If you ask business leaders how they think they can improve their position in the market, you will hear the same answers. Improving the quality of the product, reducing costs and optimizing processes are what typically comes to mind.
As every industry becomes more competitive, there is a greater need to find an edge that can truly distinguish you. Improving core aspects such as product and efficiency are important, but this is common knowledge. And if every company is doing it, there isn’t much of an edge to be gained.
But there are hidden ways to develop an unfair advantage. A heroic founder or groundbreaking discovery are two examples, but these are rarities and can’t be applied everywhere. What can be however, is how you define, articulate and execute your company’s purpose.
In the first part, we explored how purpose is a historic theme that is one of the most discussed questions in life. We spoke about how there have been multiple explanations about purpose in the general sense. Religious, scientific and humanistic explanations have all been explored to answer this question. We also spoke about why purpose matters in the world, and how it’s something rooted deeply in our psyche.
Business and work are two of the main drivers of our species. It is natural then that purpose flows into the aspect of our lives which consume more than a third of our time. As a result, an entire field of study in regards to organizational purpose has been created.
Organizational purpose is the idea that your organization exists beyond the objective of simple profit. Although profit is the first cause of a business, it is similar to the survival instinct. That is, our purpose as humans at its most base level is to survive, but we can’t create much meaning from that. In the same manner, organizational purpose is about transcending beyond the basic economic imperative and creating meaning, fulfillment and impact from it’s existence.
Another way to view it is that your organization exists as part of something larger, and plays an important role in the world. There is a greater meaning for your existence. You are not simply just a company that manufactures tires. You are a company that grants people the gift of mobility and freedom. You don’t simply cook fast food. You help busy people free up time, allowing them to spend more of it with their loved ones, creating a more loving world.
Your organization’s purpose goes beyond the what, where and how’s of your operations. It focuses more on the why. Why do you do what you do? Why is it important? If your company didn’t exist today, how would the world be worse off?
Having a strong purpose isn’t simply a trend invented by management consultants. There are clear benefits that companies can reap by developing an authentic purpose. These include attracting and retaining the best people, maximising employee innovation, creating customer evangelists and surviving economic downturns.
In an age of more conscious and informed workers, clearly defining, articulating and living your company’s purpose is essential. We are past the era of worker’s simply being drones in an assembly line. Now, workers are asking for autonomy and taking pride in their work – increasingly wanting to see what they do as important and impactful.
In the past, carrot and stick methods of motivation were enough to keep employees in line. Do x task and receive y reward. Typically, this reward would be in the form of a monetary bonus. But this type of extrinsic motivation doesn’t work so well on cognitive workers, who rely much more on intrinsic motivation. To retain and get the best of your people, they need to find meaning and fulfillment in their work. They need to have a sense of intrinsic motivation.
A company with purpose will be able to unlock this intrinsic motivation in their people, leading to a happier and more engaged workforce. Your employees will talk and people will learn about what it is like to work at your company. Potential future hires will see your purpose shine through existing employees and will be more engaged with your brand.
In particular with the millennial generation, we are on the verge of a cultural shift. In the past, the best and brightest would run to careers in banking and finance, as that was where the money was. Now, the best are looking for ways they can make the most of their talent. They want a channel to have an impact on the world, be that through starting their own companies or working at companies that reflect their values. Sustainability, a greater good, and a culture that allows individual purpose to thrive are becoming prerequisites for future professionals.
Innovation can’t be narrowed down to an exact formula. Instead, there are certain ingredients that come together to create an environment where innovation can take place. Essentially, corporate innovation involves getting the best from your people. It is your team, from the customer service rep to the CTO who collectively play a part in building the right products. To get the best ideas out of your people, they need to feel part of a stronger purpose.
When your team has both individual and collective purpose, they are more engaged with the work they do. They are paying attention to the details which allows them to better notice hidden opportunities. As they care about the work they are doing and the company, they are more likely to come up with solutions to problems they encounter. This is due to the fact that a large part of what informs innovation is curiosity. Having engaged employees consciously reflect and question their work leads to greater creativity.
