It is becoming more and more important for businesses to have a clearly defined Purpose that is well communicated and implemented both internally and externally.
Don’t make the mistake of thinking that this is just a ‘fad’ or a box to tick – major investment companies are now insisting that businesses seeking investment must have a clear Purpose that is linked to their Strategy and Culture. The reason for this is that understanding the Purpose of the business will help create the culture that the business needs and can, therefore, have a very positive impact on the performance of the business – both internally and externally.
The question then is not should your business have a Purpose but does it have a Purpose that everyone knows, understands and buys into. If not you need to think about how to create and communicate your Purpose.
So what is a Business Purpose?
Put simply, the purpose of a business the reason that it exists. It should express what contribution the business makes and how that contribution makes a positive contribution to the lives of those people it comes in contact with (such as customers, staff, suppliers, etc.).
The Purpose of a business should clearly define why the businesses does what it does in a way that inspires everyone involved with the business from staff to customers to investors and other stakeholders. The Purpose should not, therefore, relate to financial gain as the money that a business makes is an result of the activities that it undertakes, it is not the reason why it exists.
The basic format of a statement of purpose is: Activity TO Outcome.
Example: “To invest for a better future to make a difference in the lives of our customers, our people and our stakeholders“.
To organise the world’s information to make it universally accessible and useful
The above example is from an investment company and the colours show the activity they undertake and what the intended outcome of that activity is. This may seem a bit superficial but if you look closely it is actually a very powerful statement for those working in the company as it enables them to make decisions (in this case investments) that are intended to result in one or more of the stated outcomes.
It should be noted, however, that your statement of purpose does not have to follow this ‘rule’. So long as it feels right to those people who interact closely with the business then the structure of the statement is, to some extent, less relevant. For example, some Purpose Statements will only focus on the outcome and ignore the activity that generates the outcome. In these cases, the outcome is so strong that it can stand alone and the activities that the business undertakes to achieve the outcome can be decided by the people in the business.
Example: “To enrich people’s lives with programmes and services that inform, educate and entertain”
In the above example the company in question has reversed the standard structure by starting with the outcome and then stating the activities that attain that outcome. We can put this in a traditional format as follows:
“To create programmes and provide services that inform, educate and entertain to enrich people’s lives“.
Looking at these two versions of the same statement of Purpose we can see that the first one reads better without losing its meaning.
An example of a purpose that only focuses on the outcome is:
“To give everyone the power to create and share ideas and information instantly, without barriers”.
Here we can see that the activity element of the statement of Purpose is missing so the activities that the business takes to achieve this are much more open to interpretation.