Purpose-driven organisations: Moving beyond profit-driven strategy

Explore how shifting from profit-driven to purpose-driven strategies can lead to long-term success and profitability for organisations.


Purpose-driven organisations: Moving beyond profit-driven strategy

Explore how shifting from profit-driven to purpose-driven strategies can lead to long-term success and profitability for organisations.


Meet the author

Wilf Stoddart


Many traditional organisations are profit-driven, but we believe that to keep up as the world evolves, businesses need to become more progressive. One of the key characteristics of a progressive organisation is a common purpose and set of values that look beyond just making money.

Money is to an organisation what breathing is to every human being. We don’t get out of bed every morning excited to breathe but without it, we would not survive. This is the same for organisations and money. It should not be the sole focus of their day-to-day or long-term strategy but is essential to survival.

But if organisations aren’t focusing on profit-driven strategies, what are they focusing on?

Taking the metaphor further, how do you feel when you wake up in the morning with something to look forward to, something to drive you, something to do that you believe in and meets your values? You find it easier to breathe and make it through the day, right?! That’s because you have a sense of PURPOSE.

What is a purpose-driven strategy?

Purpose is the role a company or organisation serves in society, it is the mission at the heart of what everybody does within the organisation. As an example, we can look to the hallmark of purpose-driven organisations. Patagonia. It has established a clear purpose of “Build the best project. Cause no unnecessary harm. Use business to protect nature. Not bound by convention”. This statement is what provides meaning beyond monetary value. It focuses everyone in the company on its impact on the environment and society but also on innovation and quality which will inevitably lead to profit.

Purpose should not just be a marketing tool or a piece of corporate jargon. Purpose should be at the heart of everything a company does including its strategy. To bridge the gap between the intent behind your purpose and your ability to realise it, you need a clear strategy. Your strategy should be a tangible roadmap that everyone can follow to strive to achieve that purpose.

This purpose and strategy are then backed up by a clear set of values. These values are a guide for every employee and stakeholder on what they should be doing day-to-day to enact and live that purpose. If purpose is the “why” and strategy is the “how” then values are the “what”. 

Why does a purpose-driven strategy lead to profit?

Profit-driven organisations are not the most profitable ones. Purpose-driven ones are. That may seem like counter-intuitive hyperbole but it is true. There is a significant amount of evidence to back it up. For example, a 2015 Harvard Business Review found that 58% of companies with a clear purpose-driven strategy had seen 10%+ growth versus only 42% of profit-driven businesses. What’s more, only 15% of purpose-driven companies reported flat or negative revenue versus over 40% of profit-driven companies. There are many reasons why these trends may exist but let’s explore four key ones:

Four key reasons why purpose-driven strategy leads to profit

  1. A focus on profit leads to short-term thinking whereas a focus on purpose leads to long-term, visionary thinking. If I asked you to think about the future profit of your organisation, you would instantly think about monthly, quarterly or annual results. These are short-term horizons. Chasing profits in the short term can lead to missing market trends, putting extra pressure on employees, or lacking sufficient adaptability to survive a financial crisis. Having a strategy founded in your purpose creates a need to constantly look at the future of your organisation and how to be profitable in five to 10 years instead of just next week.
  2. Acting on your purpose can create a loyal customer base. A growth in the consumerist market means that your customers have a near-unlimited choice of products and services. A clear purpose with tangible evidence of action speaks volumes to your customers with 72% of consumers feeling that is it important to buy from companies that reflect their values and purpose. This should not just be about creating a marketing campaign, but putting your purpose into action will lead to customer loyalty as a result of your products’ and services’ unique differentiation.
  3. Purpose-driven thinking leads to innovation. Here I will use an example to explain my point. It is 2006 and Vodafone is an established player in the telecommunications market in Europe, Asia and the Americas. However, they are struggling to expand into Africa. They have customers in Kenya but not many beyond that. One day, an employee at Vodafone has an idea. Why don’t we try and set up a system where people in Kenya can use their mobile phones and SIM cards to send money to each other? He raised this idea to his managers who quickly shot him down saying “We are not in the banking business”. He did not give up. He fought and fought with his main argument being that Vodafone quoted its purpose as “To connect for a better future”. If they wanted to live this purpose, then a technology that allowed millions of people to share money, send money home or receive a salary without a bank account met Vodafone’s purpose perfectly. In 2007, M-Pesa was launched. Over 15 years later, M-Pesa has grown to 51 million customers in 8 countries in Africa. A study in 2016 lauded its social impact, claiming that M-Pesa raised over 250,000 families out of poverty in Kenya alone and gave banking access to 69% of the population who didn’t previously have it. Not only did it have a huge social impact, it also recorded $885 million in revenue in 2022. Nearly 2% of Vodafone’s entire revenue. That one employee’s drive to meet their purpose led to disruptive innovation, unprecedented social impact and lots of revenue.
  4. Purpose fosters an engaged, passionate and motivated workforce working towards a common goal. According to a 2016 study by Imperative, purposeful workers perform better across the board. They are more likely to rise to senior-level roles, to be net promoters of their organisation, to stay longer, and to have strong relationships with their colleagues. Something beyond a profit-driven strategy drives us. Acts as a north star. Aligning an individual and their values to a cause will create an emotional connection to work, giving them belief and drive. Better-performing employees will inevitably lead to greater profits in the short and long term. What’s more, a group of individuals aligned on a common goal will work as a high-performing team.

That gives some explanation of why you should consider prioritising purpose over profit. But if you’re still not sure why, our partner, Corporate Rebels, put it pretty simply: “Because it’s the right thing to do. That’s why.”

How do you move from a profit-driven to a purpose-driven vision/strategy?

There are two main steps to this transition: Define your purpose and values and practice your purpose and values.

First, definition. Purpose and values should not be a boring, long mission statement that no one can remember nor should it be a set of corporate jargon that you are forced to recite by heart. A purpose should be crisp, clear, and inspiring. Values should be authentic to your organisation and this is why effective definition is so important. 

There are many ways you can go about defining your purpose. It could be done retrospectively, by building on the business’s existing reason for being and looking back at what has made it a success, or prospectively by reshaping how you fit into the marketplace. This definition should be done collaboratively, without bias and with an open mind. Doing this with feedback from your organisation creates a shared understanding of your purpose and values.

Once you have defined your purpose and values, these need to be integrated into everything you do as a company. The two best tactics for doing that are to transform the leadership agenda and to disseminate purpose throughout the organisation. Ensuring leadership champions the defined values will inevitably create momentum and greater alignment. You can also do this by establishing practices throughout your business. This could be company KPIs and metrics to track your progress to meet your purpose, creating decision-making frameworks for projects based on your values and purpose or making your values visible every day to employees. 

Aligning your strategy to purpose instead of profit will require focus, commitment and collaboration from the entire organisation. It needs to feed into the organisation’s structure, governance, systems, ways of working and culture. This will in turn result in passion, energy and motivation to move your organisation to being more progressive and help better your organisation, society and the world. 

Keep up to date with our insights on change here, or get in touch to find out how taking more of a progressive approach could help your business.

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