Putting purpose to work

The perception of purpose has changed dramatically over the last five years

In the early stages, purpose was interpreted in different ways. For some, it was their North Star, used to guide and drive the business forward. For others, it was more aligned with CSR and ESG. And for the marketing community, the term ’brand purpose’ emerged. All of this triggered much debate and research.

This is why we started the CEO Purpose Report. We have always believed that purpose is a powerful strategic tool that can guide decision making and help drive business growth. Now, the majority of leaders agree.

In 2019, we saw that over two-thirds of leaders believed that defining purpose wasn’t their responsibility at all and that it sat with the marketing department. Last year’s report indicated that attitudes were beginning to change. This year’s survey confirms that they have.

Today, purpose seems to be increasingly defined as the ‘why’ or North Star of a business – a statement that captures why a business exists and the role it wants to play in the world. When purpose is combined with business ambition and strategy, it provides employees, shareholders, and customers with a clear view of where the business is heading. It paints a vision for your business.

Purpose is being used to navigate a challenging business landscape

Over the past five years, we have witnessed a number of other changes. In 2020, there was a significant development around who CEOs thought their purpose was serving. A striking 100% of respondents that year agreed that other stakeholder groups were more important than shareholders alone. 77% agreed, or strongly agreed, that to deliver long-term growth, businesses needed to operate with a purpose beyond making a profit.

Resilience was the key theme in 2021, coming after the worst of the pandemic. 48% of respondents in 2021, compared to 27% in 2020, said that uncertainty about the future was the main obstacle to achieving their business goals in the next five years.

And here we are in 2023. This year, amid rampant inflation and the meteoric rise of generative AI, the pace of change shows no signs of slowing. Businesses are at the forefront of weathering this change. So, it’s no surprise that business resilience and agility – which represent the biggest challenge for CEOs (65% of respondents) – are front-of-mind in 2023.

But change is also a positive driver: new business models represent the biggest opportunity for six in ten leaders. And for those that know how to navigate change, there’s much to be gained. That’s where purpose comes in. It’s a strategic decision-making tool that provides clarity and direction when everything else is in flux; it remains constant.

Purpose is now owned by the C-Suite

Over the past five years, there’s been a shift regarding where purpose lies within an organization.

In 2019, 43% of CEOs said that their organizations used purpose for advertising or branding, almost twice the number that stated they used it for setting the direction of the business (22%). In short, it was seen principally as a marketing tool. Before that, many treated it as a CSR or ESG initiative. Fast-forward to 2022, and things had changed. 

Last year, the CEO, COO and executive leadership team were considered to have primary responsibility for defining purpose – indicating a shift towards it becoming a company-wide strategic responsibility. 

This represented a significant development. Purpose was no longer misconstrued as a question of marketing or CSR. It was finally recognized as a key strategic enabler that could guide decision making.

Now, in 2023, that view has been cemented. Purpose is seen not only as a company-wide responsibility but also a company-wide opportunity. 57% of CEOs believe purpose has the greatest value at the corporate level, creating meaning for the whole organization, compared with just 31% at the brand and 12% at the product levels.

Purpose has evolved. From a siloed concern, locked away in specific functions or stuck at the brand and product levels, it has now matured into a cross-organizational endeavour that delivers value across the whole the business.

CEOs believe purpose is most valuable when giving meaning to the whole organization

Q: Where do you think purpose has the greatest value?

Employees are now the most important stakeholders 

There has been a gradual shift over the last five years regarding who CEOs consider to be their most important stakeholders. In 2019, 61% of those running companies with a turnover of $50m+ agreed that “creating shareholder value above all else” was central to their business philosophy.

In 2020, 100% of CEOs surveyed agreed that all other stakeholders were more important than shareholders. And in 2022, CEOs told us that customers were their most important stakeholder.

All the while, employees have been growing in importance. Last year, they came second to customers in a ranking of most important stakeholders, and now, in 2023, they have taken the top spot. This is a significant development. While much has been made of the shift from shareholder primacy to stakeholder capitalism, the privileged status of the customer has gone relatively unquestioned. It’s certainly possible that external factors such as tight labour markets have influenced leaders’ thinking this year, but this still represents an important milestone.

In addition to the increasing importance of the employee, something else is happening. There is a gradual broadening of the ‘stakeholder’ category, which was traditionally limited to investors, employees, customers, and suppliers. And increasingly, leaders are recognizing society and future generations as important stakeholders in the long-term success of their business.

Employees have knocked customers off the top spot

Q: Who do you consider are the most important stakeholders for the long-term success of your business?

Implementing purpose is now an operational challenge

Past reports highlighted lack of buy-in and support as major obstacles to purpose implementation. This year, a new picture is emerging. For those that have a purpose, the core challenges are now primarily around relevance and activation.

This suggests that companies have gained support to start their purpose journey and are now struggling to operationalize it more broadly. It also indicates that purpose is getting ‘stuck’ in the C-Suite. It’s being used increasingly in strategic decision making but not yet being unleashed across the wider business.

Over half of respondents (51%) with a defined purpose said that making it relevant and activating it represented their biggest implementation challenge.

Agreeing and defining a purpose statement was the next most popular answer, at 46%.

