Kenza knowledge education purpose business article digital pattern design

The five elements of 
purpose-led business

Key takeaways

Sep 01, 2020 • 13 min read

Key takeaways

Expectations and hopes for purpose-led business continue to make media waves, yet the path to sustainable purpose adoption is not clearly defined. 

Purpose can be operationalized from different perspectives: general, psychology, business, brand, employee and consumer. A workable framework must touch on all of these.

The majority of existing purpose definitions and approaches do not show promise in terms of measurable operationalization and standardized adoption.

50 companies top the rankings when it comes to financial and commercial success, but only 15 of them have purpose statements. Some are even contradictory to their actions.

Kenza has developed a practical purpose adoption model that can be successfully applied across any industry.

Journal

n/a

Authors

Peter Schneider

Nusi Drljevic

Summary

Summary

Perceiving the potential of purpose

Purpose leads to prosperity. This the big promise is enticing more businesses that want to create meaningful value, yet the path to sustainable adoption is not yet clearly defined.

Discussions around purpose continue to develop in the business world. There has been an explosion of approaches in the last five years that has made purpose a catch-all term, yet there is little understanding around its application in the business context. Interest in it, however, is growing among organizations, brands, investors, consumers and employees.

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Kenza insights article purpose business adoption human and digital patterns

„Today, more than ever, it is mission-critical for businesses and society to understand what purpose-led business means and how to increase its adoption.” 

Purpose appears to infiltrate everything: business models, operations, branding, products and services, experiences, marketing, communications, HR. It seems to be a key element of transformation towards more sustainable practices. By defining and moving with a higher purpose, businesses are trying themselves to social and environmental issues that go beyond financial gain.

Most believe that higher purpose could drive a needed change for global business, particularly in these testing times. Various attempts have been made to prove a correlation between a company’s purpose and its growth.

We aim to bring clarity to this conversation and provide a practical, easy-to-use purpose adoption model that helps anyone operationalize and adopt purpose in a sustainable way.

See our future-ready adoption model now
Adoption Model

Goals

Goals

Three goals towards sustainable adoption

Clarity and a practical framework: these are the keys to moving beyond a simple statement and arriving at a future approach to purpose-led business.

Greater clarity is needed before we can measure the success of purpose-led business. How do we clearly define and quickly identify whether a company is purpose-led or not? By answering this question, we can evolve from a simple statement to a future-ready approach for purpose adoption.

1st goalExplore the many purpose explanations and present insights from various perspectives on its meaning. 
2nd goalA practice analysis to find out how leading companies apply purpose in the business context. 
3rd goalCreate a workable definition and practical framework of purpose for industry-wide and standardized adoption.
Materials and methods

Materials and methods

Insights that guide action

A systematic review and analysis of science and industry sources: this is the first step in the leap towards purpose-led business.  

In order to create a well-rounded definition, we explore the following perspectives: general, psychology, business, brand, employee, consumer and public. We exclude the noun purpose, which means functionality or reason, as well as the legal definition of a company’s official function.

Our research into definitions and frameworks covers roughly 100 scientific journal publications and specialized media articles, which approach purpose from these seven perspectives. We also cover over 50 business reports from 2015–2020, looking more specifically at the relevance of purpose for businesses today. Additionally, we analyze the practices of 50 leading global companies – a cross-section of 2019 rankings from Forbes 2000, Fortune Global 500 and Interbrand best global brands. The reason we merge these three rankings is to combine both the business and brand ranking perspectives. This allows us to consider the highest-ranking companies in terms of revenue, as well as the brand role and other factors of brand strength such as clarity, consistency, presence and engagement. By reviewing communications that include websites, social media, advertising and marketing campaigns, press releases, annual reports and sustainability reports, we can create an external view on the maturity level of purpose among these global business leaders.

Kenza insights reports blockchain purpose adoption world as digital circle design

100+

Academic papers

50+

Commercial practices

50+

Business reports

Perspectives on purpose definitions

Perspectives on purpose definitions

Diverse dimensions of purpose

Purpose is understood in different ways. To unearth its core root and meaning, it must be viewed from different perspectives.

When exploring the many definitions of purpose, it’s clear that most are made without reference to elements that can be applied, managed or measured. These are very much needed to characterize purpose in a way that allows for operationalization and sustainable adoption. Table 1 provides a selection of such explanations from different perspectives: general definition, psychology, business, brand, employee, and the consumer.

