The Power of Organizational Purpose: Eight key steps to effective corporate social impact
In 2019, the Business Roundtable redefined the purpose of a corporation to promote ‘an economy that serves all Americans.’ This shift marked a turning point in how businesses view their role in society. But what does organizational purpose really mean for your organization, and why is corporate social impact critical for success?
At its heart, organizational purpose is the central idea that drives an organization forward. For most, it’s the reason they show up to work each day, believing they’re contributing to something meaningful. Purpose should be evident from the moment anyone – be it a consumer, employee, or stakeholder – interacts with a business.
The gap between purpose organizational purpose and execution
Organizational purpose has power. Yet many businesses struggle to define and articulate theirs effectively. Our work at Orangefiery aligns with broader industry findings: while 89% of executives believe organizations with shared purpose will have greater employee satisfaction, only 37% say their business model and operations align well with that purpose. The gap between purpose as an aspiration and as an operating model presents a significant challenge – and opportunity – for modern businesses.
When rapid societal changes and day-to-day operations take precedence, purpose can take a back seat. The consequences? A disconnect between an organization’s core values and how it engages with employees, investors, regulators, policymakers, and customers – which in turn impacts overall business performance and corporate social impact.
Organizational purpose as an organizing principle
Purpose should not be an afterthought or a box to be checked; it should be the driving force behind an organization’s decision-making and actions. It requires commitment at the leadership level and effectively engages insights from across all business functions to make it authentic and actionable.
Companies that are doing organizational purpose right:
Consider Patagonia, a company that has woven environmental sustainability into its DNA. Its purpose statement, ‘We’re in business to save our home planet,’ isn’t just a slogan—it drives everything from the company’s structure to production methods to activism. For example, instead of taking the company public, CEO Yvon Chouinard and his family gifted all of their family fortune (over $3 billion) to the Patagonia Purpose Trust and Holdfast Collective to fund their commitment to sustainability and saving the planet.
Patagonia is also known for using recycled materials to produce a significant portion of its products. They’ve created a “Worn Wear” program that encourages customers to repair and reuse their products and offers to repair any of their products to reduce waste from discarded clothing.
It also participates in environmental activism efforts, like donating one percent of its sales to environmental causes, which has amounted to over $140 million since 1985. Patagonia provides grants to environmental grassroots organizations and actively campaigns on environmental issues, like protecting public lands and combatting climate change. As Patagonia celebrates its 50th anniversary this year, it has been recognized by companies like Axios as the most reputable brand in the U.S.
A company like Warby Parker provides an example of a company that has had organizational purpose integrated into every function of its business since inception. With a mission to provide affordable, designer eyewear while leading the way for socially conscious businesses, it has integrated purpose into the following business practices:
- Buy a Pair, Give a Pair program: For every pair of glasses sold, Warby Parker distributes a pair to someone in need through nonprofit partners. As of 2022, it has distributed over 10 million pairs of glasses through this program.
- Warby Parker Pupils Project: provides free vision screenings, eye exams and glasses to schoolchildren in need.
It also continues to partner with organizations that provide job training and career opportunities in the optical industry for underserved communities.
While the fast furniture industry is characterized by rapid production of trendy, low-cost items often at the expense of sustainability, IKEA is striving to differentiate itself by embracing circular economy principles and sustainability goals. Despite operating in the mass-market furniture space, IKEA strives to challenge the fast-furniture model and uphold its commitment to sustainability, affordability and social responsibility by:
- Setting sustainability goals: IKEA aims to become climate-positive by 2030 by reducing more greenhouse gas emissions than its value chain emits, as well as using only renewable and recycled materials in their products.
- Incorporating a circular economy structure into their retail practices: It has implemented buy-back programs in numerous countries so customers can return used furniture for store credit.
- Relying on responsible sourcing: All wood used in IKEA products comes from more sustainable sources that have been recycled or are FSG-certified.
- Participating in social initiatives: It has established its own foundation to support programs focused on children’s rights, education and families living in poverty. It also provides employment programs to help make workforce opportunities accessible for refugees.
