Why purpose driven companies outperform, and outlast, their competition
A recent study found that 90% of people who work in purpose-driven organizations feel engaged in their work. By contrast, only 32% of people feel connected to their work in companies that employees describe as less purpose-driven.
Why the big difference? First off, purpose weaves an organization together. A clear, shared purpose impacts everything from cross-functional collaboration to strategic alignment. Purpose- driven companies have inherent benefit by allowing employees to self-select into an organization where their values will be supported and reinforced. Furthermore, purpose gives a company strategic focus that guides important decision making, especially when data alone doesn’t tell a clear story. Purpose helps unite people behind a cause. It creates a strong foundation for some of the world’s most respected brands. Take Patagonia for example. They live and breathe their ethos, and it leads them to make counter-intuitive decisions that their peers lack the clarity and / or courage to make. As a result they are almost universally admired by their customers and business leaders alike.
The founders of Volition Partners had deep personal experiences with purpose-driven companies early in our careers. For Dave, it was when he moved to California in 1999 to start the online music company that created Rhapsody, the world’s first on-demand streaming music service. The company’s drive to democratize and share the joy of music launched a business that forever changed how people consume music and powered the company through some very tough times. When the dotcom bubble burst and capital dried up, the company remained focused on its purpose, pivoted its business model and ultimately succeeded where so many others failed. For Sean, it was his first consulting firm, The Trium Group, whose clearly defined purpose not only fueled new innovative approaches to organizational development, but also created a collegial bond across the firm that has yielded decades long friendships.
Now, after 20 years of work at or with a wide variety of companies, we continue to believe that purpose creates great, long-lasting businesses where teams thrive and life-long professional relationships develop. We’ve noticed that purpose-driven companies are the most resilient; these are the companies that get through the most challenging times. Particularly start-ups, which almost always face at least one “near death” experience at some point in their growth. And it’s not just about resilience at startups: Inc Magazine recently reported on a study that showed that S&P 500 companies that embrace purpose, vastly outperform the market in creating shareholder value as well.
Still, it’s surprising how few companies succeed at connecting internal purpose to business strategy and operational alignment. Many leaders hone their individual leadership skills, or specialize in drawing insights from data, but struggle to find the consistent internal alignment that is the hallmark of high-performing businesses. It’s hard to step back and find shared ground internally when a business is operating at full speed.
At Volition Partners, we ensure that business strategy, internal purpose and external action work together. Using insight tools and experienced pattern recognition, we help clients align behind their why - not just the what. The alignment on the overall why - their purpose - allows disparate decision makers to act in concert and produce amazing results.
We believe that a shared sense of purpose helps build a culture that enables smart, motivated people to feel compelled to make decisions and take action. Purpose is at the foundation of strategic rigor and operating excellence and provides the necessary motivation and meaning to build and run a successful business.
Curious on how to articulate or discover a purpose that can enliven and align your organization? Try this simple approach, by yourself or with your leadership team:
Rapidly brainstorm short responses to the following questions – come up with 5-10 (or more) for each question:
What is it that inspires us, the thing we obsess about that brings us energy and joy? (e.g., stories that move us, touch our hearts)
What are we particularly good at, what capabilities set us apart from others in our space? (e.g., making the extraordinary relatable and inspiring)
How do we create value for others, what is uniquely valuable about our impact? (e.g., finding the ‘gems’, bringing the underrepresented to light)
Now imagine those elements represent overlapping circles – a Venn diagram – what short phrase could you put in the middle that captures all three? (e.g., Our Purpose: cultivate hidden gems that inspire humankind)
Co-authored by Dave Williams and Sean Martin