Few topics have received as much attention—and generated as much controversy—in recent years as organizational purpose. Believers look to purpose as capitalism's salvation, while detractors regard it as a nice PR trick. Who is right? As it turns out—both are. Pursued deeply, purpose truly can do good in the world and drive performance. But most companies that claim to be purpose-driven practice what I call "convenient purpose."
In truth, any number of firms adopt idealistic purpose statements, take a range of actions to serve society and yet continue to sell products and services that cause serious harm to stakeholders. These companies practice what I call convenient purpose. They articulate a core reason for being (usually framed as either a purpose or a mission statement) that extends beyond the pursuit of profits. The best of them take strong action to enhance communities, improve the lives of customers and employees or benefit the planet. But their commitment isn't sufficiently strong or broadly conceived to lead them to part with socially questionable, "cash cow" businesses.
We can discern other varieties of convenient purpose companies. Some companies exploit a high-minded reason for being (as well as similarly high-minded mission, vision and values statements) as cover to pursue egregiously selfish goals or even criminal activity. We can think of this as purpose-as-disguise. Elizabeth Holmes, the disgraced founder of the diagnostics firm Theranos, proudly proclaimed her belief that "you can build a business that does well by doing good," while Theranos itself articulated a lofty-sounding mission: "to facilitate the early detection and prevention of disease and to empower people everywhere to live their best lives." That didn't stop Holmes from perpetrating a multibillion-dollar fraud that as of 2021 had her facing criminal charges. Other scandal-plagued companies like Purdue Pharma, Turing Pharmaceuticals and Enron have also pulled from the purpose-as-disguise playbook, using lofty language to mask questionable, if not nefarious, conduct.
The vast majority of firms that don't sell arguably harmful products or aren't criminal enterprises likewise practice convenient purpose. Some practice what I call purpose-on-the-periphery: they adopt a purpose statement and take steps to deliver on it, only to treat these efforts as secondary to their core businesses. They divide their efforts into "doing good" through purpose-driven corporate social responsibility (CSR) and "doing well" through their core businesses, perceiving these as separate. They give themselves a pass on reimagining their businesses to serve a higher purpose, thinking it's enough that they return some social value in the form of charity on the side. These companies take maximizing shareholder value as their primary measure of success, giving back just enough to maintain a veneer of respectability.
In addition to firms that practice convenient purpose by treating their reason for being as peripheral, others fall short in a less obvious way. Some leading-edge firms aspire to re-engineer their core businesses to deliver value for both shareholders and society, what they describe as "win-win" solutions. In a seminal 2011 article, Michael E. Porter and coauthor Mark R. Kramer introduced the concept of "shared value," which begins by recognizing that "societal needs, not just conventional economic needs, define markets, and social harms can create internal costs for firms." Instead of writing off social harms as externalities for government to handle and regarding social imperatives as constraints or taxes on the business, the notion of shared value holds that companies' policies and practices must contribute to both social and economic objectives at once.
Firms in many cases have misconstrued these powerful ideas, aiming only for the sweet spot where social and economic value intersect. In a practice I dub purpose-as-win-win-only, they focus exclusively on seeking creative solutions that overcome seeming dilemmas—desirable, win-win solutions that maximize both profit and social good. This application of shared value has an inherent appeal: you need not make tough tradeoffs when you operate in a world where you can simultaneously discover both social and economic value. This extreme view of win-win regards business as a magical place where you can always be your best self and satisfy shareholders.
Leaders of firms that pursue purpose-as-win-win-only are far ahead of their peers, pushing purpose into the core of what their companies do. But they still don't do it as fully as they might. Companies exclusively pursuing win-win solutions tend to deliver on their purposes only to the extent that a perceived win-win is possible—which it often isn't. Forced to choose between financial performance and social good, leaders at these firms usually wind up operating the enterprise for shareholders' primary benefit. Although these leaders strive to serve society, they tend to perceive shareholder value as a performance baseline or nonnegotiable, and social value and purpose as (sometimes) negotiable. They limit their pursuit of social value projects to those where the economic payoffs are also clear. To this extent, we can describe these firms' commitment to purpose as "convenient."
An Alternate Paradigm of Purpose
My study of deep purpose companies, undertaken primarily between 2019 and 2021, revealed that these firms adopted purpose more fully than their peers because they understood better how to embed and activate it. What distinguished these companies weren't just executional tactics or even broader strategies. These companies had a qualitatively different way of understanding and approaching purpose.
Starting with that simplest of questions—what's a business for?—deep purpose leaders frame this statement as the ultimate basis for understanding the enterprise, its identity and its activities. As the psychologist William Damon writes, "Purpose is a stable and generalized intention to accomplish something that is at the same time meaningful to the self and consequential for the world beyond the self." Similarly, deep purpose leaders orient their organizations existentially around the North Star of purpose, articulating a conscious intent to conduct their business in a more elevated way. Purpose in their minds is a unifying statement of the commercial and social problems a business intends to profitably solve for its stakeholders.
Adapted from the book Deep Purpose. Copyright © 2022 by Ranjay Gulati. Reprinted here with permission from Harper Business, an imprint of HarperCollins Publishers.
Ranjay Gulati is the Paul R. Lawrence MBA Class of 1942 Professor and the former Unit Head of the Organizational Behavior Unit at Harvard Business School. Until recently, he chaired the Advanced Management Program, the flagship senior leader executive program, at the school.