofty statement a company makes that feels not quite spot-on to someone with a blog or Twitter following.
Google — the algorithmic search engine, not necessarily the company — doesn’t help. If you type in a company name followed by "purpose" — for example, General Motors purpose or Fedex purpose — you’ll often get those companies’ mission statements or corporate goals, not necessarily a statement of purpose. (Indeed, searching for Google purpose statement brings the company’s mission statement to the top of the first page.)
But mission and purpose are different, albeit complementary, things. The former states "What we do" while the latter articulates "Why we do it." Together, they should answer the fundamental question, "Why do we exist?"
That seems relatively straightforward, but of course it’s not. As with other trendy terms — "net zero" and "just transition" come to mind — there’s growing pushback from investors, the media and the political right.
The Wall Street Journal, with its characteristic anti-woke snark, recently asked, "Does Your Mayo Need a Mission Statement?" (It, too, conflated purpose and mission.) The article focused on Unilever’s goal that each of its 400 brands has a social or environmental purpose, and the criticism that policy has been receiving: "Some analysts, investors and former executives say that rather than talking about purpose, Unilever should put greater emphasis on shifting its portfolio toward faster-growing categories and on developing new products."
One noteworthy example: "A company which feels it has to define the purpose of Hellmann’s mayonnaise has in our view clearly lost the plot," wrote one of Unilever’s largest shareholders in a letter to investors late last year. "Unilever seems to be laboring under the weight of a management which is obsessed with publicly displaying sustainability credentials at the expense of focusing on the fundamentals of the business."
Unilever would likely counter that its purpose statement IS fundamental to its business. “Our purpose is to make sustainable living commonplace,” it states. That comports with BlackRock Chair Larry Fink’s assertion that purpose is what a company "does every day to create value for its stakeholders. It’s not the sole pursuit of profits but the animating force for achieving them."
That’s not good enough for some large investors, who don’t seem to see purpose and profits connected. And with the drop in Unilever’s stock and profitability, "purpose" became an easy target.
Which begs the question: Is a company’s purpose legit only when it is profitable? Is purpose a luxury affordable only to the financially successful? Unilever’s stock last peaked in the third quarter of 2019. Was its purpose more valid then than now?
Some of the pushback is part of an old trope — about purpose, corporate social responsibility, sustainability and other things: They are distractions from the business of productivity and profits. It dates at least to economist Milton Friedman’s assertion in 1970 that the social responsibility of business is to increase its profit.
More than 50 years later, that may seem a troglodyte’s view in a rapidly changing world, but that perspective is still rampant — perhaps more than ever in an era when the term "woke capitalism" has become weaponized by the political right and its media allies.
But others see purpose as a key to success. McKinsey, for example, describes the integration of creativity, analytics and purpose as the "growth triple play."
So, how should a company ensure its purpose statement serves a purpose? A few thoughts:
- It begins internally. Purpose needs to be embedded in corporate culture before it is communicated to the outside world. Employees at all levels need to understand it, even if they don’t fully appreciate its value.
- Along those lines, there needs to be high-level buy-in on what a purpose statement is, and isn’t, and how it should be used, and shouldn’t. For example, if it is seen primarily as a marketing vehicle, the odds are that the marketing team will inevitably overuse it, perhaps enthusiastically but naïvely. Each key team — human resources, operations, investor relations, public relations, community relations and all the rest — may need guardrails to ensure the term’s effective and proper use.
- Purpose is most effective when it becomes a management strategy linked to tangible goals. That often requires a change-management exercise to transform how the business operates and how employees are incentivized and rewarded.
- Finally, a company’s purpose statement should mesh nicely with its sustainability goals. That includes ensuring that external stakeholders — NGOs, customers, investors, suppliers and the public — view sustainability nested within a company’s purpose and not something separate.
None of this will shield you from the critics and haters, but it could provide a bulwark against those seeking an easy target. With today’s emphasis on "authenticity" — yet another vague and overused term — it can take extra effort to ensure that you’re walking your talk.
I’ll give the last word to David Packard, the legendary tech pioneer who co-founded Hewlett-Packard. In a 1960 talk to his company’s managers, he offered these thoughts on "purpose," which, more than six decades later, still ring true.
Purpose (which should last at least 100 years) should not be confused with specific goals or business strategies (which should change many times in 100 years). Whereas you might achieve a goal or complete a strategy, you cannot fulfill a purpose; it's like a guiding star on the horizon — forever pursued but never reached. Yet although purpose itself does not change, it does inspire change. The very fact that purpose can never be fully realized means that an organization can never stop stimulating change and progress.
Purpose can be both ephemeral and elusive, but never-changing. That’s tricky, so let’s be careful out there. On purpose.
Thanks for reading. You can find my past articles here. Also, I invite you to follow me on Twitter and LinkedIn, subscribe to my Monday morning newsletter, GreenBuzz, from which this was reprinted, and listen to GreenBiz 350, my weekly podcast, co-hosted with Heather Clancy.