These companies exemplify how purpose can serve as a powerful catalyst for both profitability and positive impact. By integrating their core values into every aspect of their operations, they’ve created efficient, purpose-driven business models that, not only enhance their bottom line, but also allow employees and customers to witness and participate in meaningful change in real-time.
Their success demonstrates that when purpose is authentically woven into an organization’s DNA, it becomes a competitive advantage, driving innovation, customer loyalty, and employee engagement. These companies prove that businesses can thrive financially while simultaneously addressing societal and environmental challenges, setting a new standard for corporate responsibility in the 21st century.
The business case for purpose
Some may argue that focusing on purpose could detract from profitability. However, research suggests the opposite. A 2019 study published in the Journal of Business Ethics found that companies with a strong sense of purpose outperformed the S&P 500 by 5-7% per year. What’s more, in an era of increased scrutiny and transparency, stakeholders are quick to call out companies that pay lip service to purpose without backing it up with concrete actions. Take Wells Fargo as an example – this company has faced significant backlash and financial penalties when its actions contradicted its values. The risks of “purpose-washing” are significant and can severely damage a company’s reputation and overall business performance.
The path from purpose to corporate social impact
Here are eight key steps to enhance your organization’s activation of its purpose and drive meaningful results on corporate social impact:
- Renew stakeholder insights: Purpose should be lasting, but it does evolve based on the changing dynamics of society and the world around us. Ensuring your organization has a current set of stakeholder insights, understanding what challenges are keeping them up at night and what opportunities they see on the horizon, is an essential part of ensuring your organization’s purpose remains relevant.
- Refresh your purpose: While a company’s vision or purpose should articulate the type of aspiration that is always unattainable, always over the horizon line of the future, things do change. It’s important to ensure a purpose statement captures current insights and market dynamics and can be translated into concrete terms and actions
- Set your norms and governance: Taking a purpose and turning it into action involves creating operating norms and processes. These things can be healthy, but they can also drift away from the norms and governance that once perfectly aligned with organizational purpose. Is your organization customer-centric? Does it incorporate new operational efforts and new channels of engagement with stakeholders? Ensuring there is clear alignment between vision and purpose and the way an organization functions helps ensure stakeholders feel that sense of purpose from their interactions with your organization
- Bring the brand into alignment: Examine corporate brand efforts and see that the organization’s brand core reflects your organizational purpose. Are attributes in alignment with purpose? Does the brand narrative or brand role reflect the organization’s purpose? If not, it may be time for a brand refresh.
- Ensure organizational alignment with purpose: Do all of your employees, ambassadors and allies “get it”? Stand up feedback loops and roll out training programs to ensure purpose is well understood and embedded in organizational decision-making efforts. Work to make purpose a regular theme in meetings and town halls. Celebrate cultural “purpose moments” where teams and colleagues have put an organization’s purpose to work in the world—and report back on its impact.
- Look at your commitments: What is your organization doing in its ESG and CSR activities? Is its corporate philanthropy reflective of its purpose and the good it seeks to do in society?
- Campaign on purpose: Create communications and stakeholder engagement efforts that are aligned with purpose. Ensure they are multi-stakeholder in nature and involve two-way communications efforts. Organizational listening is a criticaland often overlooked part of stakeholder engagement and building trust.
- Bring feedback into your purpose planning: Use evaluation metrics to bring multi-stakeholder dimensions back into planning discussions. Both quantitative and qualitative metrics are meaningful to purpose efforts, as it often requires pulling in qualitative insights—like the endorsement of a key ally or a piece of high-level feedback from an important stakeholder group—to see the impact of purpose.
Organizations must be prepared to make tough decisions and potential sacrifices to stay true to their purpose. This might involve turning down business opportunities that conflict with the company’s values or investing in initiatives that may not have immediate financial returns but align with the organization’s long-term mission. While these may be challenging decisions to make, they reinforce the degree to which purpose is a long-term issue for organizations.
As we navigate an increasingly complex business landscape, organizational purpose isn’t just a nice-to-have—it’s a priority for success. It’s a compass that can guide your organization as it navigates complex challenges, inspiring your team to new heights and creating lasting value for all stakeholders. By focusing on organizational purpose and corporate social impact, companies can drive meaningful change while at the same time achieving sustainable business success.
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