Some businesses inspire fierce loyalty, while others fade into irrelevance. Take Patagonia—known for its commitment to environmental sustainability, its customers trust that every purchase supports a greater mission. It flexes its purpose-driven muscles to engender deep commitment from its employees, customers, and suppliers. Now contrast that with WeWork, a company that promised to “elevate the world’s consciousness” but ultimately chased rapid expansion at the cost of its own stability. One built a legacy, the other burned out.
The difference? Purpose.
The Shifting Paradigm of Business Purpose
Fifty years ago, economist Milton Friedman famously declared that “the social responsibility of business is to increase its profits.” This shareholder-centric view dominated corporate thinking for decades, but we’re now witnessing a profound shift away from this narrow focus.
As Colin Mayer, Leo E. Strine, Jr., and Jaap Winter argue, “The purpose of business is to solve problems of society, not to cause them.” This perspective challenges the Friedman doctrine and calls for a more balanced approach to corporate governance—one that considers the interests of all stakeholders, including employees, customers, suppliers, communities, and the environment.
The consequences of the shareholder-first mentality have been mounting environmental and social problems worldwide. Studies show that over the period 1992-2018, there was a growing trend for publicly listed companies to focus on short-term benefits for shareholders rather than on long-term sustainable interests, with negative effects on investment and workers’ compensation.
The False Choice Between Purpose and Profit
For decades, businesses have been told they must choose: prioritize purpose or maximize profits. This is a false choice. Some of the most successful companies—Patagonia, Unilever, and Costco—have proven that doing right by employees, customers, and society doesn’t just build goodwill; it drives sustainable growth.
Purpose isn’t about making less money—it’s about making money with meaning.
Research shows that purpose-driven companies outperform their competitors financially, retain more employees, and build stronger customer loyalty. The key is understanding what makes a brand purpose truly effective.
How to Build a Purpose-Driven Business: The 8 Essential Traits
Just like a faith community’s mission must be more than words on a wall, a business’s purpose must be more than a slogan. It needs to be clear, actionable, and deeply embedded in every part of the organization. These eight traits define a great brand purpose:
1. Clear: Say It So People Get It
A great business purpose must be clear to both internal and external stakeholders. It should use precise language and remove any vagueness or ambiguity. When employees, customers, and investors can easily understand what your business stands for, they’re more likely to align with and support your mission.
2. Concise: Keep It Short, Keep It Strong
In today’s information-saturated world, brevity is key. A powerful business purpose is brief and specific, avoiding unnecessary words or flowery language that adds little value. No one remembers a rambling mission statement—the best messages are sharp, direct, and easy to repeat.
3. Credible: Live It Every Day
Your business purpose must be believable and authentic. Customers and employees are increasingly savvy at detecting insincerity, and purpose-washing can severely damage your brand reputation. Empty promises kill trust. Be real, live your values, and let your actions do the talking.
4. Aspirational: Inspire People to Believe in More
A powerful purpose should inspire your team to make the brand better than its current state. It should point toward a future that’s worth striving for and motivate continuous improvement and innovation. Great businesses, like great communities, thrive on a vision of what could be.
5. Achievable: Stretch, But Stay Grounded
While your purpose should stretch your organization, it shouldn’t break it. An achievable purpose is one that, while ambitious, can realistically be pursued given your company’s resources, capabilities, and context. A brand that overpromises and underdelivers loses loyalty—aim high, but stay real.
6. Aligned: Bring Everyone Into the Mission
True purpose-driven businesses ensure their purpose is aligned with the interests of all stakeholders: customers, employees, investors, suppliers, and communities. This alignment is crucial for sustainable success and positive impact. Organizations with disconnected missions, leadership, and culture struggle to make meaningful progress.
7. Consistent: Reinforce It Everywhere
All building blocks of your business purpose—vision, mission, and values—should be consistent with and reinforce each other. Inconsistency between what you say and what you do undermines trust and effectiveness. People watch if businesses live out their values—a brand’s purpose must guide every decision from marketing to hiring to service and beyond.
8. Memorable: Make It Stick
A great business purpose should be easy for internal and external stakeholders to remember, so they can recall and act upon it. Memorability enhances the likelihood that your purpose will guide daily decisions and actions. If people can’t recall your purpose, they can’t act on it.
Why Purpose Matters Now More Than Ever
The call for purpose-driven business isn’t just idealism—it’s increasingly seen as essential for long-term success. Several factors make business purpose more critical now than ever before:
- Growing Stakeholder Expectations: Employees, customers, and investors increasingly expect companies to stand for something beyond profit. According to research, 86% of employees prefer to work for companies that care about the same issues they do.
- Environmental Urgency: Climate change and resource depletion require businesses to rethink their environmental impact and contribution to sustainability.
- Social Inequality: The widening wealth gap and social disparities call for businesses to consider their role in creating more equitable societies.
- Trust Deficit: Public trust in institutions, including businesses, has eroded. A clear, authentic purpose can help rebuild that trust.
- Regulatory Pressure: Governments worldwide are implementing regulations that require businesses to consider their social and environmental impacts.
The Common Thread: Purpose Fuels Performance
People want to be part of something meaningful. Whether in a community organization or a global corporation, when people align their actions with a deeper purpose, they don’t just succeed—they transform the world around them.
As research from the European Commission shows, the shareholder-dominated governance model has had negative effects on long-term sustainable investment and workers’ pay. Shareholder pay-outs have quadrupled from less than one percent of revenues in 1992 to almost four percent in 2018, often at the expense of other stakeholders. This imbalance calls for a renewed focus on stakeholder-centered corporate governance.
Moving Forward: From Purpose to Action
Having a well-articulated purpose is just the beginning. To truly be purpose-driven, businesses must integrate their purpose into every aspect of their operations. This includes:
- Governance structures that empower consideration of all stakeholders
- Measurement systems that track progress on purpose-related goals
- Incentive structures that reward purpose-aligned behavior
- Transparent reporting on purpose-related initiatives and impacts
- Ongoing stakeholder engagement to ensure the purpose remains relevant and responsive
As the authors of “The Purpose of Business is to Solve Problems of Society” argue, what’s needed is “a uniform mandate requiring large corporations… to become Public Benefit Corporations under state law,” harnessing the power of corporate governance to address societal challenges.
Conclusion
The shift toward purpose-driven business represents not just a moral imperative but a strategic one. Companies that authentically embrace a clear, concise, credible, aspirational, achievable, aligned, consistent, and memorable purpose are better positioned to navigate our complex business environment, build trust with stakeholders, and create sustainable value.
So ask yourself: Is your business solving a real problem? Does your team know why they show up every day? Are your customers choosing you because of what you stand for, not just what you sell?
If not, it’s time to rethink your purpose—because in today’s business world, purpose isn’t a luxury. It’s a necessity.
As we face unprecedented global challenges, from climate change to social inequality, the role of business in society is being redefined. By embracing these eight essential traits of purpose-driven business, companies can contribute to solving society’s pressing problems while building resilient, successful enterprises for the long term.