Purpose-led Transformation

This article is brought to you by EY

Purpose-led transformation: a strategy for growth

A company’s purpose is broader than its mission statement, brand, products or financial performance – it articulates the company’s inherent reason for being and its ultimate ambition for sustainable success.

Successful organisations today have articulated and activated a unique purpose that gives focus and meaning to everything they do. They ensure that this purpose is understood and embraced by all stakeholders – employees, customers, suppliers and investors alike.

Leading companies understand that purpose-led organisations outperform their competitors. For these organisations, purpose is more than having the largest market share or achieving a particular financial result. Their purpose inspires and motivates people to act.

There is growing momentum behind purpose-led organisations, and conversations are taking place within and between businesses at all levels .

Purpose-led transformation drives performance and growth. By uniting people behind a common goal it creates new opportunities – to improve efficiency, identify new markets and enhance customer service. Purpose can be harnessed to motivate people throughout the organisation.

What is driving the discussion about purpose now?

Stakeholder expectations are changing. Employees, customers and investors are increasingly looking for deeper reasons to engage with companies. A genuine purpose articulates the organisation’s vision of how it intends to operate sustainably as a successful company within a complex and borderless society. It often – though not always – includes social, humanitarian and environmental dimensions.

The strongest purposes are a significant competitive advantage.

Imagine a plumbing company striving to improve the world’s sanitation to help combat waste-based diseases. Within their portfolio of plumbing products, they have created low-cost, hygienic products for the developing world that augment their high-end product line. All stakeholders can connect to the purpose, from employees making the product, customers buying the product and investors supporting the business.  The purpose allows stakeholders to genuinely buy in to the vision and feel part of the success.

The discussion about the power of purpose is also being fueled by advances in technology which allow easy access to information about companies’ behaviour and performance.  In the past, companies primarily were judged against the quality of their products and services and their finances. Now, they are being assessed against a far broader set of criteria, which includes purposefulness.

Organisations now have an opportunity to demonstrate how their behaviour supports and furthers their purpose, allowing them to build reputation and associated financial growth.

What are the benefits of purpose?

A strong purpose helps grow the business and differentiate from competitors. It also provides a “North Star” to guide the company, to help it hold strong during the peaks and troughs of economic volatility. This adherence to the purpose helps in formulating future-focused approaches and move fence-sitting decisions.

Research shows that organisations with a clear purpose – one embraced by leadership/ownership, management, employees, vendors, customers and the market alike – outperform competitors.

  • They hire and retain the best employees. A 2013 study shows that employees are three times more likely to stay with the organisation.1
  • They attract, satisfy and engage customers. Eighty-nine percent of clients believe a purpose-driven company will deliver the highest quality products and services.2
  • They achieve higher returns for shareholders. Between 1996 and 2011, purpose-led companies outperformed the S&P 500 by 10 times.3

What triggers purpose-led transformation?

Companies that have undergone structural changes such as mergers and acquisitions will benefit from purpose-led transformation. They can capitalize on this event as an opportunity to retell or re-craft their new company purpose.

Newly formed entities are also in an ideal position to define their galvanising force, portray this purpose to the market, customers and employees, and move forward as one organisation. Without a focus on purpose, newly formed entities can dilute the company’s brand and employee engagement, loyalty and retention. It can also impact investors’ view of the organisation and market value.

Organisations often have hundreds of change programs running simultaneously. The success of these programs is notoriously low: one out of ten succeeds, representing a massive cost with little benefit. The main reason for this high failure rate is that people only change their behaviour when they understand and believe in the reason why they are being asked to do so. Change for the sake of financial benefit – even for them personally – is less likely to motivate the masses than change for the sake of betterment.

Many industries, such as life sciences, have already started on their purpose-led transformation journey. In recent years, players in these sectors have shifted their focus from doctors to patients, who are taking greater control of their own health in all markets across the globe.

A purpose-led transformation embeds the purpose across every aspect of the organisation and provides a framework for ongoing decision-making. This includes:

  • Ensuring the employee experience mirrors the brand’s promise
  • Aligning procurement, practices and policies
  • Defining HR processes, including training, recruitment and retention
  • Ensuring the business and product portfolios are consistent with the company’s purpose
  • Aligning compensation and rewards with a mix of criteria that support the purpose

Business process, system and policy changes all have more substance and meaning when they are executed with an eye to a broader purpose.






1 What Is Your Quality of Life at Work, The Energy Project, 2013.

2 The goodpurpose® study, Edleman, 2013.

3 Rajendra S. Sisodia; Jagdish N. Sheth; David B. Wolfe, Firms of Endearment: How World-Class Companies Profit from Passion and Purpose, Wharton School Publishing, 2007.