The five most common misconceptions about purpose

Purpose is undoubtedly one of the big trends occurring across the business world today. Yet there are misconceptions on what it means to be a purpose-led business, Carolyn Butler-Madden from The Cause Effect explains.

The “Purpose” movement has undergone a significant evolution over the last decade, driven by changing employee, customer and investor expectations. However, many business leaders are lagging in their understand of and response to these changes.  And so, it seems that business is not keeping pace with market demands.

While purpose offers opportunity for businesses of all sizes and industries; for medium-sized businesses the opportunity is significant. Because of their size, agility and mindset, mid-sized businesses are best positioned to lead the purpose movement, ahead of both their larger and smaller counterparts.

Understanding misconceptions therefore is vital, as it will deliver insight to the superior value proposition of a purpose-led business.

Here are five of the most common misconceptions about purpose:

Misconception #1: Purpose means articulating your WHY

I come across numerous businesses that consider themselves to be purpose-led because they have a purpose statement on WHY they’re in business. Yet look closely and you’ll see that many purpose statements are simply passive statements of context for a business’s products or services.

If an organisation’s purpose is not about the change it intends to create in the world . . .

If it doesn’t drive innovation and action through and beyond its products and services . . .

If it’s not galvanising an organisation’s employees to create solutions linked to that change . . .

Then it’s not a purpose that delivers on market expectations. Because today the market expects a purpose to be – or link to – a social purpose.

Recent data from the 2022 Edelman Trust Barometer reflects this principle:

People are making the following choices based on their beliefs and values…

• 58 per cent buy or advocate for brands
• 60 per cent choose a place to work
• 64 per cent choose where they invest

While knowing your WHY has value, without a social purpose that galvanises your business, you’re not going to be able to unlock its full value. This leads us to the second misconception.

Misconception #2: Social Purpose = “giving back”
Social Purpose is often misunderstood as “giving back”, leading many to think it’s about donating money, product or time to non-profit organisations. While this may well be part of the package, having a social purpose is bigger. It’s about the societal change a business is inspired to create through and beyond their people, products and services.

Social Purpose-led businesses think about their company’s place in society – how they contribute to positive change in a way that is sustainable, scalable and profitable. Think about a social purpose as creating a movement that your employees, customers, partners, suppliers and investors can be part of. It’s an inspiring and energising force that can transform your organisation.

Misconception #3: Purpose is a marketing or HR responsibility

Let me be utterly clear here. Purpose is not a function of business, like marketing or HR. It’s the opposite.Business is a function of purpose.

Think about that for a moment.

It is people who use business as a vehicle to achieve positive change in the world. A business in service of a higher purpose requires leadership from the top, through every layer of the business.

Misconception #4: Once we’re clear on our purpose, we “market it”

Purpose is not about promoting your brand or business. The most successful purposeful businesses have reframed their approach to marketing. Instead of marketing “the good they do” they use their marketing to build movements for change, inviting others to join their efforts.

Misconception #5: Purpose is not an essential business strategy

While most readers will understand that being “purposeful” makes for a happier and more fulfilling work environment, what may not be as widely understood is that purpose drives profit. With their focus on long-term impact, purposeful businesses have been found to be more agile, resilient and innovative. Unsurprisingly then, they financially outperform their businesses counterparts that don’t have a purpose, or just have a passive purpose statement.

Societal change is now a core business expectation. Mid-sized businesses that recognise this and seize the opportunity to build purposeful businesses, will unlock the full potential of their business and reap rich rewards.