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What’s the point? Has purpose lost its way?

Why rediscovering your purpose matters: insights from Mike Oliver, Head of Strategy.

Purpose Blog (1)

Purpose, purpose, purpose. What’s the bloody point? Aren’t we done with all that? I’ve got one anyway and it doesn’t look out of place in our sector. I haven’t got time to come up with some better words and then distract everyone from their jobs as we try and explain it to them. It’s hard enough getting them to remember the strategy and what they’re supposed to be doing...

 

Now, to be clear, no CEO has actually said all that to us in one breath. But over the last year each of those grumbles have surfaced in our conversations at various volumes.

 

Which has led us to wonder, is the business world suffering from purpose fatigue? Are we rejecting Simon Sinek’s mantra to ‘start with the why’ and opting instead to ‘end with a meh’?

 

If so, we’re all in for a hard time, particularly since the world is looking more than ever to businesses to sort its problems out.

 

How did we get here?

Contrary to popular opinion, the idea that a company should have a purpose didn’t suddenly come along with a great big fanfare around 2013. Despite the noise levels increasing massively of late, the concept has been around for decades (read the seminal 1994 book, ‘Built to Last’ by Jim Collins and Jerry Porras for evidence).

 

But the notion that every company, organisation and brand should have a purpose hit us at the start of the 2010’s, fuelled by the increasingly unignorable sustainability agenda. Before you knew it, around 75% of all companies suddenly existed to ‘make the world a better place’, whether they produced medicines, motors or muffins.

 

But only a few businesses realised that a purpose was only valuable if it talked to what they were passionate about, what they were good at and what mattered to the world. These businesses baked it into their strategy, their communications and their culture. And they used purpose to decide what they were - and weren’t - going to do.

 

But then a whole load of history happened and for many, purpose took a back seat to surviving global instability. Understandable but also unfortunate.

 

So where are we?

Well, having a purpose is now (almost) mandatory. As far as the Financial Reporting Council is concerned, everything a company does should be grounded in its purpose. In 2018, they made it a central requirement of the annual report.

 

Unfortunately, that still doesn’t mean that everyone has got one and many that do still don’t really know what to do with it.

 

But the thought of ‘not having a purpose’ is kind of nuts. Think how desperately sad you’d be if you met someone who didn’t know where they were going, why they did what they did, and what they wanted to contribute. I appreciate that most parents of 15-year old boys know exactly what that feels like, but you get the gist.

 

So why have a ‘Why?’

So for those CEO’s who have found their purpose buried under a pile of other pressing priorities, here are a couple of quick reasons why you might need to bring it back to the top.

 

1.     It’s not just best practice to have one, it’s a requirement.

As previously mentioned, the FRC have made having a meaningful purpose a key Principle in their UK Corporate Governance Code (section 1, Principle B, Jan 2024). As such, the FCA demands that all listed companies need to report meaningfully on purpose to allow shareholders to understand how, for instance, it’s driving your strategy and culture. The Code warns against ‘boiler-plating’ and strongly suggests using pertinent metrics to accurately explain progress against targets.

 

2. You will struggle in the war on talent if you don’t have a good one

As many reports attest, talent today has prioritised working for a company with an inspiring purpose and shared values over some of the more traditional considerations (even salary). Purpose is seen as being crucial to driving culture and, as such, 90% of applicants research a culture before accepting a role*. Moreover, candidates aren’t just looking for a nifty line that helps them tell their friends why their new employer matters, they’re looking for evidence that it’s hard-wired into the company and driving it forward.

Microsoft (‘empower every person and organisation on the planet to achieve more’) and Zoom (‘make video frictionless and secure to connect people seamlessly across distances’) are just two examples of how a strong purpose has helped companies outperform their markets in terms of recruitment.

*(The Role of Workplace Culture In Recruiting Top Talent. Robert Walters)

 

3. Your strategy will lack depth and coherence without one

Great strategies need a North Star to aim for, and great companies refine their strategies periodically to get closer and closer to that goal. Lego’s purpose ‘To inspire and develop the builders of tomorrow’ has been around for aeons in one form or other, and has helped it grow year on year, multiplying its revenues by a factor of 7 in the last 10 years alone. A singular focus on its purpose has driven its insights, its innovations and its ambitions. The same could be said for Google, Tesla, Unilever and many other visionary companies.

 

4. Without one, belief in you will be undermined.

Belief in a business is the product of inspiration and evidence (this maxim is at the heart of our business at RY) and purpose is central to delivering on both sides of the equation. If your purpose is not inspiring, no-one will connect with or remember it. If it doesn’t fulfil our criteria above (passion / competence / relevance) and isn’t ownable, no-one will care about it. And if there is no evidence that it is making a measurable and positive difference to your business and your stakeholders, no-one will believe in it. All of which is problematic as research tells us that businesses have never been more needed to help solve the world’s problems (“Business is now the sole institution seen as competent and ethical” – Edelman Trust Barometer 2023 Global Report).

 

But with a good purpose, properly embraced by your strategy and culture, then customers, employees, partners, investors and communities will lean in. They’ll support and champion you through thick and thin, buy more from you, work better for or with you, invest in you and more.

 

So maybe it’s time to shake off that purpose-fatigue. Once you’ve got one that all your stakeholders can believe in, you can start to enjoy the benefits and find comfort in the fact that you should never need to change it.

 

Which should give you more time to focus on that pesky teenager...

 

Click here to find out more about our paper, The Purpose Gap, our latest thought piece which breaks down how your business can be optimised by your purpose and, naturally, how we can help.