In response to the accelerated social change and greater consciousness around issues of equality and social justice over the last few years, major corporations have started focusing on ESG and ‘purpose.’ Their leaders have realized that they need to communicate not only their ‘what’ but also their ‘why’ if they want to connect with the internal and external stakeholders who are essential to their success.
Non-profit organizations are known for being mission-driven, and their leaders may wonder why they should have a stated purpose when they already have a mission statement.
According to Harvard Business School’s Ranjay Gulati, an author and expert on leadership, strategy, and organizational practices, having a stated purpose and embedding it into an organization’s way of working supports its ability to succeed.
In a recorded conversation, Mr. Gulati was interviewed by Robert E. Quinn, a faculty member of the University of Michigan Ross Business School and a co-founder of the Center for Positive Organizations, he rejected the idea that shareholder value is somehow contrary to or threatened by social purpose.
In the conversation, and in his book “Deep Purpose,” which offers a reassessment of purpose as a management ethos, Mr. Gulati outlined four positive impacts related to having a stated purpose and incorporating it operationally:
Directional: Purpose provides a directional system for management and creates an organizing schema–it’s the ‘how’ of ‘what’ you do, and provides guidance on what an organization will and will not do. This clarity supports decision-making at all levels of the organization and is valued by employees.
Motivational: CEOs want employees that are engaged and inspired, and employees want to feel connected to a larger agenda. So leaders must energize employees around a larger sense of meaning and create a “common organizational ambition.” Expressing culture and purpose provides a framework that employees can buy into.
Reputational: Externally, a stated purpose that informs how an organization operates helps it differentiate itself from the crowd and connect with consumers and constituents. It clarifies who the organization is and what sets it apart from its competitors.
Relational: Organizations that identify and name their purpose can more easily form mutually beneficial collaborations and partnerships because fundamental points of alignment are easy to define. Having affinities in common signals a trustworthiness that saves time and resources in negotiating relationships, while reducing risk and streamlining the process of deciding whether to collaborate and how.
These aspects are worth considering for organizations of any kind and size, especially during times of social change and shifting expectations. Clarifying and articulating a purpose is a management strategy that can help support decision-making, build loyalty from both internal and external groups, and create pathways to innovation.
Purpose is never at the expense of performance.
