What is a Business Purpose?

Photo of a compass representing a Business Purpose

A clearly defined Purpose is an essential element to building a successful business.

As the global economy continues to grow and evolve, the concept of business purpose has become increasingly important. But what exactly is business purpose? In this article, we will define the term and explore its significance in modern business.

What is a Business Purpose?

Business purpose refers to the reason why a company exists. It is the underlying motivation or driving force that shapes a company’s strategy, culture, and decisions. A strong purpose is essential for building a successful and sustainable business. It provides clarity and direction for the organisation, guides decision-making, and helps build a strong brand identity.

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. This is explained by the concept of the Golden Circle which shows how a business purpose can fundamentally change the way that people in the business communicate.

It should be noted that a business purpose is not the same as a mission statement or vision statement, although these concepts are closely related. The mission statement defines the company’s overall purpose and goals, while the vision statement describes the company’s aspirations and future direction. Purpose is a more foundational concept that underlies both the mission and vision statements.

In short, a business purpose is the driving force that enables it to express the company’s true identity. It is also the catalyst for creating a culture that makes the purpose real. This is what we call ‘living and breathing your purpose’.

Why is Business Purpose Important?

Don’t make the mistake of thinking that this is just a ‘fad’ or a box to tick. Many investment companies are now insisting that businesses seeking investment must have a clear purpose that is linked to their strategy, culture and values. 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.

There are several other benefits to being purpose driven. First, it helps a company stay focused on its core values and goals. A clear business purpose provides direction for the company’s strategy and decision-making. It helps leaders prioritise their initiatives and allocate resources in the most effective way.

Second, business purpose can also help a company differentiate itself from its competitors. A strong purpose can create a sense of purpose that attracts customers, employees, and other stakeholders. Companies with a clear and compelling purpose can build strong brand loyalty and achieve greater customer engagement.

Third, business purpose is essential for attracting and retaining top talent. Today’s employees are increasingly motivated by more than just financial compensation. They want to work for companies that align with their personal values and offer a sense of purpose. A clear and compelling purpose can help a company attract and retain top talent.

Finally, business purpose can help a company build a strong reputation in the market. Companies that are driven by a strong purpose are often seen as more trustworthy and authentic than those that are purely profit-driven. A strong purpose can help a company build a positive reputation and enhance its credibility with customers, employees, and other stakeholders.

How purpose fits with the strategy model.

A diagram showing how Business Purpose guides business strategyThe diagram shows how the various element of the strategy model fit together and how Purpose sits inside the model, acting like a compass that guides the overall direction of the organisation.  The organisation’s Purpose will tend to remain consistent over time, even when the other elements of the model change.

The purpose is normally defined when the organisation is created – since that is the point at which the reason for starting the business is most clear.  This can, however, be lost over time so many organisations need to create it retrospectively.  While this can be challenging, discovering why your organisation exists (beyond financial gain) makes it easier for you and those you work with to find fulfilment in doing what you do.  When people see the value in what they are doing or offering they will be more motivated, focused and driven. This will ultimately have a positive impact on your bottom line.

Examples of Business Purpose

Many successful companies have a clear and compelling business purpose. For example, Tesla’s purpose is to accelerate the world’s transition to sustainable energy. Patagonia’s purpose is to use business to inspire and implement solutions to the environmental crisis. And Amazon’s purpose is to be Earth’s most customer-centric company.

All of these companies have a clear and compelling business purpose that guides their strategy, culture, and decision-making. This purpose helps them stay focused on their core values and goals, differentiate themselves from their competitors, and build a strong reputation in the market.


Business purpose is an essential concept for building a successful and sustainable company. It provides direction and focus for the organisation, helps differentiate the company from its competitors, attracts and retains top talent, and builds a strong reputation in the market. Companies that have a clear and compelling purpose are more likely to succeed in the long run than those that are solely profit-driven. By prioritising business purpose, companies can build a more sustainable and successful future for themselves and the world.


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