How To Create A Framework For Purpose In 5-Steps

If you’re a marketer, you’ll be familiar with the term ‘the 5Ps’.

Now there’s a new set of ‘Ps’ driving organisational thinking that sits at the very core of what companies exist to deliver…and it all relates to the concept of purpose.

The word “purpose” is often bandied about to the point of jargon these days, yet its overuse signals a deeper market shift that companies can no longer afford to ignore.

In recent years there’s been an increased focus on adoption of purpose in business, following the Business Roundtable’s redefinition of the Purpose of a Corporation in the U.S. 

Shortly after this announcement in late 2019, the global pandemic hit, forever altering how we live, work, prioritise values, and make purchasing decisions.  

But what actually is purpose in business? 

THE ROLE OF AUTHENTICITY & PURPOSE

Purpose challenges companies to answer two fundamental questions - Why do you exist? And what would the world lose if you disappeared?

It serves as the foundation of a company’s identity, defining its core mission and guiding how it creates and measures positive impact on the world.

It’s well documented that across the global landscape companies that operate from purpose-driven models experience accelerated growth rates, higher staff retention and attracts investors.  

In simple terms, purpose drives long-term value creation through a reduction in strategic drift.

However, there’s a catch.

Purpose must be authentic, or claims of ‘purpose-washing’ may arise. An inauthentic adoption does more harm than good - leading to loss of customers, high staff turnover and increased risk. 

HOW TO REDUCE YOUR RISK OF PURPOSE-WASHING

Purpose must be embedded at every level of an organisation to drive meaningful impact and reduce risk.

In an article by McKinsey & Company, the authors outline the "5Ps of Purpose" and introduce a framework for companies to adopt, emphasising that authenticity is essential for purpose to become a successful growth driver.

A summary of the key insights is provided below.

A FRAMEWORK FOR PURPOSE - THE 5 P’S

Beyond the kickoff workshop and the initial buzz of early-stage creation, purpose requires a structured framework to ensure it's seamlessly embedded into all organisational decisions.

Purpose must strike a balance between the emotional and the rational, resonating deeply with all employees.

This alignment fosters consistent decision-making at all levels, building a values-based culture that empowers the organisation to navigate internal and external changes over time.

Here is the basic framework of the 5Ps:

1. Portfolio strategy and products: the products and services your organisation provides, and the “where to play” and “how to play” choices you make to best serve your customers

2. People and culture: the talent—and the talent management—your firm deploys

3. Processes and systems: the operational processes you adapt to meet purpose-related targets; the ways you ensure that behaviour up and down your value chain is in line with your purpose

4. Performance metrics: the target metrics and incentives you use to measure what you wish to achieve, how your firm is progressing, and the way you create and distribute incentives to make your organization’s purpose tangible

5. Positions and engagement: how you align your external positions and affiliations to be consistent with, and consistently deliver on, the purpose your company has defined

You can read the full article from McKinsey & Co here.

References:

• https://www.businessroundtable.org/business-roundtable-redefines-the-purpose-of-a-corporation-to-promote-an-economy-that-serves-all-americans

• https://www.brandclarity.au/blog/what-is-purpose-washing

• https://corporatefinanceinstitute.com/resources/knowledge/other/5-ps-marketing/

• https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/more-than-a-mission-statement-how-the-5ps-embed-purpose-to-deliver-value