PURPOSE IS A CONCEPT often used in managerial communities to signal and define a firm’s benevolent and pluralistic approach to its stakeholders beyond its focus on shareholders. While mounting evidence links purpose to positive organizational outcomes such as growth, employee satisfaction, innovation and superior stock market performance, the definition and application of purpose in management research has been varied and frequently ambiguous.
In a recent paper with my colleagues Gerard George (Georgetown University), Martine Haas (University of Pennsylvania), Simon Schillebeeckx (Singapore Management University) and Paul Tracey (University of Cambridge), we present a framework for understanding and implementing purpose in organizations.
My co-authors and I view purpose as directed towards a higher-order goal that the firm engages with in an authentic way and that employees find compelling. This is consistent with the World Economic Forum’s stance, which is that the purpose of firms ought “to produce profitable solutions to the problems of people and planet, and not to profit from these problems.” In our paper we propose the following definition:
Purpose in the for-profit firm captures the essence of an organization’s existence by explaining what value it seeks to create for its stakeholders. In doing so, purpose provides a clear definition of the firm’s intent, creates the ability for stakeholders to identify with, and be inspired by, the firm’s mission, vision and values, and establishes actionable pathways and an aspirational outcome for the firm’s actions.
To bring this definition to life, we propose a framework of corporate purpose consisting of six pillars. The first three, which fall under the heading of Goal-Based Purpose, are elements of purpose that have been widely embraced by corporate leaders for many years. The latter three relate to Duty-Based Purpose, and while fewer organizations embrace them fully, they are fast becoming mission-critical.
Goal-Based Purpose: Three Pillars
Corporate purpose can be understood as