Table 1:

Perspectives on purpose definition

Perspectives on purposeSelected examples of working definitions
GeneralWhy you do something or why something exists. (Cambridge Dictionary) 
PsychologyPurpose is a higher-level psychological construct that offers insight into how and why certain people are healthy and successful in the long-term. (Kashdan & McKnight, 2009)

Purpose is the human desire to do things in service of something larger than ourselves.  (Pink, 2009)

Purpose is a fundamental component of a fulfilling life. (Taylor, 2013)
BusinessThe purpose of business is to create and keep a customer. (Drucker, 1954)

Purpose answers the critical questions of who a business is and why it exists beyond making a profit, through a set of carefully articulated core beliefs. But, to be more than just words, purpose must guide behavior, influence strategy, transcend leaders – and endure. (Punit Renjen, Deloitte Global CEO, 2020)

Corporate purpose should produce profitable solutions to the problems of people and planet. (World Economic Forum, 2020)
BrandYour purpose is the “why?” of an organization, the reason it exists—beyond making a profit. (Interbrand)

Purpose is what drives us as individuals and as organizations. A brand purpose statement is an articulation of why that brand exists in the world, their role, and ultimately, their reason for being. (Siegel + Gale) 

Purpose becomes apparent when brands are putting something out in the world that advances humanity. (Labbrand).
EmployeePurpose is a mission critical resource for conducting open business. An organization’s purpose must be utilized for bringing people together to work toward a common goal. (Cushman & Burke, 2014)
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Purpose in business practice

Purpose in business practice

How leaders present purpose

Few leading companies claim to operate with a higher purpose. They all take different approaches but lack operationalization intent.

Table 2 shows 15 companies from the aggregated ranked lists that have a defined and visible purpose statement. We exclude mission statements, core values, philosophies, credo, ethos, etc. – despite these statements sounding purposeful in some cases. By doing this, we are able to see who is working with the actual term and is further along with purpose adoption. 

Table 2:

Only 15 of the top 50 companies have a defined purpose definition

CompanyPurpose statement
AxaEmpower our 105 million customers to live a better life.
Banco SantanderOur purpose is to help people and businesses prosper.
CaterpillarOur customers use our products to build the basic infrastructure that enables higher standards of living so that people have access to water, electricity, roads, bridges, hospitals, schools and so much more.
Coca ColaRefresh the world. Make a difference.
Mercedes BenzFirst move the world.
DellAt Dell Technologies, our purpose is to drive human progress, through greater access to better technology, for people with big ideas around the world.
DisneyCreating happiness for others.
FordTo drive human progress through freedom of movement.
HPEAt HPE, we believe that technology’s greatest promise lies in its potential for positive change. We can use this change to overcome challenges and make a greater impact for the global good— together. 
NestléDriven by our purpose we want to help shape a better world and inspire people to live healthier lives. 
NikeOur purpose is to unite the world through sport to create a healthy planet, active communities and an equal playing field for all. 
Royal Dutch ShellShell’s purpose is to power progress together with more and cleaner energy solutions.
SAPHelp the world run better and improve people’s lives.
SiemensWe serve society. We create value for our stakeholders. We make real what matters.
SonyFill the world with emotion, through the power of creativity and technology.

These examples highlight two concrete aspects: how differently leading companies approach purpose, and the lack of solid, workable definitions. We analyzed these statements to identify opportunities and gaps in terms of operationalization and adoption for the sustainable usage of purpose. Further in-depth research is needed to identify how these companies implement purpose across their business functions.

The statements also lack transparent operationalization to show how it would be done. For example, global insurer AXA takes a limited approach to defining purpose, focusing only on the consumer, not taking social and environmental dimensions in considerations. Banco Santandar’s statement speaks directly to individuals and businesses, without further mention of how they intend to promote prosperity. Caterpillar is direct and on target, listing off functional product benefits for infrastructure and higher living standards (and thus broader society).

Others stand as vague marketing claims rather than meaningful and effective purpose statements – Coca Cola, Ford, Daimler and Disney are prime examples. These indirectly express the value they create and only hint at human progress and change, therefore being unclear on how purpose can be operationalized and adopted.

Dell’s statement is stronger, addressing human progress and treating purpose as an ongoing evolution that they contribute through technological advancement.

In some cases, it is easy to see contradictions and a lack of authenticity. Royal Dutch Shell, for example, speaks of cleaner energy solutions – yet this is at odds with their reputation and core business operations. Nestlé claims to be driven to inspire people to lead healthier lives, yet this does not match their product line of mostly sugar-laced beverages, sweetened cereals and candies.

Nike and SAP could be considered good practice examples; however, problems could arise in terms of adopting purpose across the various stages of maturity.

Good purpose practices

Good purpose practices

Standout cases

By defining purpose with clear elements and dimensions, businesses can better operationalize, adopt and deliver on their purpose claims over the long-term. 

The selection shown in Table 3 was made according to three criteria: 

1st criteriaIs the purpose statement clearly defined?
2nd criteriaIs the company publicly perceived as a successful, purpose-led business?
3rd criteriaDoes their purpose definition allow for measuring and managing the success and sustainable use of purpose? 

