Purpose must come before formulating a strategy. It seems so obvious today, but it wasn’t always so. Business academics and executives long ago bought into the notion that the purpose of all business is to maximize profits and shareholder value. In fact, most business school courses on strategy hardly mention the word purpose in any other context.
Purpose, mission, and vision are often used interchangeably. However, it is important to maintain a distinction among the three. Purpose refers to the difference you’re trying to make in the world, mission is the core strategy that must be undertaken to fulfill that purpose, and vision is a vivid, imaginative conception or view of how the world will look once your purpose has been largely realized.4
Why Purpose Matters
A higher purpose gives great energy and relevance to a company and its brand. Google’s original purpose was to organize the world’s information and make it easily accessible and useful. As founders Larry Page and Sergey Brin said, “How can that not get you excited?”5 REI’s purpose is to reconnect people with nature. The Container Store helps people get organized so they can be happier.
Consider Southwest Airlines, perhaps the most successful airline in the history of the world. Southwest’s animating purpose from day one was to democratize the skies, that is, to make air travel accessible to the average person. When Southwest came into being in the early 1970s, only 15 percent of Americans had flown on an airplane; today, more than 85 percent have flown, due largely to Southwest’s pioneering efforts to offer low fares, bring air service to smaller markets, and market it in a fun way. Southwest has been consistently profitable since it started operations. It provides a great experience for customers. Team members love working there. The company is founded on having fun and radiating love (its stock symbol is LUV).
Whole Foods Market is passionate about helping people to eat well, improve the quality of their lives, and increase their lifespan. Our purpose is to teach people that what they put into their bodies makes a difference, not only to their health and to that of the people who supply the food, but also to the health of the planet as a whole. From our start in 1978 as Safer Way, Whole Foods Market has promoted organic food and the agricultural systems from which it derives. By helping to develop markets, customers, distribution networks, and even the national standards for labeling for organic foods, Whole Foods has also promoted the environmental benefits that accompany the increasing number of organic farms, dairies, ranches, and sustainable agricultural practices. For example, because organic farms utilize no synthetic fertilizers or pesticides, there is reduced usage of fossil fuels and less chemical contamination entering food chains and water supplies.
Purpose and meaning are now being embraced by large mainstream companies such as Unilever, PepsiCo, Inc., and Procter & Gamble which touch the lives of billions. At PepsiCo, Inc., CEO Indra Nooyi has been emphasizing “Performance with Purpose” by investing heavily in drinks and food products that are healthier for customers. P&G CEO and chairman Robert McDonald is seeking “purpose-inspired growth.” He has articulated the company’s purpose as “touching and improving more lives, in more parts of the world, more completely.”6 Unilever CEO Paul Polman recognizes the importance of connecting the company to a purpose beyond profits and growth. “Having a deeper purpose to what we do as people makes our lives more complete, which is a tremendous force and motivator. What people want in life is to be recognized, to grow and to have made a difference. That difference can come in many forms; by touching someone, by helping others, by creating something that was not there before. To work for an organization where you can leverage this and be seen to be making a difference, that is rewarding.”7
Purpose is something we can never take for granted; the moment we do, it starts to be forgotten and soon disappears. It has to be at the forefront of consciousness (and therefore decision making) literally all the time. When the purpose is clear, leadership teams can make quicker and better decisions. Clarity of purpose also leads to bolder decisions. Rather than adjusting decisions according to the winds of public opinion or changes in the competitive environment, decisions in a purpose-driven company take those things into consideration while also being informed by something more soulful and sturdy. This leads to superior overall performance. Purpose-informed decision making is a critical connection point between clarity of purpose and superior performance, financially and otherwise.8
Losing a Sense of Purpose
Every major profession has a higher purpose as its reason for being. This is true of medicine, which is about healing. It is also true for education, architecture, engineering, and the legal profession. Each is animated by service to a higher purpose, one that is aligned with the needs of society and that gives the profession legitimacy and value in the eyes of others. Each of these professions, of course, is also partly about making a profit and earning a living. However, when any profession becomes primarily about making money, it starts to lose its true identity and its interests start to diverge from what is good for society as a whole. As Einstein said, such a loss of higher purpose is not uncommon today: “Perfection of means and confusion of ends seem to characterize our age.”
Consider two industries that have lately fallen in public regard. The pharmaceutical industry’s drop in public esteem has been precipitous. It used to be a greatly admired industry with a clear sense of higher purpose; companies invested heavily to develop miracle drugs that saved, improved, and extended lives, and developed vaccines to prevent devastating diseases such as polio and cholera. As recently as 1997, 80 percent of Americans had a positive view of the industry; this plummeted to less than 40 percent by 2004.9 The industry has long been extraordinarily profitable, but its relentless obsession with ever higher revenues and profits has obscured its essential purpose of preventing, curing, and containing diseases. The industry’s loss of purpose has coincided with its declining reputation and a major increase in ethical lapses. In recent years, many drug companies have been spending much more on aggressive, often misleading advertising and less on R&D targeted at the serious illnesses that most afflict humankind.
The financial sector too has a clear inherent higher purpose: to provide people with attractive alternatives for saving and growing their money by investing that money in ways that are maximally beneficial to society. Each type of financing alternative has its own role and purpose: venture capital to fund risky early-stage businesses, debt capital to meet working capital needs and to prevent ownership dilution, equity capital to provide long-term financing for growth and expansion, and so on. But in recent years, the financial sector has become increasingly profit obsessed and short-term oriented. Compensation levels have soared to ridiculous heights as financial incentives have fueled the fire toward immediate, profit-only management, diminishing real value creation. Many banks started to trade on their own accounts in order to generate greater profits. This has led them into many well-documented risky ventures, while also compromising their integrity as financial advisers. No wonder the industry’s reputation is in tatters.
By embracing the idea that their primary, even sole purpose is to make money, businesses sacrifice the great power that comes from having a higher purpose. Worthy, transcendent goals elicit greater levels of creativity, collaboration, diligence, loyalty, and passion from all stakeholders.
Happiness Cannot Be Pursued …
The great Austrian psychologist Viktor Frankl gave us a priceless gift of wisdom over sixty years ago, and it remains highly relevant today. As a psychiatrist in pre–World War II Vienna, he spent nearly two decades treating thousands of people who were depressed and prone to suicide. His quest was to go beyond helping people not be depressed and enable them to be truly happy. Eventually, he developed a comprehensive theory of human happiness firmly grounded in his own clinical work. In his classic book Man’s Search for Meaning (cited by the Library of Congress as one of ten most significant books ever written), he wrote that happiness cannot be pursued; it ensues as the result of living a life of meaning and purpose.10
