2/12 The Strategic Importance of Purpose

In our first article, we laid the foundation for understanding purpose activation and its vital role in creating a unified business direction. In this second instalment of our 12-part series, we will dive deeper into how being purposeful is not just a branding or HR initiative but a critical strategic choice that impacts every aspect of the business. The purpose is a strategic pivot point for business decisions and innovation, helping companies move beyond short-sighted views and take a broader approach to growth and sustainability.

Purpose as a Strategic Pivot Point for Business

One of the most significant challenges organisations face today is their fixation on products. Take the example of Kodak or Nokia—both were industry giants that became too focused on their products to the point where they closed their eyes to the future. They viewed themselves merely as "product makers," this narrow focus eventually led to their downfall. Kodak, for instance, had the technology to develop digital cameras years before their competitors, but they failed to capitalise on it because they saw themselves as a "film company." Nokia had similar challenges, believing their mobile phone dominance would last forever. In both cases, the fixation on products cost them their future.

In contrast, companies like Apple show how aligning with purpose creates a broader perspective. Apple began as a computer company, but it has expanded far beyond that to music devices, smartphones, wearables, and even financial services. Apple's purpose—creating products that enrich lives—has allowed them to pivot between different industries and continuously innovate. When Steve Jobs returned to the company after his departure, he focused on realigning Apple with its core purpose. Under his leadership, Apple was no longer just a computer company; it became a symbol of innovation, making products that changed how people live, work, and interact with the world.

Apple’s journey illustrates how purpose can act as a strategic pivot point. Purpose allows leaders to step back and ask the right questions: Are we fulfilling our mission? Are we solving the problem we set out to solve? This thinking frees organisations from product fixation and encourages them to explore new ways to live up to their purpose. When businesses are purpose-driven, they stop thinking in terms of products and start thinking in terms of customers, innovation, and long-term impact.

Purpose in Business Decision-Making

As companies grow, leadership teams often need help with multiple viewpoints and opinions. While diversity of thought is essential, it can sometimes dilute the company’s focus if leaders are not aligned with its purpose. A powerful example of this is General Motors (GM) history, where a CFO-turned-CEO, driven by short-term financial metrics, diluted the precise market positioning of GM’s car brands. This misalignment resulted in brand confusion and declining market share, as recorded in many brand management books.

Today, businesses have the tools to avoid this pitfall by ensuring that decision-making is deeply rooted in purpose. Purpose provides a clear lens through which leaders can assess their decisions. For example, before launching a new product or initiative, a purpose-driven company will ask: Does this align with our purpose? How will this impact people, the planet, and profit?

This purpose-driven approach simplifies decision-making. It becomes easier to win over boards, shareholders, and employees because purpose offers a logical and ethical framework for evaluating new ideas. Consider Kodak again: Had the company adhered to its purpose of "preserving memories," it might have embraced digital photography instead of resisting it. Their failure to align with their core purpose led to their eventual bankruptcy, even though they had the right technology in their hands.

Purpose not only helps organisations make more intelligent decisions but also empowers employees at all levels to innovate. When everyone understands the company's purpose, they can contribute new ideas aligning with its long-term vision. With purpose as a guiding star, decision-making becomes more transparent, and innovation becomes more organic.

Purpose of the Foundation for Innovation

Necessity may be the mother of invention, but purpose is the key to sustainable innovation. Purpose not only drives companies to innovate but also provides a framework to channel creativity in a way that aligns with the company’s long-term vision.

Take Tesla, for example. The company aims to accelerate the world's transition to sustainable energy. This purpose is aspirational and drives Tesla’s entire innovation strategy. Tesla doesn't just build electric cars—it creates solutions that address the more significant issue of climate change. The same is true for SpaceX, another of Elon Musk’s ventures. SpaceX's purpose is to make space travel affordable and to ensure humanity’s survival by becoming an interplanetary species. These ambitious purposes create the framework for constant innovation, whether in battery technology, reusable rockets, or electric trucks.

Organisations with an articulated purpose don't just innovate for the sake of it; they innovate with direction. When employees understand the company’s purpose, they are more likely to come up with ideas that support that vision. However, in many businesses, there’s a lack of innovation because employees feel disconnected from the company’s mission. When companies ask for new ideas, there’s often an awkward silence. Why? Because employees are unclear about how their ideas fit into the larger purpose.

Purpose-driven innovation is not just about creating new products but also about improving processes, enhancing customer experiences, and exploring new markets. A formal framework for idea development, guided by purpose, can help create a culture of innovation. Imagine programming a purpose-driven innovation framework into an AI system. Such a system could evaluate ideas based on how well they align with the company’s purpose and values, further enhancing decision-making and innovation.

The purpose is far more than a branding or HR initiative—it’s a strategic choice that can shape the future of a business. By acting as a pivot point, guiding decision-making, and fostering innovation, purpose becomes the glue that holds an organisation together. Purpose-driven companies like Apple, Tesla, and Unilever show that aligning with purpose creates more resilient, innovative, and profitable businesses.

In the following article, we will dive into Purpose and Employer Branding, exploring how aligning purpose with your employer brand can attract top talent and improve employee engagement. Don’t miss out on this critical topic—subscribe to follow our series and stay updated on how purpose activation can transform your organisation.

If you missed it, check out our previous article: What is Purpose Activation?

Author

Tridiv Das founded Stratacom, a leading business consultancy specialising in activating purpose-driven business strategies with a strong focus on ethics and organisational culture.

Sources

1. Apple's Strategic Purpose and Innovation: Gallo, Carmine. The Innovation Secrets of Steve Jobs: Insanely Different Principles for Breakthrough Success. McGraw Hill, 2010. Isaacson, Walter. Steve Jobs. Simon & Schuster, 2011. "How Apple Keeps Innovating, Year After Year" - Harvard Business Review, 2016. https://hbr.org.
2. Kodak and Nokia’s Failures: Lucas, Gavin. "The Rise and Fall of Kodak: A Story of Innovation and Complacency." BBC News, 2012. https://www.bbc.com. Ovide, Shira. "Nokia’s Fall From Grace." The New York Times, 2020. https://www.nytimes.com.
3. General Motors' Misalignment and Leadership Challenges: Lutz, Bob. Car Guys vs. Bean Counters: The Battle for the Soul of American Business. Portfolio Hardcover, 2011. "GM's Brand Dilution Under CEO Roger Smith" - Marketing Strategy & Cases, 2015. https://www.businessinsider.com.
4. Tesla’s Purpose-Driven Innovation: Musk, Elon. "The Master Plan, Part Deux." Tesla Blog, 2016. https://www.tesla.com/blog. "How Tesla Became the Most Valuable Automaker in the World" - Business Insider, 2020. https://www.businessinsider.com.
5. Purpose as a Catalyst for Innovation: Collins, Jim, and Porras, Jerry. Built to Last: Successful Habits of Visionary Companies. HarperCollins, 1994. "How Purpose-Driven Companies Foster Innovation" - Deloitte Insights, 2020. https://www2.deloitte.com.