In business, as in society at large, good concepts tend to get corrupted unless they are operationalized in a way that allows both proponents and critics to objectively assess their role, impact and value.
It happened to Corporate Social Responsibility, which, because of the way it is practiced, often is derided as “Too much C, not enough S and very little R.”
Now, another great concept for business leadership that seems adrift is Purpose.
Welcome to the Purpose wars. How did a well-meant constructive approach become the center of a controversy which, in essence, hinges on whether capitalism works as it should – and what the true and proper role is of business in society?
Purpose has swept the business landscape. At Page, it is a frequent topic. Let’s just recall the riveting talk at the London conference by Unilever’s CEO Paul Polman – who gave Unilever an action-oriented and performance-enhancing Purpose.
Purpose has been embraced by academics and consultants (Harvard Business Review) and business journalists (Financial Times).
The Financial Times article contrasts the Milton Friedman precept that the goal of business leaders is to maximize profits with today’s executives who, when they talk about Purpose, sound like the civil society activists that were so badly riled by Milton’s mantra “the business of business is business.”
On the business conference circuit, Purpose has its well-established place. It is a core concept in enlightened enterprise thinking. Studies like the Reputation Institute’s CSR report show that Purpose well expressed helps bolster reputation.
But now there is a backlash. Some of it is simply anti-business. Other critics make the point that governments are responsible for improving our societies, and that business should stay in its lane.
The harshest critics say that companies now use Purpose solely as a way to mask their true intentions: maximizing profits and exerting influence beyond the proper remit of business.
A few days ago, Maria Hengeveld, a young academic, wrote a scathing article about Purpose in The Nation, a progressive U.S. magazine.
She said Purpose was a new scam that business leaders use to lure Millennials into their companies with “empty promises and self-serving slogans.”
“As a self-serving corporate fantasy, the purpose paradigm is designed to win trust that isn’t earned, perpetuate power that is not legitimate and preserve a lack of governmental oversight under which corporations compete with each other for profits,” Hengeveld wrote.
Former Edelman executive Robert Phillips, lobbed his own volley in the Purpose Wars in the most recent issue of Management Today.
Phillips says there is a risk that the search for purpose in companies becomes “an end in itself,” and that the talk of deeper meaning will serve to obscure inaction and even cover misdeeds.
“As long as you are on the journey, you are de facto on the side of better or good. The journey offers some sort of path of redemption,” Phillips writes.
For companies that are serious about improving their wider impact, the B Corps movement may be a place to start. Parts of Unilever, such as Ben and Jerry’s, and a large portion of the business of French food giant Danone have gone through the onerous certification needed to become a B Corp business.
In its own words “Certified B Corporations are a new kind of business that balances purpose and profit.” B Corp wants to be “a community of leaders, driving a global movement of people using business as a force for good.”
And there was the P word again – balancing “purpose and profit.”
I remain a firm Purpose proponent. Purpose is a way to focus the high-level statements of Mission, Vision or Values into a simple and meaningfully connection between business life and real life.
And the search for meaning gives our existence meaning. Of course, we must turn Purpose into action, but first we must find it. And the search for Purpose, in itself, has great value.
Alongside Strategy and Culture, I see Purpose as both source of both energy and guidance – a lever that enterprise leaders should use to rally hearts, focus minds and drive greater performance.
So, Strategy is what we do and how we do it. Culture is who we are and how we behave. Purpose is why we exist.
An authentic Purpose is a way for companies to assess how they are performing against the third bottom line in the TBL model, which underpins both Sustainability and CSR. TBL’s bottom lines reflect the company’s economic, environmental and societal performance, impact and contribution.
So, my advice remains that Purpose has a central role as a leadership engagement instrument.
Purpose connects employees with the goals and role of their companies, and it connects the company with society at large and especially with the communities in which it operates. Example: ABB’s “Power and Productivity for a Better World” – developed as a statement of purpose, it was for 10 years or more also the company’s tagline and brand essence.
Clearly, as a management consultant quoted in the FT article says, there is a need for metrics and data to underpin Purpose.
Only if such metrics can be developed, stakeholders can track – and reward or punish – companies on how they perform against their stated Purpose. For Purpose to have real value, that is what is needed – because you can only manage what you can measure.
In my view, measurability is what all the Purpose Wars are all about.