Corporate purpose is an important business topic - but one that is widely misunderstood. We unpack the different ways in which corporate purpose can be defined and recommend the steps for companies to follow in order to define a purpose that is authentic for them and that leads to meaningful behavior change

1. WHAT’S THE PURPOSE OF YOUR PURPOSE?
Harvard Business Review - March/April 2022
Key Ideas
Jonathan Knowles
16 February 2022
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2. T2 Perspective on Purpose
• The topic of corporate purpose provokes heated debate
• Many claims that “purpose-driven” companies outperform in the market
• Yet evidence that corporate valuation is only influenced by commercially material factors
• The conflation of “purpose” with “higher purpose/social good” is the root cause
• Purpose can be used in three primary senses:
• Function – as in “the purpose of a can opener is to open cans”
• Intentionality – as in “to act with purpose”
• Calling – as in “higher purpose”
• In speaking about things, we mean purpose to refer to function (”purpose-built”)
• In speaking about people, we use purpose to mean calling (“purpose-led”) and
use “purposeful” when referring to the capacity to focus on other goals
• When we speak about corporate purpose, it is not clear which of these three
senses we mean – and all three are relevant!
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3. Three / Four / Five
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3
Senses of the
word
4
Business
agendas
5
Steps to define
your purpose

4. Three Senses
3
COMPETENCE
The function
that our
product serves
CULTURE
The intent with
which we run
our business
CAUSE
The social good
to which we
aspire

5. Four Business Agendas
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GOVERNANCE & SUSTAINABILITY
How can purpose reinforce our
reputation as a good corporate citizen
and a strong ESG performer?
EMPLOYEE ENGAGEMENT
How can purpose strengthen the
connection that employees feel to the
work and to one another?
DEMAND GENERATION
How can purpose increase
consumers’ preference for our
products and services?
STRATEGY & BUSINESS VALUATION
How can purpose enhance our
opportunities for profitable growth
and reduce business risk?

6. Five Steps to Define Your Corporate Purpose
1. Assemble the internal constituencies that have a vested interest in the purpose
discussion
2. Explore the three ways in which purpose can be defined and how each
definition might apply to each of the four business agendas
3. Link the purpose discussion to business strategy to identify which approach to
purpose would be most impactful for the business
4. Transcend siloed thinking (a purely extractive approach to purpose) to develop
something motivating and authentic
5. Embed purpose in behavior – the acid test of purpose is whether it changes
how the business actually behaves
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7. T2 Conclusions on Purpose
• The conflation of “purpose” and “your why” with “social cause” is the root cause
of much of unproductive arguments about corporate purpose
• There are examples of companies defining purpose in each of the three senses:
• Competence – “First move the world” (Mercedes)
• Culture – “To live and deliver WOW!” (Zappo’s)
• Cause – “In business to save our home planet” (Patagonia)
• Corporations are commercial constructs whose purpose is to ensure their own
commercial viability by brokering between the interests of their stakeholders
• If it is authentic for a company to define its objectives in terms of a social cause,
and if this results in increased preference by customers and employees, then this
can be a wildly successful strategy
• For most companies, we recommend “purposeful not purpose” as the focus
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