Purpose is what guides the company, or its reason for being. It tends to be perennial, to last, like our DNA. Ask first if the purpose of your company is clear, if it is properly conveyed and publicized. This is valid not only for your internal stakeholders (the people who are part of the structure, from high leadership all the way to those who are directly responsible for the production of goods or delivery of services – i.e. those working in the strategic, tactical and operational roles), but also of your external ones (every public that is materially connected and/or impacted by the activities of the company – such as vendors, stockholders and governments, to name just a few).
A wide publicization and internalization of the purpose by these groups make the entire ecosystem to act based on shared principles, principles directed towards the same goal, making results and growth, therefore, easier to achieve. And this is not a new discovery.
In the article Strategic Intent, published by Harvard Business Review in 1989, Gary Hamel and C.K. Prahalad had already approached this subject, associating strategic purpose and its unfolding as vision, mission, objectives and goals, something that should, consequently, allow for the achievement of results. And what about growth?
A study carried out by Malnight, Buche and Dhanaraj, published by the same periodical in 2019, reached the following conclusion: the 28 companies that were analyzed, all with high growth rates (over 30% in the five years prior), had purpose as the center – and not as a complement – of their strategies.
The effect of this was twofold: (i) it helped these companies to redefine their scope of action, better adapting to quickly changing environment, in which interests and relationships with stakeholders created a multiplicity of opportunities and (ii) it allowed them to broaden their mission, creating and holistic value proposal to their customers, which in turn increased the length of their mutual relationships. One very clear conclusion of such effects is that the stronger bond with customers and stakeholders that come from having a clear purpose, generates long-lasting positive impacts for the corporation.
Nowadays the discussion about purpose is becoming broader. All agents involved in this process think not only about their specific interests when starting a relationship with a company, but they also consider the interests of society as a whole – which encompasses economic development, preservation and efficient use of natural resources and social responsibility. Issues that are currently viewed in tandem with corporate governance, like the ESG (environmental, social and governance) agenda. This concern is becoming more palpable, and can be exemplified by a recent international study, carried out during the Covid-19 pandemic, which points out that companies that put profits before people would forever lose the trust (and, therefore, the relationship) of 71% of the customers that were interviewed.
A purpose that includes the interests of society – whose generational transition leads to ever more conscious and demanding consumers – generates lasting relationships and, thus, the possibility to turn the business into an enduring undertaking.
And your company, is it already aligned?
