Business man reviewing his business purpose

Rethinking your business purpose in a changing world

January 26, 2022

Rethinking your business purpose in a changing world

Synopsis
3 Minute Read

Rethinking your business purpose is more than a feel-good exercise, it’s a driver for organizational renewal, says MNP’s Mary Larson. Find out more in her insightful article.

Leader, Consulting – Organizational Renewal

Every organization exists for a reason, yet many have real difficulty identifying their statement of business purpose. More than simply describing what you do, a statement of business purpose should tell the world what motivates you to do what you do today, and how that work improves the lives of customers and stakeholders.

Why draft or renew your statement of business purpose?

The reasons to pay attention to your organization’s statement of purpose are as varied as organizations themselves. It might be the way you deliver products and services is changing and your statement of business purpose doesn’t represent your organization now. Or perhaps your stakeholders — employees, customers, shareholders, board members and others — are demanding a refresh, or maybe your team will only continue to work for companies whose purpose they support. Or it might be because your organization never really had an effective statement of business purpose to begin with.

Whatever the reason, the reality is most organizations stand to benefit by revisiting their statement of business purpose and making it more relevant to their mission, goals and operations. A recent McKinsey survey of more than 1,200 managers and front-line employees found that only 42 percent of respondents said their organization’s statement of purpose was having any impact.

What are the challenges?

Businesses often create lofty, optimistic, and aspirational statements designed to inspire an emotional response. Vision is a wonderful thing, but that’s not what business purpose is about. On the other end of the scale, your statement of business purpose might be too matter of fact or simply does not say enough. Stating you build quality cars or develop state-of-the art apps describes your day-to-day activity. A statement of business purpose needs to go much further than that.

Basics of a good purpose statement

A good statement of purpose answers three basic questions, which come down to why, how and what.

  • Why does your organization exist and what value do you bring to customers or society?
  • How is your business carried out? Consider the culture of the organization, the values it stands by, or the ways customers or staff are treated.
  • What does your organization want to be in the future and what are its performance goals?

What does a good statement of business purpose look like?

Succinct and actionable, a statement of business purpose should describe an organization’s unique capabilities to address specific issues and should ensure all team members understand they are moving in the same direction. It should instantly resonate with customers, making them feel good about what the company does. It should inspire employees to bring the purpose to life, doing great work and feeling good about working where they do.

For example, does your company “make dog food” or “develop nutritious foods to promote long and healthy lives for our canine companions?” Does your insurance firm “sell a wide range of policies” or “draw on our extensive data and experience to assist customers to live confidently by helping them manage a broad range of risks at a competitive price?” All those statements are true, but only two of them reveal the company’s purpose.

How and when should a statement of business purpose be developed?

Crafting a statement of business purpose isn’t usually something an organization does in isolation. It’s most effective when undertaken as part of a strategic planning exercise, guided by third-party experts. Along with the senior management team, a consultant can facilitate a thorough review of the capabilities of the business, its strategies, the markets it serves and even the approach taken by competitors. This discussion often provides a perspective on purpose.

An effective purpose statement begins at the CEO or owner level. It can’t be delegated to the marketing department, a PR agency or internal staff members. Those stakeholders each have their own talents and capabilities, but they are not responsible for setting the direction of the organization. The statement of business purpose must be consistent with the mandate of the leader.

How can leaders put the statement into action?

A statement of business purpose should act as a set of guide rails, ensuring the organization’s actions remain consistent with its purpose. Stakeholders today hold businesses to high standards. When a business fails to achieve its own stated purpose, it will be held to account. Company boards can play a significant role here, ensuring that purpose statements are well-defined, integrated into strategy development and execution, and overseen and tracked by the CEO.

If your business is changing and evolving, consulting with an expert as part of a strategic plan review can help ensure your statement of business purpose remains fresh, consistent and integrated into everything your organization does. After all, business purpose is not just a matter of saying the right things—it’s about doing them, too.

For more insights into business purpose, read Mary Larson’s latest MNP whitepaper, The Board Imperative: Purpose-Driven Leadership.

Contact us

Contact Mary Larson, National Leader, Organizational Renewal Practice, at [email protected].

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