Purpose – Why is Purpose Important in Business?
19th Jun , 2020
By Chris Cartney, June 2020
Your business purpose should resonate both with your people and customers. You should be envisioning your business as one where employees are excited to go to work and customers are loyal to your business without a second thought. Business purpose has been described as the “philosophical heartbeat” of a company. Greg Ellis, former MD of the REA Group, said his company’s purpose was “to make the property process simple, efficient, and stress free for people buying and selling a property.” This emphasised the importance of serving customers or understanding their needs by putting his managers and employees in the customers’ shoes. It says “This is what we’re doing for someone else.” And it’s motivational because it connects with the heart as well as the head. Indeed, Ellis called it the company’s “philosophical heartbeat.”
At International Business Mentors, we find that business people who focus on a clear and articulate business purpose are better able to drive themselves and their business forward. With a clear purpose, you are better able to develop a clearer business strategy, create better competitive advantages against competitors, inspire more focused innovation, improve brand trust and customer loyalty, boost communication of the business purpose that coordinates efforts of your people, reduce wasted resources on non-critical activities, and improve understanding by your customers. Ultimately, a clearer purpose and focus helps drive individuals and businesses to better business success – especially when coupled with an experienced business mentor.
Since personal purpose is the most basic reason for our own existence, it must also be true for a business. Once business purpose is defined, you can then clearly state your business vision and mission, and these become core to developing your business strategy.
The Golden Circle of Marketing
There is great business value in your business purpose directly supporting your marketing to your customers. According to Sinek’s Golden Circle of Marketing, there are three layers of how to market your business. You can talk about:
- WHAT your business does
- HOW your does what it does
- WHY your business does what it does
Sinek calls this the Golden Circle of Marketing, with the “what” on the outside of the circle, then “how”, and “why” in the inner circle. A business’ “what” and “how” messages speak to their customer’s rational brain, and these explain the services offered and how they are offered, typically in a way that attempts to make that business stand apart from its competitors. However, most importantly, the “why” statement targets the emotional centre of our brains, which neuroscience has shown us is how we make decisions. Here are some great examples of “why” statements:
- Under Steve Jobs, Apple’s mission statement was “To make a contribution to the world by making tools for the mind that advance humankind.”
- Starbucks: “Our mission is to inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time.”
- Nike: “To bring inspiration and innovation to every athlete* in the world. *If you have a body, you are an athlete.”
- SEEK: “To help people live more fulfilling and productive working lives and help organisations succeed”.
- LEGO, the world’s largest toy company, doesn’t just sell toys; it strives for “the development of children’s creativity through play and learning.” To fulfil that promise, it designs compelling sets of blocks that can be assembled in myriad ways. Just as critically, it fosters online and in-person communities of enthusiasts of all ages to inspire ongoing engagement, learning, creativity and innovation.
- IKEA, the world’s largest furniture manufacturer and retailer, has a clear message about the value it offers. It promises “to create a better everyday life for the many people” – as distinct from the affluent few – by “offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.”
How Business Mentoring Can Assist with Defining Your Purpose
At International Business Mentors, our business mentors and business coaches help many organisations to define, refine, or update their business purpose. Business mentoring and coaching can assist business leaders to reassess their business purpose and strategy, providing support for clarifying your business purpose, vision and mission.
Our business mentors and coaches will ask many questions to help get to the heart of your business purpose and strategy development, including:
- What is your reason for existing as a business?
- What are your values?
- What do you do and for whom do you do it?
- What should you provide to your customers that they demand?
- Why is your business uniquely capable of providing its goods and services?
- Why do you serve your clients in the way that you do?
- Why are you in this industry?
- Why did you start this business?
- What is your promise to your customers?
- Who does your business benefit?
- What image of your business do you want to convey?
- What does success look like for your business?
- How will you achieve your goals?
From your clear business purpose, you can then develop your vision of what the business should ideally look like in the future in a clear and memorable way. For instance, the Swedish company Ericsson (a global provider of communications equipment, software, and services) defines its vision as being “the prime driver in an all-communicating world.”
Once you understand and have embraced your agreed business purpose, you can inspire collective working towards that business purpose, which underpins the delivery of your strategic objectives.
Next, you can develop your business mission. The mission describes what business your organisation is in (and is not in), both now and into the future. Its objective is to provide focus for management and staff. For example, a professional services firm might define its mission by the type of work it does, the clients it caters to, and the level of service it provides. For example: “We’re in the business of providing high-standard defensible tax and legal assistance to senior managers and their clients in medium-to-large accountancy firms.”
Next comes the business strategy, which is a plan of actions or decisions to assist the business in achieving specific business objectives, both short and longer term.
Why a Good Business Strategy is Important
The business strategy is a carefully planned and flexible master plan that management implement to meet the purpose, vision and mission and secure the desired competitive position in the market, carry on its operations, service customers appropriately, and achieve the desired ends of the business both financially and in all other respects. This includes the desired image, direction and destination of the business. A good business strategy has objectives such as:
- Achieving effectiveness
- Perceiving and utilising opportunities
- Mobilising resources
- Securing an advantageous position
- Meeting challenges and threats
- Directing efforts and behaviour
- Gaining command over the situation
Before your strategy is accepted, it must be critically assessed for market sensibility, operational achievability, financial viability and sufficiency of net cash flow, profitability, returns and ability to be adequately funded, as well as strength of supply chain, systems, online presence and senior leadership capability, depth of your people, and organisational ability to deliver. If it does not stack up, some rethinking may be required.
Strategy development needs fresh eyes, and our business mentors and coaches are well placed to lend you confidential, questioning and confidential support.
To create a positive performing business culture, business leaders should use the development process of the business purpose statement, vision, mission and strategy as a motivational process. For example, the business purpose statement must speak to the very heart of the organisation, should be something all of your people and customers can directly relate to and be inspired by, and become central to all of your business decision-making and the practices of the business.
For example, if the business exists to deliver the best customer service, then that must be the focus of all your people, systems, products and services. Once defined, you can then move onto the mission statement, which explains what a business does and who it does it for. You must choose who you are going to provide your products and services to and what you will offer them. The vision statements must envisage the long-term goals for the business’ success and future, while the values statements explain what is important to the business and help to define its culture. Values describe the desired culture. As Coca-Cola puts it, they serve as a behavioural compass. Coke’s values include having the courage to shape a better future, leveraging collective genius, being real, and being accountable and committed.
Assessment of Performance
Strategy and operational plans pull all these processes together and allow for periodic reassessment to see if all are pulling their weight in the right direction and performing or not. The reassessment also questions if the strategy needs a rethink given changes in the economic environment, customer demand patterns, competitor threats or opportunities, operational advances or problems, needed system or IT changes, people opportunities or threats, new opportunities such as new markets opening up, competitors for sale, new product or service developments or external threats such as trade wars, wars, pandemics, social movements, new competitors entering the market, supply chain issues or opportunities, etc.
At International Business Mentors, our experienced business mentoring and coaching professionals can support you in developing your purpose statement and strategy development, as well as carrying out assessment, as part of the business mentoring program and business growth strategy.
Call International Business Mentors today to discuss how a business mentor or business coach can help you define your purpose and build your strategy to support this.