Why 6 out of 10 purpose statements fail ... and what you can do about it.

These days it’s fashionable for every company to have a ‘higher purpose’. 

It feels good to do the ‘right thing’. It also makes business sense.
Companies with a clear, higher purpose have better financial performance. Employees in purpose-led organisations are more eager to get out of bed and work more. Shareholders and customers vote with their wallets for companies that aim for prosperity instead of profit.

But living your WHY is not as easy as Simon says. 
While 93% of Fortune 500 CEOs agree companies should do more than only focus on money, only 42% of respondents in a recent McKinsey survey feel their organisations’ purpose statement drives impact. As this is self-reported, the actual number is probably lower.

So while everyone talks an excellent game, we stick with business as usual.

So where does it break down, and what can you do about it? 
Here are my two cents ...

PROBLEM #1: Purpose conflicts with identity
Psychologists, storytellers, organisational designers, neuroscientists and one very smart person I know all agree. Purpose only guides behaviour if it is authentic and resonates with WHO you are. This doesn’t just apply to individuals, but also to organisations. If your employees, customers and shareholders don’t identify with your purpose, it will never be more than words. 

ACTION: Define your organisation’s WHO before you tackle the WHY. Who are the people working for you? Buying from you? Funding you? What drives them? If you’re in charge, what drives you? Your colleagues? Your board? Only when that’s clear you can start formulating a WHY that has any chance of implementation.

PROBLEM #2: Purpose conflicts with business sense
It may give everyone a buzz to say they are saving the Amazon or ending world hunger. Still, there are also topics like efficiency, profitability and allocating the capabilities/resources to make an actual difference. If you ignore these, your purpose may sound amazing but its implementation will get hollowed out in every budget cut, performance review and shareholder meeting.

ACTION: When defining a purpose, combine idealism with pragmatism. Don’t just look at what the world needs. Also connect this to what your organisation is good at and what allows commercial success. Only by aligning your purpose and profit goals, you can strengthen both.

PROBLEM #3: Purpose conflicts with daily life
Most purpose statements are created in boardrooms or marketing departments. But they need to get brought to life by Ramon in accounting and Janet who works in the warehouse. While these individuals may get inspired by a powerful slogan, they don’t necessarily see what your fancy words mean to them. So they focus on the operational KPIs that DO make sense. I mean, what alternative do they have?

ACTION: While it’s perfectly fine to start with a visionary workshop, you also need to cascade your purpose to every function and individual in your business. Show them how it practically affects their job and how it influences the behaviours you expect from them. Seeing how they make a difference will motivate your teams and it will get you better implementation. Everyone wins. Including the Amazon.

Authentically living your purpose is one of the hardest things any individual or organisation can do.

So if the topic of comes up in your business, make sure you address these three conflicts head on. It’ll make life easier, more profitable and fun.

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An earlier version of this article first appeared in my personal newsletter Thoughts & Tidbits. Subscribe if you want more of this content as well as tidbits that I only publish in this newsletter.

(c) Alain Thys, 2021 - All rights reserved