In 2012, Twinkie fans taught us an important lesson about marketing: When it comes to company valuation, customer loyalty is king.
How to discover your company’s core purpose
“Core purpose” – it’s been identified by the most influential business authorities of our time as one of the key ingredients for a high-performing organization.
Jim Collins and Jerry Poras, authors of the innovative business classic Built to Last, embarked upon a 6-year study of truly exceptional companies that have prospered over the long term, including well-known brands such as Hewlett-Packard, 3M, Procter & Gamble, Nordstrom, Disney, and Marriott. These long-lasting organizations each have a remarkable average of 100+ years of sustained business performance. The stock of these organizations has performed 15 times better than the overall stock market has since 1926.
Collins and Poras uncovered some key components that have allowed all of these high-performance businesses to both endure and thrive.
One of these key components is a deeply-held core purpose that creates a strong sense of identity and continuity throughout a business.
Here’s how Collins and Poras describe an organization's core purpose:
[It’s] the organization’s fundamental reason for being. An effective purpose reflects the importance people attach to the company’s work—it taps their idealistic motivations—and gets at the deeper reasons for an organization’s existence beyond just making money.
What’s your company’s core purpose?
A core purpose is bigger than a charismatic leader, product, service, team, or technology.
As Simon Sinek says in his book, Start with Why, it's the idea of who you are as a company and why you exist. As such, an organization's core purpose has to be completely idealistic.
Your ability to prosper as a company is not about what you sell, it's about what you believe. And it should drive everything you do.
Unfortunately, too many companies fail to capture this concept. Instead, they end up with uninspiring, cliché mission statements that are neither motivating nor memorable. These businesses are often driven solely by profit and performance, which in today’s rapidly evolving marketplace isn’t sustainable.
“Leaders die, products become obsolete, markets change, new technologies emerge, and management fads come and go, but core ideology in a great company endures as a source of guidance and inspiration,” Collins writes.
The whole point of your core purpose is to motivate and lead your people. It’s the glue that holds your company together as it grows, expands, and diversifies. Employees at every level of your company must know that at the heart of what they do is something meaningful that continuously anchors their daily activities.
Defining your core purpose is all about clarity, genuineness, and alignment. It doesn’t have to sound impressive on a billboard or as a tagline. It does, however, have to be meaningful to your business.
A true core purpose will endure throughout the lifetime of your company.
Meaning drives engagement
Employees at every level of your company must know that at the heart of what they do each and every day is something that is meaningful. Every day they come to work, they crave a reason for why they are at their job. People fundamentally want to know that what they are doing serves a greater purpose.
Of course, your team knows that their day-to-day responsibilities boil down to tangible, tactical, productive work. But when they know that their daily work is part of the bigger mission, they are more driven to show up every day on time and do their job well.
As a whole, a well-communicated core purpose results in a workforce that is more engaged. Engaged employees work with passion and they feel a profound connection to their company. They cooperate to build a company and they create new customers.
Companies with a highly engaged workforce improved operating income by 19.2% over a period of 12 months, whilst those companies with low engagement scores saw operating income decline by 32.7% over the same period.
- 2010, Towers Watson Strategies for Growth Study
A clear understanding of how a person’s job contributes to their company’s reason for being is a powerful form of emotional compensation. It, quite simply, is more thrilling to share a common purpose than complete a job.
How do you identify your core purpose?
Collins identifies five important characteristics of a company's core purpose:
- It's inspiring to those inside the company.
- It's something that's as valid 100 years from now as it is today.
- It should help you think expansively about what you could do but aren't doing.
- It should help you decide what not to do.
- It's truly authentic to your company.
Bear in mind, your core purpose is not your strategic differentiator. In fact, you can have the same or a similar core purpose as another company, even one that is in an entirely different industry.
For example, both an interior design company and a landscape company might have a core purpose of “bringing beauty to people's lives.” A puzzle company and a team-building event organization may share a core purpose to “provide tools of imagination.”
Not sure where to start? Here are some questions that can help you determine your core purpose:
- Why does our organization's existence matter?
- What is our most important reason for being here? Why?
- What would be lost if this organization ceased to exist?
- Why are we important to the people we serve?
- Why would anyone dedicate their precious time, energy, and passion to our company? (Note: the answer is not money.)
Defining your core purpose is all about clarity, authenticity, and alignment. This means that you do not have to sound “sexy.” This is not something that has to sound impressive on a billboard. It does, however, have to feel meaningful. You’ll know when you finally identify your core purpose because it will be accompanied by a strong sense of conviction. Your team will feel a deep “yes!” when it is uncovered.
Delving into the depths of your business and finding your core purpose will take effort – it’s a major evolution in thinking. But when you make the strides to shape your business from the inside out, you are undertaking actions that have a high ROI.
Knowing your core purpose will heighten employee and customer engagement. Your purpose-driven brand will create and inspire enthusiastic advocates who are personally invested in your company’s success.