“Why does your business exist beyond making money?”
The question most consultants will ask to define purpose
What is the realistic outcome of purpose, and does every business really need it?
Whenever something is hyped with great intensity, it's important to check expectations. Purpose or your “why” seems like a mandatory exercise for businesses these days, but is it really?
In this article, I want to help you clarify if you need purpose. We’ll look at the hype, how purpose works, and we’ll check out the reasons why purpose is something you might not need after all.
First, let's look at why it works:
In this article:
1: Purpose works, and the future is purpose-driven
“Society is demanding that companies… serve a social purpose.
To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.
Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.”
Larry Fink CEO Blackrock Inc.
When even Larry Fink the CEO of Blackrock, the world's largest investment banking firm, focuses his 2018 Letter to the CEO’s talking about the importance of purpose, it is clear purpose is a trend beyond naive idealism.
Like Fink describes, the world, customers demand purpose, demand the contribution of businesses to society.
And increasingly so, Millennials, and Gen Z are more passionate about social and environmental issues than the generations before. They grew up in an age of abundance, allowing them to be pickier customers than prior generations. The prosperity they became used to enabled them to envision and strive for higher ideals.
In the next 10 - 20 years, when most gen X and boomers retire, gen Y and Z will become the dominant buyers in the marketplace. So, it makes sense to invest in having an authentic business purpose, especially for Startups.
And there are several statistics to back it up:
So how do you integrate purpose into your business? And what do you have to do to become a highly ranked purpose-driven business?
2: Riding purposeful trends
Let's look at how the now well-established German brand true fruits used purposeful trends to become the market leader in an overly saturated market.
Arguably the strongest trends in the food industry right now are sustainability, organic food, vegan food and eco-friendly packaging.
From their start in 2006, they made a strong statement with their packaging: True fruits uses distinct glass bottles that transparently visualized the amounts and ingredients in the smoothie. What you see is what you get. “True fruits - no tricks” is one of their values. They stand for honest and healthy products presented in a sexy way.
True fruits visualizes the ingredients and their amounts on each bottle.
They further emphasized the transparency of their brand by using their campaigns to comment on topics like racism, gender inequality, and on the environmental impact of plastic.
Translation: “Say yes to plastic! Glass can break.
Plastic stays in the ocean forever! ”
With an ironic twist, they're saying, yes plastic will not break like our sustainable glass bottles, but that's exactly the problem. Plastic trash won't go away.
Translation: “Glass clear decision.”
These ads were placed next to each other.
Purpose works and is powerful when it is used as a way to harness trends and develop radical differentiation for your brand.
True fruits have done a particularly masterful execution of harnessing purposeful trends. Since sincerity and transparency are their focus, they can play controversial and contemporary trends like a harp, always using their packaging as a way to comment on current topics.
Here is another recent example: During the last German federal election in 2021 they put each political party's program on the back of their bottles. This way, testing how well people actually knew what each party stood for.
Purpose is an overall societal phenomenon, and this leads to several trends in different industries.
But does every business, does your business, really need a purpose or need to use purposeful trends? Do you need to be that political or activist?
3: Why you could ignore purpose
“We're awash in books about purpose, positioning statements about purpose, and even marketing-type firms that help their clients find their purpose. There's something about it that rings hollow to me. “
David C. Baker
So let's look at the other side. What is your business purpose if you're mowing lawns? Or selling sprinkler systems?
Some vocations may lend themselves to a more heroic calling than others, you might say.
Is real purpose not just about having the right intent that strongly aligns with the needs of your customers?
“Do what you said you would do, for the price you said you would do it for, within the timeframe you agreed.”
Does your purpose have to be heroic? Or infused with any other kind of idealism? Should you parade purpose simply because it works for some at the moment?
This brings us to one of the core misunderstandings about purpose:
4: You don't need to be nice to use purpose
Amazons purpose statement reads:
“to be Earth’s most customer-centric company”
Purpose is often mistaken for being about showing you are good or have a wonderful culture at your company. Purpose, however, is really something that is quite functional and doesn't have to have anything to do with saving the world or having a table soccer table at your office.
Purpose is neither bad nor good. Purpose helps your business to excel and be clear about what you are about.
5: To have purpose or to have not
Purpose is essential because it defines how your business functions at the core. Do you need to communicate it to customers directly?
In most cases, probably not.
But if you asked most people: "is Amazon the world's most customer-centric company?" I believe most people would agree.
We know what Amazon stands for. Part of why we know, is because they have a very powerful purpose that they are extremely dedicated to.
If you believe in making an impact with your business regarding a certain cause, you should definitely have purpose.
If you are selling sprinkler systems, and you do what you said for the price you said you would in the time frame agreed. Then that integrity as value may be enough to sustain your business in certain industries.
Something no business will be able to avoid in the future are the great purposeful trends of our century. The environmental, racial, gender, related trends among others will need to be navigated in some way.
One of the most effective ways of incorporating trends into your business is defining a purpose and aligning with purposeful topics.