Since the days of Simon Sinek’s iconic TED Talk, purpose has become a staple of business literature and social media for marketers. Back then, the power of purpose was more of a theory than a proven principle, but over the last several years, more and more evidence is pointing toward purpose’s impact on organizations. A study by EY published in the Harvard Business Review showed that companies who prioritized purpose in their organizations saw faster revenue growth than those that were either developing or lagging in purpose.
Intuitively this makes sense. When businesses have a clearly stated purpose, customers have a foundation on which to build a relationship. As Simon Sinek says, “People don’t buy what you do, they buy why you do it.”
It’s not just revenue that gets a bump when you have a clear purpose. There is a significant uptick in productivity. A Bain and Company study showed that an employee who is truly inspired by an organization’s purpose is 125% more productive than the average “satisfied” employee. Purpose has the ability to rally a team around a cause, and get them to buy into something more than a paycheck. Being part of something bigger than themselves.
Purpose also has a dramatic impact on employee loyalty. When employees feel connected to the organizations purpose, they are twice as likely to stay there. For millenials, it’s a whopping 5 times more likely!
So why do so many companies not have a clear purpose? For starters, purpose is hard. A meaningful purpose is something that’s authentic to the company. It’s not a blandly recited platitude about outperforming others or offering the best (insert product here) available. A clear purpose is something that the organization takes seriously, involving senior management members from every department. And more importantly, purpose focuses not on outcomes, or products, or industry. Purpose is your statement of why you exist and why anyone cares. That means it deals with intangibles, and (dare I say it?) EMOTIONS. Successful purposes are built around emotions delivered for customers and the world. It’s very pie-in-the-sky stuff, and a lot of people run for the hills when “touchy-feely” stuff like purpose come into play. They think that the big, bad world of business has no room for soft ideas like purpose. And it’s hard for organizations to know where to start and how to approach purpose.
So it takes a real commitment, starting at the top, to develop a purpose that people take seriously, and are invested in. We’ve talked in the past about our version of the purpose statement – the brand principle statement. It’s short and sweet – 7 to 10 words – and it doesn’t reference products, services, categories, features or services. It simply points out the big idea that unites and energizes a business. Fedex is in the business of shipping, but its purpose is “Connecting people and possibilities around the world.” Mercedes Benz “epitomizes a lifetime of achievement.” These statements provide focus and context within which a company operates. It gives customers something to align with as they consider purchases. When people know what you stand for, they can feel better about supporting your business. And as we mentioned above, employees are motivated by having a purpose.
Where the value of purpose really shines, however, is in times of crisis. The global coronavirus pandemic has forced many businesses to ask difficult questions about their day-to-day activities. Should workers telecommute? Should they be offered unlimited sick pay? Should they be tested for the virus? Should business shut down entirely? In difficult times, having a well-defined purpose offers a prism through which leaders can view the difficult decisions they make. If your business’ purpose is to connect people, then finding some way of operating that enables people to connect during the crisis would seem imperative. On the other hand, if your business’ purpose is to help people prioritize their time, then your shutting down operations makes a statement that says health and family come first in a time like this. Of course it’s not a panacea, but it provides a north star that can guide the organization in tough times.
On that note, we hope that all of you are taking steps to insure your health and safety, and that of your families, friends and co-workers. Remember that the choices you make to stop the spread of coronavirus, including keeping social distance, avoiding crowds, and working from home, are not just for your own benefit. Doing your part to slow the virus is helping the most vulnerable people in our society avoid serious illness and even death. Short term sacrifices that limit activities now will have big long-term rewards for our society as a whole. Stay safe and healthy everyone!