The concept or ‘purpose’ is ambivalent and poorly defined. In the past twenty years alone, 107 different definitions of purpose have been published in scientific publications. New academic research by strategist Esther Overmars, published by the Dutch research foundation SWOCC, brings much needed realism to the purpose debate. Ultimately, purpose is not about doing less harm to the world. It is a long-term strategy about actively wanting to improve the world.
“Companies are not on earth to do good,” was the bold statement made by McKinsey partner and theologian Carsten Lotz in FD (The Financial Daily Newspaper in the Netherlands) at the end of 2022. His argument is that too often, purpose turns out to be nothing more than a statement, a vague set of values, or even worse: a toy of the marketing or branding department.
Marketers have indeed been too focused on the growth that purpose would bring. Mark Ritson rightly notes (Marketing Week, 2022) that the intention should be to pursue your purpose as a company, even if you have to make sacrifices (at least in the short term) when he states: “The purpose of purpose is purpose”. Despite all the great campaigns and promises, in practice companies mainly do what they have always done: maximizing financial results for the benefit of the shareholders. No wonder there’s purpose fatigue in our industry.
Exploiting sensitive topics for personal gain instead of actually contributing to meaningful change is labeled as 'purpose washing'. It is precisely what purpose is not about. Purpose is not a marketing tool, but the driving force behind a company as a whole that should be aimed at truly improving the world. And there is a crying need for this, because today the evidence that major reforms are required is irrefutable.
Maturity
Purpose deserves the status of maturity, but is in danger of ending up proclaimed ‘dead’ due to the opportunism with which it has been used. The concept is ambivalent and poorly defined. In practice, we see a lot of differences in how companies interpret purpose. It’s being mixed up with other concepts like mission, vision or sustainability. There is also no consensus in the academic world about what purpose is. Over time it has been conceptualized in different ways, depending on the discipline and on the dominant view in economics at the time.
Together with researcher Amber Kouwen, I did a systematic literature review to learn about the origins and meaning of this much debated concept. We found out that in the past twenty years alone, 107 different definitions of purpose have been published in scientific publications. They come from different research areas such as management and economic studies, marketing and psychology. Three-quarters of these 107 definitions were published over the past five years, showing that despite the controversy, purpose is a very hot topic.
We conclude after careful examination of these definitions, that purpose has three fundamental characteristics that are relevant today:
(1) The reason for existence: why are you here?
(2) A goal beyond profit maximization: what is your higher aspiration?
(3) The prosocial contribution: what is the contribution you strive for to the welfare of society and the planet?
A conclusive definition of purpose emerges when we put these three characteristics together: “Purpose is the company’s raison d’être and includes a concrete goal in addition to or beyond profit maximization, which relates to the company’s prosocial contribution to people, society and/or the environment.”
Purpose orientation
Opposed to ESG, CSR or sustainability, purpose is not about doing less harm to the world. It is about actively wanting to improve the world. In a purpose-driven company, economic and social value ideally go hand-in-hand. That poses a prioritization problem of the highest order for the leadership. The idealism that has emerged around purpose is that it is compatible with profit maximization. This turns out to be quite difficult in practice. As soon as the revenue model or commercial results are under pressure, it only becomes clear what the true intention and dedication to the purpose are.
B-corps and social enterprises that were founded on a social mission, live and breathe their purpose. But the reality is that many companies that define a purpose are somewhere in the middle of a messy transformation. Purpose is therefore not a matter of 'having' or 'not having’. It is a journey with trial and error. Companies that want to develop and pursue a purpose are constantly confronted with the challenge of actually striving towards realizing that purpose.
The result is that there are major differences in the extent to which companies are purpose-oriented. For example, there is still a great dependence on products (or brands) that directly contradict the purpose. After all, a past also has to be broken down. The degree of orientation on purpose is therefore mainly about the question of how fast you are prepared to go. Do you follow, or do you lead?
How can companies become more purpose-driven?
Little research has been done into what helps or hinders a company from cultivating a strong orientation towards purpose. What we conclude from literature and qualitative research is that it is a long-term strategy. Developing a culture, products and initiatives that support the purpose takes time, money and attention. The motto is to stick to the principle of the purpose and continuously express it through the organizational brand or brand portfolio as the most important driving force behind the company.
Based on our research we’ve identified seven building blocks of purpose orientation and visualized them in the Purpose Orientation Wheel. Each building block in turn consists of several underlying elements (not pictured). They mutually influence each other and work as a holistic whole. This gives us insight into the anatomy of purpose orientation. And it provides a constant touchstone for companies that want to become more purpose-driven.
Purpose versus Brand positioning
The primary role of the purpose is to provide direction and inspire, not to differentiate the company. That’s why a purpose doesn’t have to be unique. A company expresses its purpose through the (organization) brand. The brand colors how the company puts its purpose into practice. Therefore the (organization) brand is visualized in the outer ring around the building blocks. A company might position the (organization) brand as explicitly purpose-driven. But it doesn’t necessarily have to. A multi-brand company ideally uses its brands to help realize its purpose (the product brands belong in wheel element 6). But these brands do not have to have a purpose themselves but their brand essence should, to the least extent, not be conflicting with the organizational purpose.
Purpose as the driving force for change
By properly understanding, sincerely applying and strategically anchoring purpose throughout the entire company, purpose can be the driving force behind much-needed social change.
Read the full research here: https://www.swocc.nl/publicatie/purpose-orientatie/
The book 'Purpose Orientation; why and how companies change the world' was published (in Dutch) by Scientific Research Foundation for Commercial Communication (SWOCC) in the Netherlands, January 2024. The research was supervised by Dr. Lotte Willemsen and Prof. Edith Smit and co-authored by Amber Kouwen.
References
Overmars, E. & Kouwen, A. (2024). Purpose oriëntatie; waarom en hoe bedrijven de wereld verbeteren. SWOCC-publicatie 89. Amsterdam: Stichting Wetenschappelijk Onderzoek Commerciële Communicatie