And 44% of CEOs agreed that communicating it clearly and consistently was a challenge. Once again, this highlights that purpose is no longer a ‘one and done’ marketing or brand initiative but a strategic imperative over the long term.

Key challenges

Q: Which aspects of your purpose implementation have been challenging?

The value of purpose is not being fully realized

Whilst it’s exciting to see purpose helping leaders make strategic decisions, many still appear to be missing the wider picture. For example, when asked about what purpose helps them to do, only 26% of CEOs selected ‘aligning senior leaders’.

This might not raise many eyebrows, but at Brandpie, we have seen time and again the powerful effect that purpose can have at the leadership level. When competing interests collide in the C-Suite, it can slow decision-making and stymie progress. Purpose – when utilized effectively – can be a unifying force for cohesion and momentum.

Perhaps surprisingly, the power of purpose is also being overlooked as a driver of positive change. Only 28% of CEOs find that their purpose helps them ‘advocate for positive change on important topics’.

This reveals an interesting disconnect. Whilst leaders say they are using it to make strategic business decisions, they aren’t necessarily thinking about the wider impact purpose can have. They aren’t considering how it can live throughout the entire organization and create positive change beyond its walls.

CEOs aren't seeing the full potential of purpose

Q: Does your purpose help you do the following?

Purpose can drive commercial outcomes

When we asked CEOs what they considered to be the greatest outcome of purpose today, nearly three quarters (74%) identified customer loyalty.

Other outcomes like innovation (65%) and business resilience (66%) also resonated with CEOs, but to a lesser degree. Given we know that business resilience and agility is the key challenge facing CEOs and the key opportunity is the creation of new business models, it appears purpose could be playing a bigger role. Using purpose to drive innovation and transformation is a clear opportunity.

The business outcome that scored the lowest in terms of overall impact was attractiveness as an employer, at 59%. This is perhaps surprising, given that CEOs identified employees as their most important stakeholders.

It seems that, whilst leaders are identifying employees as crucial to their business, they are not yet unleashing the power of purpose for their people. There is a clear opportunity here to connect purpose to meaningful careers, empowerment and a sense of ownership, as well as a way to attract new talent as the business evolves.

CEOs are seeing the links between purpose and business outcomes

Q: Purpose positively impacts the following business outcomes. Do you agree with this statement?

There are two key reasons why CEOs don’t have a purpose 

11% of CEOs we surveyed do not have a purpose today.

For those who are without a purpose, a third (33%) said it was because they don’t know where to start. So, whilst purpose has evolved significantly over the past five years, getting started is still a challenge for some.

The other key reason for not having a purpose was the use of other levers, like vision or mission to guide the business (43%). This isn’t surprising for us. We see this terminology being used interchangeably, often without a clear understanding of how they should do different things.

It's so important for purpose, vision, and strategy to have clear roles and to all work together. Purpose is enduring — it shouldn't have an end point and it should be big enough to accommodate changes to the business as it transforms over time. Your vision is where you are aiming for. Your strategy is how you get there.

There is a clear trajectory for purpose

In the past, purpose was misunderstood. It was seen as a marketing tactic or a CSR initiative, and too often its value lay in giving meaning to brands.

Now, we’re entering a new era. Purpose is being seen for what it really is – a strategic business tool – and it’s being treated accordingly. Last year’s survey indicated a shift in perception was underway. This year, it’s been confirmed. Now, purpose is located cross-organizationally, informing strategy and giving value to the whole business.

We have always understood the strategic power of purpose. Now the majority of CEOs share our view. It’s exciting that we are now at a point where it can start to have the transformative impact that it’s capable of.

Five years of data has given us a privileged insight into the minds of over 4000 CEOs across the globe. It’s been fascinating to watch a monumental shift in the way purpose has been perceived and deployed since 2019. And based on what we can see from this year’s survey, its value and impact are only growing stronger.

Looking ahead, most leaders surveyed said that ensuring business resilience and agility was the biggest challenge they anticipated in the next 18 months. Using purpose to navigate this will be key – companies and people who have a clear idea about what they are working towards, and why, are more resilient.

We can also look towards expanding the view of where purpose can be used to effect change. Aligning senior leadership, advocating for important causes, and attracting talent are three areas where purpose was shown to be under-utilized in the survey. The future holds the potential for purpose to develop in ways far beyond what we are seeing today.

It’s time to put purpose to work

We have moved a long way beyond ‘communicating’ or ‘embedding’ purpose. The real rewards are to be found in using purpose as a strategic business enabler, making it central to the operating model of the business.

Operationalizing purpose has the power, in the next five years, to drive meaningful, positive change – advancing innovative ways of doing business that serve the widest definition of stakeholders, not just shareholders.

But it requires a mindset shift. This isn’t about adding to the to do list. It’s not about a strand of purpose activity or a purpose programme. It’s about using purpose as an input to existing business operations. It’s about how purpose shows up in strategy development, culture, brand, innovation and every other key aspect of doing good business. 

We have developed an operating model for purpose, one that helps systematically embed, activate, and operationalize purpose in an enduring way, driven by the C-Suite and delivered by all your stakeholders.