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What is a Company’s Purpose?
A company’s purpose explains why the company was created and what defines them. No matter the industry, a company’s purpose will influence its decisions and strategies in order to achieve the company’s ultimate goal. According to Gallup, a leader in global analytics, a purpose must be the “driving force that enables a company to define its true brand and create its desired culture.” Usually one sentence in length, the company purpose makes a mission statement with examples of what a company does and the target audience.
A company may forgo short-term gains in order to achieve long-term goals and this is included as part of its stated purpose. Southwest Airlines does this by not charging passengers for checked bags, and CVS by not selling tobacco products. Why? Because forgoing millions of dollars in revenue from specific sources creates a favorable brand that customers are loyal to.
Why is it Important for a Company to Have a Purpose?
A company’s purpose is a constant reminder of who you are and what you are trying to achieve. When done well and constantly revisited, companies can navigate change more effectively.
- Know what to do. Companies with a purpose know what to do in order to make their dream a reality. It helps drive their philosophies such as what services to offer, how to engage with employees, and strategic and operational tasks.
- Know what not to do. At the same time, a proper purpose acts as a blinder to distractions. When short-term gains or opportunities arise, a purpose acts as a company guideline. This helps explain why Southwest Airlines does not charge for checked bags or why CVS does not sell tobacco products: it goes against their deeply rooted purpose.
- Attract and retain loyal customers. Simon Sinek stated, “People don’t buy what you do; they buy why you do it.” Leaders and companies that know why they take specific actions will attract and retain loyal customers. This mindset creates sustainable growth to accomplish the company’s purpose.
Examples of Company Purposes
While creating a company purpose is difficult, being constantly committed to it is even more difficult. The following companies have done an impressive job of taking their company purpose and embedding it into their product or service.
ESPN: To serve sports fans. Anytime. Anywhere
ESPN has become a leader in sports entertainment after securing large amounts of market share from television giants like NBC and CBS. Their first telecast anchor, Lee Leonard, said during the first broadcast in 1979: “If you’re a fan, what you’ll see in the next minutes, hours, and days to follow may convince you you’ve gone to sports heaven.
For over 40 years, ESPN has grown to serve high school, college, and professional sports fans in a variety of ways. This includes live broadcasts, reruns, documentary series, articles, statistical analyses, and more. Today, with the power of the internet and mobile devices, sports fans can watch their sport of choice from nearly any location on earth.
Miller, James Andrew; Shales, Tom (2011). Those Guys Have All the Fun: Inside the World of ESPN. Little, Brown and Company. ISBN 978-0-316-04300-7
Ford: To Help Build a better world, where every person is free to move and pursue their dreams.
Ford Motor Company was established in 1903 and sold its first Ford Model A this same year. In 1908, 15 million of Ford’s Model Ts were sold. By 1913, their innovation revolutionized manufacturing with the assembly line which lowered production time at a lower cost. Additionally, Ford implemented the $5 workday in 1914 which was double the existing pay rate of factory workers.
From its creation, Ford built a better world for employees and customers. By creating a system that allowed more people to move freely with affordable automobiles and paying workers to double the standard, dreams could be pursued. Today customers use Ford trucks to build homes and deliver products, performance cars to race and experience thrills, and hybrid models to lower their carbon footprint.l
Airbnb: To create a world where anyone can belong anywhere.
Famously known for allowing real estate owners to rent their properties to guests, Airbnb strives to redefine stereotypical travel standards. Across the world, Airbnb has made it easier and more comfortable for nearly anyone to feel they belong where they stay. This includes couples traveling abroad, family reunions, and friends wanting a quick weekend getaway.
Outside of their normal service, Airbnb strives to serve those in need. This is exemplified in their support of Afghan refugees in 2021 and Ukraine refugees in 2022. Additionally, Airbnb remains committed to racial justice and anti-terrorism efforts. They use their influence to make it easier for hosts to earn more, such as when their senior vice president submitted a letter to the SEC to make it easier for companies to share equity with the people who help power their platforms.
How To Develop Your Company’s Purpose
There are several ideas on how to create a company’s purpose. One article from the Harvard Business Review details how to create a meaningful purpose by factoring in what the world needs, what the company is passionate about, what the company is uniquely good at, and how the company can create economic value.
Step 1: Find Your Passion
As has been said often, passion feeds purpose. Without passion, there will not be a driving force behind actions. Without passion, the highs and lows of operating a company may be too heavy. Without passion, it will be nearly impossible to attract and keep dedicated employees. As a person or company discovers their passion, they discover the fuel that will make their dreams a reality.
Step 2: Describe Your Passion in a Simple, Meaningful Phrase
As we saw with ESPN, Ford, and Airbnb, a company’s purpose is meaningful and simple. Unlike a mission statement or company values, a company purpose should be short so it’s easy to share yet broad enough to explain why the company is in business. This rallying call allows the vision to penetrate the hearts of those who connect to what the company is accomplishing.
Often the company purpose starts with, “To..” followed by a verb and the intended audience and unique method.
Step 3: Revise and Edit
Just like a college essay, business proposal, or HR article, the first draft or attempt is not perfect. When you feel you have a company purpose down, try it out! Share it with friends, family, colleagues, potential customers, or stakeholders. Judge their reaction and feedback. Are they enthusiastic or do they raise their eyebrows in confusion? Depending on the different reactions, you may need to revisit the company’s purpose and try again.
Another important test for the company’s purpose is to examine its impact on yourself. Does the purpose excite you? Does it accurately describe your end goal? Is it simple and powerful enough you can tie your daily actions back to it?
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Austin became the HR Director at Discovery Connections in 2021. Before that he worked as an Account Manager for a Section 125 benefits and COBRA administrator. He graduated from Brigham Young University with a Bachelor of Science (BS) in Exercise Science in 2019 and from Southern Utah University with a Masters of Business Administration (MBA) with an emphasis in Organizational Leadership in 2021. At end of 2021, he became certified with SHRM-CP.
Originally from Oklahoma, Austin enjoys trying new foods in new places he travels to, watching college football, and snowboarding the local resorts in Utah. He has been married to his wife since 2019 and owns a cockapoo named Hershey.
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