Why purpose is critical to your organisations strategy.

It is widely accepted that being clear on your purpose is an essential element of organisational success.

Purpose serves to answer the 'Why' of an organisation. Why does the organisation exist and why would anyone engage with and buy or access our services or products that we provide?

Defining your purpose requires you to look beyond the 'what you do', but to dig deeper and to think about the bigger picture motivators and benefits you provide to the customers and communities you serve.

In addition to providing your organisation and stakeholders a unifying 'north star', there are two other key reasons as to why purpose is critical to your organisations strategy.

1. It helps to redefine the playing field.

Traditional ways of engaging with customers or stakeholders are changing. Rather than being restricted to a single playing field, organisations that let purpose be their guide are able to think about the broader eco-system in which they exist and identify new opportunities to pursue.

In an increasingly competitive market, successful organisations have been able to define a purpose that looks at connected interests and relationships among multiple stakeholders which create new opportunities beyond the members and participants they have traditionally served.

2. Reshapes the value proposition.

By having a purpose driven approach which facilitates opportunities in a new or larger ecosystem of stakeholders, organisations can create a more holistic value proposition and deliver benefits to customers over a longer lifespan. An example might be a sport broadening their purpose beyond their traditional competition focus and offering services and programs with a focus on fitness, health and wellbeing to meet a growing participation trend.

Organisations that make this shift are able to do so in three main ways; by responding to trends, building on trust, and focusing on pain points.

How to define your purpose.

Leaders and businesses that have effectively defined corporate purpose typically have done so with one of two approaches: retrospective or prospective.

The retrospective approach builds on a firm’s existing reason for being. It requires that you look back, codify organisational and cultural DNA, and make sense of the organisation's past. The focus of the discovery process is internal. Where have we come from? How did we get here? What makes us unique to all stakeholders? Where does our DNA open up future opportunities we believe in? These are the kinds of questions leaders have to ask.

The prospective approach, on the other hand, reshapes your reason for being. It requires you to look forward, take stock of the broader ecosystem in which you want to work, and assess your potential for impact in it. The idea is to make sense of the future and then start gearing your organization for it. The focus is external, and leaders have to ask a different set of questions: Where can we go? Which trends affect our business? What new needs, opportunities, and challenges lie ahead? What role can we play that will open up future opportunities for ourselves that we believe in?

In Summary

By putting purpose at the core of your strategy, businesses can realise three specific benefits: more unified organisations, more motivated stakeholders, and a broader positive impact on society. Defining your purpose should be a critical part of the strategy development process for every organisation.