Table 3:

Good practice examples of purpose definition

CompanyHow purpose is communicated 
IntelDelight our customers, employees and shareholders by relentlessly delivering the platform and technology advancements that become essential to the way we work and live. 
NikePurpose moves us. Our purpose is to unite the world through sport to create a healthy planet, active communities and an equal playing field for all.
SAPHelp the world run better and improve people’s lives. That’s been our purpose from day one. So, when our customers have the next big idea to save a species, transform an industry, feed the hungry, support equality, or provide relief worldwide – we deliver the right technology to help them run at their best and achieve their vision.

These examples meet the criteria above to varying degrees of success. Most are good practices that take a positive step in the right direction, allowing the integration of various purpose perspectives in order to arrive at a comprehensive and integrated understanding.

Intel’s purpose definition is directly aligned to its business activities, therefore its purpose claims can be clearly understood and measured. Even though it positions itself as a provider of an essential technology, there is no direct reference to wider benefit for society or environment.

Nike’s purpose statement joins the psychological perspective of connection and service with society: “Our purpose is to unite the world through sport to create a healthy planet, active communities and an equal playing field for all.” Nike has been successful at embedding purpose into business strategies and activities. “Purpose moves us” is the headline of purpose.nike.com, a website dedicated to purpose that exists separately from their official online presence (where no mention of purpose is made).

SAP injects the consumer perspective with its purpose statement while focusing on its contribution to a better future. The company’s definition shows that purpose is an ongoing process of change and improvement, and it has been successful at communicating, educating, and inspiring others.

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Kenza insights report blockchain purpose adoption model human and machine

“While these can be seen as lighthouse examples, closer consideration reveals that we are still far from realizing the full potential of purpose-led businesses.” 

These companies display ongoing business success, yet further analysis is needed to prove a positive correlation between purpose statement and revenue (Hemerling et al., 2019; Leaders on Purpose, 2019; Havas, 2019).

At this point in time, we argue that a future approach to purpose adoption is needed to close the current gaps around what purpose-led business actually is and how it can be accelerated.

Purpose adoption model

Purpose adoption model

The five elements of purpose-led business: a practical adoption model

In these times, it is mission-critical for businesses and society to understand what purpose-led business means and how to adopt purpose in a sustainable way.

Our research shows that purpose can only create value when it can be operationalized and adopted. This opinion is shared by many sources. There are different singular approaches for using and adopting purpose in the business and brand context, yet there are no holistic or comprehensive models for actively managing its sustainable usage and adoption. A solid working definition is the key to a future-ready approach to purpose adoption – one that can be broken down into measurable elements and actively managed across all stages of maturity.

As discussed above, we approached the definition of purpose from various perspectives: general definition, psychology, business, brand, consumer, employee and public sector. The general perspective defines purpose as why we exist or for what intention, and implies that it motivates our actions. The psychology perspective enhances our understanding of purpose as an intrinsic motivating factor that drives us to find fulfillment. It also unites individuals with wider society, as purpose means acting in the service of the community. The business perspective highlights the value that purpose can bring in terms of engaging all stakeholders. The brand perspective shows purpose as a possible vehicle for communicating the good in a company by enhancing its image. The consumer perspective shows a battle between high expectations and lack of trust – consumers expect businesses to focus on creating social value as well as profit, yet the majority do not believe they do. The employee perspective shows that rallying staff together around a common purpose is a powerful way to attract and retain talent – there is a general desire to find fulfillment at the workplace among millennials and Gen Z employees. While we do not dive deep into the public sector perspective, purpose in this context seems to focus on the responsibility of businesses to make positive contributions to society and environment.

Through our definition, we aim to bring clarity to what a purpose-led business is, why it is relevant, and for which stakeholders. Taking key elements from each of the perspectives discussed, we suggest the following as a working definition with the highest operationalization and adoption potential to create holistic value:

Definition

The five elements of purpose-led business

1. Evolution
2. Self-fulfillment
3. Stakeholder value
4. Positive contributions to society
5. Positive contributions to the environment

Adoption Model

The Kenza Adoption Model

Services

How to prosper with a practical purpose adoption model

Adapt to shapeshifting trends and identify opportunities to grow. Define, operationalize, and measure purpose across your business with Kenza – in only a few weeks.

Your benefits

  • Position your company with a unique purpose statement
  • Operationalize purpose across your entire business ecosystem
  • Measure purpose-led success and accelerate growth with clear KPIs
  • Adopt purpose and increase maturity levels with an intuitive framework
  • Make a positive impact on society and the environment

Our journey together starts here

To shape the future, we need a solid foundation. Please recheck your details.

Our services

Purpose maturity and adoption audit

Format

Online survey, online interviews 

Duration

1 weeks

Purpose positioning and statement definition

Format

Interactive, virtual workshop

Duration

1-3 days

Closed-loop measurement architecture design

Format

Digital delivery 

Duration

2 days

Purpose adoption and growth roadmap design

Format

Digital delivery 

Duration

1 week