Corporate purpose has become a beacon that guides and directs key business decisions, informing strategy and ensuring that everyone is aligned across growing global businesses, according to The Power of Purpose, a new study from Burson-Marsteller and IMD, one of the world’s top business schools.
“First and foremost corporate purpose is a corporate strategy that drives business decisions,” says Jeremy Galbraith, CEO, Burson-Marsteller Europe, Middle East & Africa. “This study shows that corporate purpose is becoming central to guiding business decisions. Communicating it clearly, internally and externally is one of the key strategic tools for companies seeking to build trust and reputation with stakeholders.”
The study showed that companies feel there is more danger today associated with a lack of transparency than too much, especially given social media. Transparency around purpose is also critical internally as it creates a culture which unites employees, instils shared values and provides motivation and inspiration.
And corporate purpose tends to gain in importance at a time of organisational transformation. There were three scenarios where corporate purpose was identified as particularly relevant: following a change of leadership; following a merger and for re-establishing and refreshing a brand.
Purpose is also a key strategic tool for companies in a crisis, providing a story to tell and as a way of countering accusations that are perceived to be inaccurate. For corporate purpose to be effective, it should be in place before a crisis hits.
“Business leaders are rapidly realising that companies cannot do business on a failing planet, and that they are being held accountable,” says Aileen Ionescu-Somers, director of the CSL platform at the IMD Global Center for Sustainability Leadership. “As the power of the global corporation is growing beyond national or regional boundaries it is clear that a purpose defined solely around profit is inadequately articulated since it does not reflect this vastly changing dynamic.
“However, it is essential that purpose is embedded in overall organisational strategy so that there isn’t a disconnect between what companies say they do and what changes are really being made to how they operate.”