Is Purpose at the Center of Your Strategy?

The discussion about the role of purpose in formulating an organization’s strategy has been piquing my interest lately in a very particular way (evidenced by the fact that we have taken up this topic in two recent issues of Management Tips).

In the first of these, on reframing the essential purpose of the organization, we mentioned that “the essential purpose” was the fundamental reason justifying the existence of the organization. It is a definitive statement about what you are trying to accomplish in the world, if you are connected to something meaningful, good and bigger than the organization itself.

In the second, on determining factors of company strategic purpose, we stated that strategic purpose was fundamental to the achievement of results. It integrates corporate statements with strategic objectives, the foundations of strategy (the business, vision, mission and values ​​of the organization) with the achievement of objectives.

If you missed those, I invite you to go back and read those.

Today we will return to this discussion, looking at the excellent article by Malnight, Buche and Dhanaraj published in HBR September-October, entitled “Put Purpose at the Core of Your Strategy.”

The authors outline the importance of organizations putting purpose at the center of strategy when redefining their business. According to them, this is what successful companies do.

Based on studies of various companies looking at high growth, they concluded that in well-known strategies for promoting high growth, such as creating new markets, meeting stakeholder needs and changing the rules of the game, a fourth strategy was missing: purpose.

They state, too, that many companies have shifted purpose from the periphery to the center of their strategy, thanks to the commitment of leadership backed by investments designed to generate sustainable growth.

In their study, they identified that purpose has two fundamental roles: helping organizations redefine the playing field, and enabling them to reshape their value proposition.

At the end of the article the authors offer us a simple but interesting diagnostic tool to assess whether purpose is at the center of our company strategy.

This diagnostic involves reflecting on five questions:

  1. Does purpose help increase the company’s growth and profitability?
  2. Does purpose influence strategic decisions and investment alternatives?
  3. Does purpose shape the value proposition?
  4. Does purpose impact how the company creates and manages organizational capabilities?
  5. Is purpose on the agenda of leadership teams every time they meet?

If you answer “yes” to these five questions, then purpose is at the heart of your strategy, and you are on the path successful companies take when redefining their business.

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