Organizations in all sectors are increasingly required by their investors, customers, employees, and wider stakeholders to articulate a clear statement of corporate purpose. Purpose isn’t about profit maximization; it’s the reason the organization exists.
A purpose statement should clearly explain how the organization will contribute to human, societal, or environmental goals. It needs to be believable, authentic, and inspiring. However, we’ve seen many purpose statements that in our opinion range from vague (e.g., Delta’s “Lift the world”) to grandiose (e.g., Cisco’s “to power an inclusive future for all”) to uninspiring (e.g., Decathlon’s “to be useful for people”).
Having a well-crafted purpose statement really matters. Not only does it represent the organization’s aspirations, it also sends signals to employees about what the company stands for. It is the vital first step on the road to actually embedding and activating an authentic purpose. Yet leaders often struggle to articulate an appropriate and inspiring purpose statement due to a lack of guidance concerning the focus, scope, and form of expression they should aim for.
We’ve undertaken a detailed analysis of 66 purpose statements from leading organizations around the world. We considered whether the statements were clearly formulated and closely linked to the organization’s core activities, as well as the extent to which they were credible. We talked to senior leaders and employees and reviewed best-practice advice. Based on these insights into what does and doesn’t work, we developed a diagnostic framework leaders can use to help craft the best purpose statement for their specific situation.
A Framework for Crafting a Meaningful Purpose Statement
Our framework, SABRE, identifies four dimensions of purpose statement content (i.e., what the purpose means) and one dimension of purpose statement formulation (i.e., how the statement itself is worded). Leaders can evaluate their current or proposed purpose statement against each dimension.
The foundation of any purpose statement is an explicit reference to the specific, pressing human, societal, or environmental problem(s) the organization seeks to address or alleviate.
All too often, we see purpose statements that simply refer to these in a very general way or worse, fail to mention them at all. In fact, 68% of the statements we analyzed fell into this latter category. We’ve also seen purpose statements formulated around performance or profit aspirations. Statements like these point to a mission or goal, but not a purpose.
A good example of a clear statement of societal benefit comes from Philips:
At Philips, our purpose is to improve people’s health and well-being through meaningful innovation. We aim to improve 2.5 billion lives per year by 2030, including 400 million in underserved communities. As a technology company, we — and our brand licensees — innovate for people with one consistent belief: there’s always a way to make life better.
For those struggling to articulate how their company’s products and services advance a social or common good, it may be more realistic to relate the purpose to how the company operates. For example, food retailer Aldi’s purpose is to “Provide value and quality to our customers by being fair and efficient in all we do.”
Both employees and external stakeholders, including customers and investors, will want to know if they can trust that your purpose statement accurately and honestly reflects the organization’s true aims, and they’ll seek cues in and around the organization to guide their evaluation. If the organization’s stated purpose is to improve health yet it continues to sell tobacco products, for example, stakeholders will conclude that the purpose fails the authenticity test.
Employees are likely to be especially well-attuned to inauthentic purpose statements. Where they perceive a mismatch between the stated purpose and the daily realities of organizational life, we’ve found they experience disenchantment, leading to loss of engagement and potentially even the decision to quit. Adding questions about the purpose statement to regular employee surveys will help leaders identify where it’s falling short. Customers and investors are equally unimpressed when a company is revealed to have misrepresented itself in its purpose statement, giving rise to accusations of purpose-washing.
BlackRock’s purpose statement comes across as authentic because it’s grounded in what the company does and how it operates: “As a global investment manager and fiduciary to our clients, our purpose at BlackRock is to help everyone experience financial well-being.”
Of course, authenticity isn’t fixed — purposes that seem authentic one day can become inauthentic the next following negative publicity. For example, Volkswagen, which had previously stated its corporate commitment to delivering sustainable cars for a better future, was accused of “greenwashing” following the revelation in 2015 that the company had tampered with emissions testing, leading to the “Dieselgate” scandal, hefty fines, and reduced trust around the world.
Some purpose statements are so grandiose that they’re impossible to live up to. Unfortunately, many of the statements we analyzed failed the believability test for this very reason. Vague aspirations such as “improving the world” may be laudable, but stakeholders will ask: How?
The best statements make it clear that the organization can realistically deploy their resources and measure their progress toward achieving their purpose. For example, Astra Zeneca’s statement, “We push the boundaries of science to deliver life-changing medicines,” shows strength on the believability dimension, as it’s easy to imagine a pharmaceutical company developing important new drugs.
Relevant to beneficiaries
The most effective purpose statements contain a clear indication of which segments of society and the environment will benefit. Unfortunately, some statements fail to mention any specific beneficiaries at all, and so remain abstract.
For example, Mars’s statement, “The world we want tomorrow starts with how we do business today,” fails to clarify who in particular will benefit from the company’s products. Apple’s purpose statement, on the other hand, makes the intended beneficiaries, its customers, more clear: “Bringing the best user experience to its customers through innovative hardware, software, and services.”
The final component of SABRE addresses how the statement is worded. The best purpose statements are engaging and inspiring, appealing to the heart as much as to the mind. They’re memorable for all the right reasons. When statements are too long, they become unclear and lose their grip on people’s attention. Sure, you may want to have a more detailed explanation of what the purpose means, but the headline statement needs to be punchy. Consider General Mills’ brief and engaging purpose statement: “Making food the world loves.”
Putting It All Together
We believe an organization can develop a statement that meets all of these criteria. Take Novo Nordisk, for example:
Our purpose is to drive change to defeat diabetes and other serious chronic diseases, such as obesity and rare blood and endocrine disorders. We do so by pioneering scientific breakthroughs, expanding access to our medicines, and working to prevent and ultimately cure diabetes.
Novo Nordisk clearly states the societal problem they’re setting out to tackle. The statement aligns with the organization’s core ambitions, and we can see how the firm can deploy its resources to achieve these. The beneficiaries are named, and the statement is concise and aspirational.
By using the SABRE framework to guide purpose statement discussions, leaders can move toward achieving an inspiring, authentic, actionable purpose that will make clear to internal and external stakeholders how they will help address today’s fundamental challenges.
This content was originally published here.