Three Types of Corporate Purpose



Moral Purpose
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Jaap de Jonge
Editor, Netherlands

Three Types of Corporate Purpose

The purpose of a company or non profit organization affects its success in several crucial areas, like demand generation (how customers see it, brand personality), HR (employee engagement), investor attractiveness (ESG Factors, corporate sustainability), strategy (stakeholder management, strategic growth opportunities for long-term), corporate valuation and risk reduction.

What is a Corporate Purpose for? Purposes

A well-formulated "corporate purpose" or "organizational purpose" is very powerful as it can appeal to, motivate, propitiate, and attract clients, employees, investors, governments and even society at large. Moreover, in a VUCA world with constant change, the corporate purpose can be the beacon and/or glue holding everything and everyone in the organisation together.

However, Knowles et al. (rightly) explain how the term "purpose" is confusing. It's because purpose can have several meanings. It can be understood in (at least) 3 distinct ways:
  1. Purpose as a COMPETENCE: The main function that a company/organization/products/services serves.
    For example, Mercedes has: "First Move the World".
  2. Purpose as a CULTURE: The intent with which a company/organization is run.
    For example, Zappo has: "To Live and Deliver WOW".
  3. Purpose as a CAUSE: The social or moral good a company/organization aspires to.
    For example, Tesla has: "To accelerate the world's transition to sustainable energy".
It is important to note that an organizational purpose can be defined in any of these 3 ways. In particular, according to Knowles, even if every company should work to become a better corporate citizen, "not all companies can save the world". All others should use one of the other 2 options to provide the basis for a meaningful and motivating "why" they exist when creating a corporate purpose statement. In a pragmatic, but authentic way.

⇨ Do you agree with these 3 meanings/types of corporate purpose?

Reference: Knowles J., Hunsaker B.T., Grove H., James A., "What Is the Purpose of your Purpose? Your why may not be what you think it is", HBR Mar-Apr 2022, pp. 36-43.
 

Rating

 
3
Ronald Ainsbury
Coach, New Zealand
 

3C's of Purpose is Useful Approach for Corporates

This is a useful approach as there is much confusi...

 
2
Johan Bergstroem
HR Consultant, Sweden
 

Some Thoughts About the Purpose of a Small Company

Very interesting, Thanks. Even though this is most...

 
1
Ronald Ainsbury
Coach, New Zealand
 

Purpose of Small Business

@Johan Bergstroem: Spot on Johan! Too often in man...

 
3
Rob Thompson
Coach, United Kingdom
 

Purpose Depends on the Angle of the Viewer

If I consider my role as a coach in education, the...

 
1
Paul Pretorius
Management Consultant, South Africa
 

Start with WHY

May I suggest we consider the contribution by Simo...

 
0
Maurice Hogarth
Consultant, United Kingdom
 

The Purpose of Being

The fun and confusion of the English language. "P...

 
1
Barry Harrison
Consultant, United Kingdom
 

Purpose of an Organisation

Its quite simple really. 1. Why was it formed? 2...

 
1
Maurice Hogarth
Consultant, United Kingdom
 

Purpose Means Different Things to Different People

@Barry Harrison: I agree that for many businesses ...

 
3
Jaap de Jonge
Editor, Netherlands
 

Formulating a Corporate Purpose is Neither Simple Nor Should it Be

I agree that if one formulates the corporate purpo...

 
0
Barry Harrison
Consultant, United Kingdom
 

Primary Purpose of a Company

@Jaap de Jonge: I agree making money may not be th...

 
1
Maurice Hogarth
Consultant, United Kingdom
 

The Purpose of a Business is Service its Customers

@Barry Harrison: If the purpose of a business (v a...

   

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