What is the purpose of purpose?

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A statement of business purpose answers the question:

why does this business exist?” 

and does so in terms of the better world that arises from the success of the business.

In Blueprint’s view, there are two fundamental reasons – or purposes – for setting out a purpose beyond profit:

  1. It focuses on how the business can best contribute to solving the problems and meeting the needs of people and society. A good purpose sets a long-term goal and aspiration, grounded on the distinct capabilities and resources of the business, and how it could benefit society for the long term.
  2. A worthwhile purpose ‘switches on’ the latent intrinsic motivation of people to commit to a shared endeavour beyond making money. It appeals to the human search for meaning and to contribute to something beyond the self. In practice of course it takes much more than just a good purpose statement to do this, and there needs to be a bridge between the purpose and the role that people perform in practice so they can feel that what they do contributes to the overall purpose of the business. When it is brought to life a good purpose informs how the people in the business behave, both directly through its operations and indirectly within society. Because any business depends on a series of relationships that spans people across multiple organisations, the purpose can be a unifying narrative that focuses on the end benefit provided to society. As such, it contributes to a culture of collaboration through relationships within and across businesses in pursuit of the common good.

This means an explicit recognition of the need for companies to create products or services that transform customers’ lives for the better, to provide employees with a healthy and enriching workplace and to preserve the environment for future generations. It means acknowledging the responsibilities business has within society and a recognition that the entire investment chain has a role in enabling a longer-term perspective to be taken with key stakeholders treated fairly in decision making.

The benefits of such a purpose include the unleashing of human creativity and innovation to contribute to human betterment. It also provides a language to discuss difficult trade-offs for all those operating right across the value-chain: from investors all the way through to company supply chains. This is achieved not through merely adhering to rules and contracts but rather through relationships that inspire the human desire to move beyond self-interest to the creation of something better for mutual benefit. It also makes clear that a fundamental shift is underway, moving away from seeing business as existing to maximise short-term returns to shareholders. Business exists to pursue a purpose that benefits society and, by doing that well, it creates sustainable long-term value, with profit and returns to investors being a vital and necessary outcome.

The consequences of this shift are fundamental and will lead to changes in the ecosystem within which business operates and to how businesses are structured, run and measured. It will also result in a shift in thinking. In being guided by purpose, companies will be required to think through the balance between short-term financial returns, longer-term value creation and the social and environmental impact of the business.

Leaders and managers will put the purpose first and will seek to attract investors who are equally committed to pursuing it to achieve long-term, sustainable value. Investors and Boards will recognise that making competitive returns for shareholders is essential to a company’s success – but they are not its purpose.

Over time, intrinsic purpose will also be a catalyst for new business models, modes of collaboration and increased innovation, drawing on human motivation and creativity.

For a more detailed exploration of intrinsic motivation and business as a series of relationships see: Understanding the Blueprint Principles