Wrong Uses of Company Purpose

Wrong Uses of Company Purpose

🔥NEW A company or corporate purpose (statement) is meant to very succinctly communicate what a business firm is all about. It presents the (typically ambitious) long-term goal of the organization. It provides the reason or reasons you exist. It is about WHY you exist.

Neither confuse it with the mission (which is about what you do and for whom), nor with the vision (the desired future state at which the organization hopes to arrive).

In an increasing number of cases the corporate purpose has an idealistic touch to it by addressing certain societal problems besides just being profitable for the shareholders.
That is a very welcome departure from the days of traditional Value Based Management, as long as we remember "the proof of the pudding is in the eating". To taste and test the pudding, we might have a look to what extent the purpose of the company is actually integrated into the well-known 7S-es of McKinsey: Shared Values, Strategy, Structure, Systems, Staff, Style and Skills.

Formulating a corporate purpose statement is a most complex challenge and it's no wonder we unfortunately witness quite a few companies that have difficulties in getting their purpose right — let alone making it work. To help out, let's try to collect a list of the ways purpose is being applied in the wrong or a too limited way. To get us started, Gulati interestingly mentions 4 categories of insufficiently "deep" purposes:

1. CONVENIENT PURPOSE: Companies talk about purpose but don't act on it, or only in superficial ways. This category includes companies that tell they serve society but are actually selling harmful products. Think of companies active in the weapons, tobacco, alcohol, and junk food industries.
2. PURPOSE AS A DISGUISE: Companies using a lofty mission to hide malfeasance. Pain-relief company Purdue Pharma is pressed the sales of it's drug OxiContin to such an extent that it caused a opioid epidemic.
3. PURPOSE ON THE PERIPHERY: Companies that do (some) good through their Corporate Responsibility program while using funding from their profitable core business, but keep these 2 things apart. These companies miss the strategic opportunity to truly integrate these 2 areas.
4. PURPOSE AS AN INSTANT WIN-WIN: Companies that aim only for perfect, ideal, instantly available combinations of financial and social value. There are often not so many of these "perfect combinations" and by restricting themselves to these, companies miss out on opportunities for more substantial contributions to society.

⇨ What do you think of Gulati's list? Do you know of another type of shallow/wrong applications of company purpose statements? Let's try to make this list complete once and for all. It will be a great tool/checklist of things companies should watch out for and avoid.

Reference: Gulati R., "The Messy but Essential Pursuit of Purpose", HBR Mar-Apr 2022, pp. 44-52

		Comments Sort by date Sort by rating Rating
		0 Anonymous
	Traditional Value Based Management Mission statements are always a problem; easier said than done. Curious you said "traditional value ... Sign up

		1 Francisco Vega
	Purpose as Best Practice It is practically impossible for a succinct statement to integrate, weigh and at the same time expre... Sign up

		3 Gautam Mahajan CEO, India
	Purpose of a Company The purpose of a company is not a mission or a vision statement. Purpose is why we are a company V... Sign up

		3 Jaap de Jonge Editor, Netherlands
	Values Based Management @Anonymous: Happy to hear you appreciate 12manage. What I meant with the term "traditional" Value B... Sign up

		1 Gregory Johnson Coach, United States
	PURPOSE versus . . . I embrace this dynamic presentation and plan to use the theme and content in my engagements as I att... Sign up

		1 PeterMaria van Herpen Switzerland
	Corporate Goal: Profit HP used to express its company goals in the 'corporate goals'. Rule number 1, as far as I remember, ... Sign up

		1 Gregory Johnson Coach, United States
	Pure Profit Purpose Has a Cost to It @PeterMaria van Herpen: A pure profit purpose has a COST to it. When people are viewed as chattel or... Sign up

		1 Gary Wong Consultant, Canada
	Think of Purpose as a Constant Set of Natural Laws Assessing that a purpose statement is shallow, wrong, or right is a hindsight evaluation. Interestin... Sign up