The hype train on corporate purpose keeps steaming down the tracks. I have written about it before and tried to be positive. But I feel the need to be more constructively critical. If everyone has been convinced that they need to have a corporate purpose, let’s at least have it be a useful one. I try to contribute to that goal in this Playing to Win/Practitioner Insights (PTW/PI) piece. And as always, you can find all the previous PTW/PI here.
The hype train
The articles and books on corporate purpose just keep coming. For example, in the past month alone, Harvard Business Review published four pieces on purpose (one, two, three, four). And the books keep coming, whether David Gelles’ Dirtbag Billionaire, Ranjay Gulati’s Deep Purpose, or the somewhat earlier Corporate Purpose: Why It Matters More Than Strategy by Shankar Basu.
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There is lots of sensible stuff in the articles and books. However, there is a theme across them that is most explicit in Corporate Purpose: Why It Matters More Than Strategy. It reminds me of the logical problem in my least favorite business book ever—Execution, which argues that execution is more important than strategy and then proceeds to include strategy as a subcomponent of its definition of execution. In this (il-)logical construction, if there is anything useful at all about execution outside of strategy, it will be more important than strategy by tautology.
In similar fashion, if you think corporate purpose—which is clearly one of your strategic choices—matters more than strategy, you have no idea what strategy is.
The general view being put forward in the purpose arena is that having a societally lofty corporate purpose is the most important thing a company can do—and largely guarantees success or at least is strongly correlated with success.
I don’t buy it. I don’t see it as a helpful view.
Integration is the key
The same thing worries me about purpose as worries me generally about the first box of the Strategy Choice Cascade—Winning Aspiration. Visually, it is the first box. And management teams and boards get excited about diving into it first. They often spend massive amounts of time on determining their Winning Aspiration and in due course nail it down and etch it in stone.
But their chosen Winning Aspiration not infrequently lacks integration with the other four questions. That is how you end up with insane aspirations like WeWork’s infamous “to elevate human consciousness.” I don’t know what that has to do with leasing office space, even if it is funky space! A Winning Aspiration of that sort is worse than nothing at all.
And that leads to my concern about the corporate purpose hype train. Purpose is just another name for that first box. You can call it vision, mission, purpose or aspiration. It doesn’t really matter to me—though I think having one of those four is better than having multiple ones (which I have argued before). And because of the hype, I fear that the outcomes will be unconnected and unrealistic because companies have been convinced that if they have some lofty save-the-world purpose, they will succeed. So, make it bigger and better!
No. The absolute key is integration. The five choices on the Strategy Choice Cascade need to fit with and reinforce each other. The only way that happens is if each of the five choices is flexible—and customizes to the others. If the five choices independently are inflexibly locked and loaded on, you will have a bad strategy. That means if you start by setting and locking on a lofty purpose, it is unlikely that you will be able to realize that purpose because you won’t be able to make four other choices—Where-to-Play (WTP), How-to-Win (HTW), Must-Have Capabilities (MHC), and Enabling Management Systems (EMS)—that bring the purpose to life. Chances are, your purpose, regardless of how lofty, will end up looking naïve and unrealistic, like WeWork’s.
Instead, you need to toggle back and forth between the five choices to build the fit and reinforcement until such time as you have a purpose on which you can reasonably expect to deliver. If you care about having a lofty purpose and you do the hard thinking work, you should be able to achieve a nicely integrated Strategy Choice Cascade—with a purpose about which you can be proud.
Sustainability is the goal
A critical aspect of any great strategy is sustainability. By this I don’t mean the narrow goal of environmental sustainability. I mean a strategy that is built to last. We like and admire strategies like those of P&G or Lego or Apple because they are successful across generations. That doesn’t mean they are immune to crises—they are demonstrably not—but that they have the strength to get through the crises and renew themselves—like Apple in 1997 and Lego in 2005.
I believe that the only strategies that are sustainable are strategies that are good for all the parties involved. If your strategy requires you to abuse your employees, rip off your customers, hurt the communities in which you operate, and/or skirt society’s laws and regulations—it won’t last. It may be profitable for a time, but in due course, one or more of these constituencies will successfully undermine it.
For sustainability, you need employees who thrive—which I wrote about earlier in this series with Zeynep Ton. You need customers to truly benefit from your existence. You need communities that are delighted to have you as part of them. And you need to make society a better place—which I also wrote about earlier in this series. Any company has the ability, as I termed it in that piece and in a longer Harvard Business Review article earlier, to improve the civil foundation of society through innovation designed to make the world a better place.
If you do these things, it is much less likely that anyone will fight you or undermine you. You will get the benefit of the doubt. Competitors will be inclined to go elsewhere and/or compete differently. And the ecosystem around you will help you evolve positively because the players in it have the desire to see you prosper.
If a corporate purpose integrates seamlessly with the other Strategy Choice Cascade choices, resulting in a high level of fit and reinforcement and it helps the company pursue a sustainable strategy, it is a strong positive feature. And I support that kind of corporate purpose as an integral part of strategy (which I view as fitting into the Winning Aspiration box of the Strategy Choice Cascade).
E.l.f. Beauty example
Wildly successful e.l.f. Beauty provides a great example of a constructive and strategic corporate purpose, which is: To create a different kind of beauty company by building brands that disrupt norms, shape culture, and connect communities through positivity, inclusivity, and accessibility. That Purpose/Winning Aspiration choice is perfectly integrated with its other strategy choices.
Those choices include a WTP focused on millennials and Gen Z, who find the e.l.f purpose highly appealing. It includes a HTW focused on providing premium quality cosmetics and skincare products at extremely affordable prices—to achieve the accessibility purpose. The MHC include low-cost sourcing, and both understanding and supporting the community of e.l.f. enthusiasts. The EMS include management approaches that enable “moving at e.l.f. speed,” in keeping with the needs and demands of the customer community the company serves.
The strategy, including the purpose, shows the hallmarks of sustainability. Employees love working there and being part of the diverse, inclusive community inside the company. Their retail partners love e.l.f.’s focus on their productivity, not just e.l.f.’s own. The customer community loves them, including e.l.f.’s commitment to clean, vegan, and cruelty-free products, and its willingness “to challenge industry norms and shape a more inclusive and positive culture in the beauty world.” Competitors mainly choose to compete elsewhere or in different ways rather than challenge e.l.f. head on.
Sustainability can only ever be proven over the fullness of time. But thus far things are looking positive for this integrated, sustainable approach to strategy and purpose.
Practitioner insights
A corporate purpose won’t help the world just because it is lofty. Purposes would all be loftier than they are today if it was easy. It isn’t. Like all strategy choices, the choice of Purpose (or Winning Aspiration, whichever term you prefer) entails making hard and creative choices.
When making your purpose choice, aim for sustainability through integration. Never consider your purpose choice independently of the other four key choices. Consider multiple draft purpose possibilities and build Strategy Choice Cascades for each of them. Only then choose the purpose and remaining cascade choices that give you the best shot at the holy grail—a sustainable strategy.
If you do it that way, I will applaud your purpose. I won’t fear that you have simply boarded the corporate purpose hype train!
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