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The Power of Purpose

2 April 2021

Oxford University and Ernst & Young found that public dialog on purpose increased five-fold between 1995 and 2016. In fact, there is clear evidence that purpose is a powerful driver of organizational performance. Research reveals that more than 90% of purpose-driven firms deliver above average growth and profits, and private equity investors consider purpose as a key factor when deciding to invest.

Highlighting purpose in an organization

It seems that purpose is not yet being deployed as widely or as effectively as might be assumed. For example, having asked 2,000 CEOs what the purpose of their organization was, researchers at the Opus College of Business at the University of St. Thomas and the Carroll School of Management at Boston College found that a staggering 93% failed to state why their company was in business. The CEOs were more likely (77%) to allude to what their organizations did, referencing products and services, while 95% neglected to reference a core problem they endeavored to solve. After analyzing the findings, the researchers concluded that they “reveal[ed] serious deficiencies in corporate performance statements” and outlined ways companies could “infuse their statements with meaning” to attract and retain talent motivated by meaning as well as money.

This research highlights a serious deficiency in how organizations are designed. In creating opportunity, purpose helps companies redefine the playing field and reshape their value proposition. Purpose, then, enhances the ability of companies to succeed by improving employee experience, which is linked to higher levels of employee engagement, stronger organizational commitment, and increased feelings of well-being. So, it is vital to narrow down what purpose is and how it should be properly embedded as an organizational quality.

Crafting a meaningful purpose statement

To be truly valuable, a purpose statement should pinpoint an aspirational reason for being that inspires and provides a call to action for an organization, its partners, and stakeholders. It does not have to promise a world-changing impact — although that certainly helps. Instead, it should clearly express the organization’s impact on the group it is trying to serve. If a purpose statement is to fully perform its job — if it is to convert intent into strategic clarity and improved financial performance — there must be more to it than a call to action.

A well-crafted purpose statement should:

Perhaps just as important as the statement itself is the way it is created. A collaborative process of crafting the statement is an essential contribution to changing organizations for good. Given the right approach, purpose has the potential to establish the discipline that will enable leaders to leave behind the traditional methods of command and control and move confidently to more delegated approaches that help people feel connected, inspired, highly valued, and empowered to perform.

By creating organizational flow (OnFlow™) in your organization, your team will experience heightened creativity, increased performance, and accelerated problem solving. Using OnFlow to diagnose your situation, we can help you transform the way you work and the results you achieve. To learn more, visit Fitch Consulting.
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