Like your vision, your purpose acts as a destination for your employees to work towards. There is a journey that you are collectively undertaking, with various obstacles in the way. Having this reason for existence allows employees to channel their focus and creative energy towards this mission. This in turn allows them to think beyond the simple ‘how’ and ‘what’ that your company does, and instead gives them the room to contribute different ideas that reflect the overall purpose.
If you are someone who only values the bottom line, there is still a compelling case to be made about purpose. In many ways, a strong purpose acts as a wind to your sails – amplifying the speed of your ship. It isn’t a tangible quality, but it indirectly enhances all aspects of your business. This then leads to increased sales.
The first department you will notice this in is with your sales teams. Sales is an unforgiving profession. The role involves grunt work, countless rejections, the unpredictable role of luck and the ability to remain calm under pressure. Many sales professionals are in it for the money, but the people that sell best are usually those who are passionate about their product.
Passion is tied closely to purpose. By seeing the meaning in the product they are pitching, sales reps become more energized and are able to more confidently sell and position the product in the market. Sales then evolves from the goal oriented transaction model, into a more consultative solution model. It becomes more about maximising customer happiness which leads to further sales.
Through purpose, your workforce as a whole should become more aligned. Efficiency, innovation, and energy will be on the rise as your organization is greased with this new fuel. It’s not just the sales team that contribute to the bottom line – it’s every single person in your business. The product and engineering teams will want to create the best offering in your market. Your marketing and design teams will want to tell your story in the most captivating way. Your customer service reps will fight for the maximum happiness of your customer. All these functions performing at their best will lead to a stronger market position.
In some cases, a strong purpose can create evangelist movements and communities built around your product. Some people even design their entire identities around products and brands with a strong, resonating purpose. Take for instance the effect that Apple has on it’s evangelists. The ‘idea’ and purpose of Apple is to represent those who think differently and people wear this badge with pride. The core adherents of Apple products serve as a marketing and PR department in itself, promoting and defending the products in society.
Aside from acting as a catalyst for good, purpose can also act as a shield against adversity. When a company without a strong purpose is going through tough times, there is very little to keep everything together. And it is in these cases where a surge of energy or new solutions could be the difference between the company going bankrupt or thriving.
Our economic system goes through boom and bust cycles, and it is hard to predict when the next economic downturn could appear. In these periods, investors and businesses become much more cautious with investment, leading to spiral of economic contractions.
What type of businesses survive in this environment? Typically, it’s those with healthy fundamentals, but every business will take a hit. What happens when you have to lay off people and maintain company morale? What will you do when you lose a major client? On both the personal and organizational level, it’s only a strong reason for existence that can help you best navigate these setbacks.
Google wants to enter your market, what do you do? Particularly in tech, larger more robust companies move into spaces occupied by smaller upstarts. Your team, and even yourself begin to wonder how you will be able to compete. This is when your true purpose is exposed. When someone with more money, talent and brand capital wants to do what you do, how do you compete? To galvanize your people and customers, you need a story that transcends simple market competition.
In the current day, there is a huge opportunity for leaders to create purpose filled organizations. In the past, you could only gain an edge in business through strong capital or business connections. Nowadays, it is much more about who you are as a leader, and how you empower people with meaning, fulfillment and ideas.
Purpose is the starting point. We can all seek to improve our company culture, innovate more and come up with better marketing slogans. But none of these efforts will be as effective without a strong reason for being. It is a simple concept that can amplify your business outcomes many fold. But that doesn’t mean that it is easy. Your purpose must be authentic and actually resonate with your people.
In the next parts, we will explore the challenges involved with finding and implementing purpose, and how best to overcome them.
Stefan Beiten is a lawyer, international entrepreneur and investor from Berlin. With more than 20 years of experience, Stefan is an expert in building, scaling and managing successful businesses.