Businesses with clear purpose perform better

It was 10 years ago, in 2009, that Simon Sinek talked to us about purpose in business with his TED talk Start with why – a talk that has since been viewed over 42 million times.

People don’t buy what you do, they buy why you do it – Simon Sinek.

What he means is that people don’t just connect to a company’s products or services, but they buy into the reasons why the company exists. They buy into the idea that a company exists for something larger than themselves; a purpose.

So, what is a purpose and perhaps more importantly what isn’t it?

A business’ purpose is not the same as a mission statement, nor is it to be confused with corporate responsibility. Where a mission states what you are trying to achieve and corporate responsibility programs can fund sustainability, education or research, a purpose tells us why you do what you do. It is the reason for the business existing, the thing that inspires us and those around us. Here are some great examples that highlight the difference;

• TOMS founder Blake Mycoskie says the company’s mission is to sell shoes, but its purpose is to provide free footwear to people in need.
• The Kellogg  food company’s mission is ‘to enrich and delight the world through foods and brands that matter’ but its purpose is ‘Nourishing families so they can flourish and thrive’.
• IAG’s state that their strategy is ‘to optimise our core insurance business while creating future growth option’ while their purpose is ‘We make your world a safer place’.

Clearly the why and the what are two different, yet connected, things. As you can see from these examples, it is the why that is driving the what. It is the why that gives us, as a consumer, a reason to believe. These companies are doing what they do to help reach their purpose. Your purpose is the reason that all your business activities take place. Your purpose gives a reason to your customers to choose your business and your products above someone else’s.

Your purpose, clearly articulated, can be communicated to both employees and customers and can really help drive competitive advantage.

Therefore, a purpose is more than just marketing or positioning of brand image, it needs to be an integral part of who your company is. In fact, every decision should be looked at in terms of purpose. When done right and fully integrated, purpose can have significant positive impact in so many areas.

Look out for our next article where we will look at how an embedded purpose brings internal advantages into your business.