Company purpose has mainstreamed its way into management vernacular, and with plenty of good reason. Evidence from across industry sectors has proven that genuinely purpose-driven organizations outperform their non-purpose-driven competitors on critical metrics. For example, brands that have a clear commitment to improving their customers’ quality of life outperform the stock market by 120%, and over the last decade, purpose-driven brands have seen their valuation skyrocket by 175%. In one study of 28 companies over a 17-year period, purpose-driven companies grew by 1,681% in comparison with the S&P 500 average of 118% over the same span. Even more compellingly, 77% of consumers feel a stronger connection to purpose-driven companies over traditional companies, and 66% of consumers would switch from a product they typically buy to a new product from a purpose-driven company.
How Executive Teams Shape a Company’s Purpose
To shape an enduring purpose that sets a company apart both competitively and as an employer, leadership teams must pave the way. An effective, aligned, and committed executive team — the governance mechanism that shapes the story of an organization unlike any other team — is central to shaping and sustaining impactful corporate purpose. In a post-pandemic workplace where talent retention and productivity have become top executive priorities, clearly purposeful organizations come out on top. Leaders must create a culture of radical trust, in which people not only understand and believe in the purpose the company serves, but also feel safe to act on it for the good of the organization. From that combination of clarity and trust comes exceptional innovation and growth. The authors present five strategies for leaders to put their company’s purpose into practice.