In today’s rapidly changing business environment, many businesses recognise the importance of having a purpose. It provides a North star to guide decision making and allows you to focus on what is truly important in the midst of complex societal pressures. Many businesses who now have a purpose, don’t know how to make it a reality. The disconnect between lofty aspirations and daily operations can lead to a lack of engagement, missed opportunities, and public scepticism.
So how do we go from a well-crafted purpose statement on a wall or website to something that is tangible and felt by customers, employees, shareholders, and the world more broadly?
This was the guiding question for Anglian Water, Ofcom, and Clarasys to facilitate a series of interactive sessions as part of the Purpose in Practice Community, established by Blueprint for Better Business. Together with a bunch of other organisations across different sectors, we explored how to use strategy to turn purpose into day-to-day action.
Strategy today can be defined in many different ways, but is generally understood as a way for an organisation to position itself to achieve short-term and long-term objectives, and grow over a period of time. With the Purpose in Practice Community, we found that purpose-led strategy requires a shift in the way we do strategy and what we do it for. Instead of aiming to maximise profit, we aim to deliver on our purpose. Below I outline 5 steps to consider when developing purpose-led strategy, outlining where we might do things differently compared to strategy today:
Step 1. Define an impact ambition
Strategy today involves setting clearly defined aims and the overarching plan to get there, with a focus on maximising profit and shareholder value. Purpose-led strategy focuses on solving the specific problem(s) for people and planet that your business has a material role in solving profitably in service of your purpose. The end goal is no longer maximising shareholder value, but shifts to maximising value in pursuit of your purpose.
To make a purpose ‘real’ companies can start to identify what our partner Mutual Value Labs calls ‘meaningful challenges’. A meaningful challenge is external to the organisation, addresses a specific stakeholder group, and is measurable. Under the banner of a broad purpose statement a set of meaningful challenges can be developed. This is the first step towards creating purpose-led strategy.
Step 2. Understand the systems in which you operate
Strategists today typically start with the company at the centre, focusing on leveraging internal strengths and addressing weaknesses while also considering competitors, market trends, and customer needs. Understanding stakeholders is a critical part of this and companies that are really customer centric, like Apple, do a great job of developing products in line with customer needs and pain points. However, this company-centric approach can sometimes limit the scope of strategic thinking, as it inherently positions the company as the primary reference point and may overlook or ignore broader systemic issues or subtle interdependencies.
Purpose-led strategy takes a different approach to understanding stakeholders. Rather than taking the company, or even customers, as a starting point, it looks at the systems in which you operate through the lens of your meaningful challenges rather than what your business looks like today. Mutual Value Labs calls this ‘decentering’. Your company moves out of the centre, becoming one of many stakeholders, rather than the singular lens through which you see the world. So what is the benefit of this approach? First, it expands the number of stakeholders you can serve and deepens your understanding of these stakeholders. This opens up new opportunities for innovation and mutual value that were not apparent from a company-centric perspective. Second, this approach allows you to better identify and address root causes of systemic challenges, rather than targeting surface level issues that may only exacerbate systemic problems.
Step 3. Create a Theory of Change
Strategists understand that the devil is often in the detail when it comes to strategy creation. Creating a strategy that is deliverable requires a clear alignment of day-to-day business activities with intended strategic outcomes. In purpose-led strategy, you may have guessed by now, the outcome and ultimate impact you drive, are different (see step 1). To understand how resources and day-to-day activities actually produce the intended impact on people and planet, businesses can use what is called a theory of change. Originating from the non-for-profit world, theory of change is an approach to map how activities, outputs (quantitative measures), and outcomes (qualitative measures) contribute to the intended impact. This approach is critical in developing purpose-led strategy as it ensures that prioritised resources actually produce the right results.
Beyond intended outcomes and impact, purpose-led strategy also requires a process-level shift compared to ‘traditional’ strategy. Having a purpose-led process means that the approach is guided by ethical methods, such as those defined in PAS808 (the purpose-led business standard), ensuring that all activities are conducted with integrity and transparency. While creating the purpose-led strategy, consider the following:
- Deep engagement and co-creation: Involve teams across the organisation in exploring profitable ways to deliver impact, aligning daily activities with the organisation's purpose and making the work more meaningful.
- Starting small and scaling impact: Begin with small-scale initiatives or pilot projects to test and learn. This allows for adjustments based on feedback without overwhelming resources. Gradually expand successful initiatives, scaling up to include broader teams and eventually external stakeholders
Step 4 Setting Targets and Measures
Today's strategy relies on traditional business metrics such as revenue growth, market share, profitability, customer satisfaction, and return on investment to develop targets and success measures in line with strategic objectives. Most companies now also have non-financial measures of success around DE&I, employee wellbeing, sustainability, and customer satisfaction. Businesses also recognise that a balance needs to be struck between the short-term and long-term sustainability of the business, but incentives, in particular for leadership, often align with prioritising short-term financial returns because quarterly growth remains the main objective.
Purpose-led strategy builds on the success of strategy today. It sets clear, actionable targets and measures that align with the intended impact (as described in step 4) and allow you to bridge the gap between short-term and long-term value. Long-term value is pivotal to delivering on impact, but short term value is needed to keep the business afloat. Profit here is the fuel to make your impact happen. It is needed to pay the bills, invest, and build reserves, but is not a goal in itself. Purpose-led strategy also shifts the way in which targets and success measures are developed. Similar to step 3, there is an emphasis on using ethical methods to develop targets and measures, such as equality, transparency, and honesty, for example in admitting mistakes to ourselves and externally.
While these targets and measures are important, they are not a goal in itself. Don’t get stuck trying to measure everything. Giving people the permission to tell their story - what purpose means to them - is a great way to make the complexity more accessible.
Step 5. Delivering on Your Purpose Led Strategy
Strategy and delivery cannot be seen as entirely separate. The ultimate success of a strategy is dependent on how it is delivered. Delivery can be done in many different ways, ranging from detailed roadmaps to more agile approaches, but the key is that thoughtful action is taken in pursuit of your strategic goals.
Purpose-led strategy leverages typical strategic enablers around the operating model across people, process, technology, and data to deliver on the organisation’s meaningful challenge. Performance is measured more in line with how well the organisation delivers on your purpose, which might include changing the way you incentivise your people. In addition, the delivery itself needs to be purpose-led. In practice this often requires cultural and behaviour change initiatives to avoid reverting back into prioritising profit as the main outcome. Purpose-led strategies thrive on agility and the ability to adapt to new insights and changing world conditions.
Start small and learn along the way
Do you have a purpose, but aren’t sure how to translate this into meaningful action? Look at creating purpose-led strategy. Review your existing business strategy - its objectives, resource allocation, and measures of success - and see what needs to change for it to become purpose-led. Engage purpose-curious people within the organisation and work your way through the steps outlined above. Start small, celebrate wins, and embrace learnings along the way.
Purpose-led strategy requires a shift in the end-goal of your strategy away from just solely focusing on profit to prioritising impact, as well as the means of getting there. Creating purpose-led strategy does not require you to abandon all that we have learned about creating good strategy. Rather, we can leverage our existing business strategy as an enabler to impact. Purpose-led strategy is not about creating just another large document that can be stored somewhere on a virtual shelf. It is ultimately about defining why as a business you exist in the world, what you want to change, and how you can go about getting there.
