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How Purpose Lost its Purpose

How Purpose Lost its Purpose

It’s unclear when the idea of a corporate purpose beyond the maximisation of shareholder value first appeared, but over the last ten years we have seen purpose evolve from a potentially transformational pursuit to another piece of marketing jargon. As ever, in the rush to board the bandwagon, many businesses have failed to understand the true meaning behind the slogan and now risk undermining the nobler principles that purpose should embody.

Traditionally, a purpose-led business was considered to be one that understood the implicit contract it had with all its key stakeholders, be they employees, investors, customers, regulators or the local community to which it belonged. As the world was recovering from the financial crisis in 2008, the pursuit of purpose and “business for good” was bolstered by a flurry of studies and books advocating its adoption.

A number of companies were successful in connecting to their own authentic purpose and were able to reflect this “truth” in every aspect of their business. Patagonia became the “B” Corp poster child and Unilever set out its stall as the leader in sustainability practices across its entire value chain. Research by Harvard Business School Professors John Kotter and James Heskett showed that “purposeful” or values-driven companies outperformed their peers in stock price by a factor of twelve.

However, lately we have witnessed the gradual devaluation of purpose to the point of abuse. This typically happens when purpose is leveraged solely for marketing purposes, with no real substance behind the message. Only today I received another email inviting me to a conference “to meet with other business professionals to identify your brand’s purpose and how to leverage it to your company’s advantage”.

This kind of purpose strikes me as simply meaningless marketing jargon and in today’s world, obsessed as it is with transparency and policed by a highly cynical media, this approach does more damage than good.

Purpose is more than a set of aims with an end date, and it needs redefining. In essence, purpose gets to the heart of that most fundamental of questions: why do we exist? Somewhere along the line the purpose of purpose has been confused. In my view, there are three principal misconceptions that we need to address to restore meaning to purpose.

  1. More than words. Purpose is often solely communicated alongside a company’s mission or vision statement, but it should also be found in the day-to-day interactions between a business and its stakeholders. To be genuine, purpose must be rooted in the reality of what the organisation can deliver, not simply in hyperbolic, platitudinous or simplistic messages which promise to “unlock potential”, “unite the world” or “create a healthy planet” but which fail to provide real direction.
  2. It’s about Connection. Purpose needs to be the point of connection between the company and its stakeholders, it indicates where and how value is created. Purpose answers the organisational question of “why do we do what we do?” And acts as an accountability measure to those that live by that purpose, a yardstick against which a company should measure itself.
  3. Purpose-washing. The Nation, a US weekly magazine, labelled the new wave of purpose statements as “empty promises and self-serving slogans”. Alan Jope, CEO of Unilever wrote earlier this year that “green washing, purpose washing, cause washing and woke washing were beginning to infect our industry”. That kind of self-serving activity removes any possible trust between a business and its stakeholders.

Purpose should be the unifying prism through which a company evaluates all its actions. A company’s purpose should be unique and has to come from the internal truth that resides in the core of the business which is then manifested throughout the company’s values and imbued in its daily interactions.

So my one small piece of advice to business leaders who are committed to embedding purpose in their company – for the sake of themselves and the wider purpose movement – show don’t tell and be authentic about your purpose.


Alberto López Valenzuela, founder & CEO at alva

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