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CHAPTER 3

Purpose: The Corporation’s Search for Meaning

Voluntary exchange for mutual benefit creates the ethical foundation of business, and that is why business is ultimately justified to rightfully exist within a society. But what is its purpose? The cofounder of the medical devices company Medtronic, Earl Bakken, has long been a tireless evangelist for the company’s reason for existing: “The story of Medtronic is one of men and women who have dedicated their lives and careers to helping real people overcome pain and disability to lead more normal, happy lives. It’s a story I never tire of hearing or telling.” Bill George was CEO of Medtronic for ten years, during which time the medical technology company’s market capitalization grew from $1.1 billion to $60 billion. One of George’s first actions was to bring the inspirational cofounder back to the company. In a conversation with us, George recalled the power of rediscovering the company’s purpose:

Earl used to do these mission events for employees that were just wonderful. He talked for an hour and then gave the employees a bronze medallion with the symbol of the company—a person rising off the operating table and walking away to a full life. Medtronic’s philosophy under Earl had always been that we were not putting a pacemaker into someone’s body; we were restoring them to full life and health. After giving someone the medallion, he would say, “Your job here is not just to make money for the company; your job is to restore people to full life and health.” At every holiday party, we would hear from six patients about how a Medtronic defibrillator or a stent or a spinal surgery with a stimulator had changed their life. That’s what we all lived for. It was the backbone and the heart of the company.¹

What Is Purpose?

Every conscious business has a higher purpose, which addresses fundamental questions such as: Why do we exist? Why do we need to exist? What is the contribution we want to make? Why is the world better because we are here? Would we be missed if we disappeared? A firm’s purpose is the glue that holds the organization together, the amniotic fluid that nourishes the life force of the organization. You can also think of it as a magnet that attracts the right people—the right team members, customers, suppliers, and investors—to the business and aligns them. No matter its specific intent (see the sidebar “Examples of Higher Purpose”), a compelling purpose reduces friction within the organization and its ecosystem because it gets everybody pointed in the same direction and moving together in harmony.

EXAMPLES OF HIGHER PURPOSE

 Disney: To use our imaginations to bring happiness to millions.

 Johnson & Johnson: To alleviate pain and suffering.

 Southwest Airlines: To give people the freedom to fly.

 Pivot Leadership: Better Leaders = Better World.

 Charles Schwab: A relentless ally for the individual investor.

 BMW: To enable people to experience the joy of driving.

 Humane Society US: Celebrating animals, confronting cruelty.

 American Red Cross: Enabling Americans to perform extraordinary acts in the face of emergencies.

An excellent guide for discovering or rediscovering your higher purpose is It’s Not What You Sell, It’s What You Stand For, by Roy Spence and Haley Rushing, cofounders of the Purpose Institute. As they put it, “What is a purpose? Simply put, it’s a definitive statement about the difference that you are trying to make. If you have a purpose and can articulate it with clarity and passion, everything makes sense, everything flows. You feel good about what you’re doing and clear about how to get there. The more constituents that you have the more important it is to have a simple and clearly defined purpose that everyone and everything can report up to and a set of Core Values that animates the way people interact with one another.”²

Purpose is most powerful when it taps into a “universal human truth.” In other words, it is fully aligned with the higher aspects of what it means to be human (or as Abraham Lincoln elegantly put it, with “the better angels of our nature”). Such a purpose has an uplifting moral quality, appealing to people’s highest ideals and motives and transcending narrow personal concerns.³

Purpose must come before formulating a strategy. It seems so obvious today, but it wasn’t always so. Business academics and executives long ago bought into the notion that the purpose of all business is to maximize profits and shareholder value. In fact, most business school courses on strategy hardly mention the word purpose in any other context.

Purpose, mission, and vision are often used interchangeably. However, it is important to maintain a distinction among the three. Purpose refers to the difference you’re trying to make in the world, mission is the core strategy that must be undertaken to fulfill that purpose, and vision is a vivid, imaginative conception or view of how the world will look once your purpose has been largely realized.⁴

Why Purpose Matters

A higher purpose gives great energy and relevance to a company and its brand. Google’s original purpose was to organize the world’s information and make it easily accessible and useful. As founders Larry Page and Sergey Brin said, “How can that not get you excited?”⁵ REI’s purpose is to reconnect people with nature. The Container Store helps people get organized so they can be happier.

Consider Southwest Airlines, perhaps the most successful airline in the history of the world. Southwest’s animating purpose from day one was to democratize the skies, that is, to make air travel accessible to the average person. When Southwest came into being in the early 1970s, only 15 percent of Americans had flown on an airplane; today, more than 85 percent have flown, due largely to Southwest’s pioneering efforts to offer low fares, bring air service to smaller markets, and market it in a fun way. Southwest has been consistently profitable since it started operations. It provides a great experience for customers. Team members love working there. The company is founded on having fun and radiating love (its stock symbol is LUV).

Whole Foods Market is passionate about helping people to eat well, improve the quality of their lives, and increase their lifespan. Our purpose is to teach people that what they put into their bodies makes a difference, not only to their health and to that of the people who supply the food, but also to the health of the planet as a whole. From our start in 1978 as Safer Way, Whole Foods Market has promoted organic food and the agricultural systems from which it derives. By helping to develop markets, customers, distribution networks, and even the national standards for labeling for organic foods, Whole Foods has also promoted the environmental benefits that accompany the increasing number of organic farms, dairies, ranches, and sustainable agricultural practices. For example, because organic farms utilize no synthetic fertilizers or pesticides, there is reduced usage of fossil fuels and less chemical contamination entering food chains and water supplies.

Purpose and meaning are now being embraced by large mainstream companies such as Unilever, PepsiCo, Inc., and Procter & Gamble which touch the lives of billions. At PepsiCo, Inc., CEO Indra Nooyi has been emphasizing “Performance with Purpose” by investing heavily in drinks and food products that are healthier for customers. P&G CEO and chairman Robert McDonald is seeking “purpose-inspired growth.” He has articulated the company’s purpose as “touching and improving more lives, in more parts of the world, more completely.”⁶ Unilever CEO Paul Polman recognizes the importance of connecting the company to a purpose beyond profits and growth. “Having a deeper purpose to what we do as people makes our lives more complete, which is a tremendous force and motivator. What people want in life is to be recognized, to grow and to have made a difference. That difference can come in many forms; by touching someone, by helping others, by creating something that was not there before. To work for an organization where you can leverage this and be seen to be making a difference, that is rewarding.”⁷

Purpose is something we can never take for granted; the moment we do, it starts to be forgotten and soon disappears. It has to be at the forefront of consciousness (and therefore decision making) literally all the time. When the purpose is clear, leadership teams can make quicker and better decisions. Clarity of purpose also leads to bolder decisions. Rather than adjusting decisions according to the winds of public opinion or changes in the competitive environment, decisions in a purpose-driven company take those things into consideration while also being informed by something more soulful and sturdy. This leads to superior overall performance. Purpose-informed decision making is a critical connection point between clarity of purpose and superior performance, financially and otherwise.⁸

Losing a Sense of Purpose

Every major profession has a higher purpose as its reason for being. This is true of medicine, which is about healing. It is also true for education, architecture, engineering, and the legal profession. Each is animated by service to a higher purpose, one that is aligned with the needs of society and that gives the profession legitimacy and value in the eyes of others. Each of these professions, of course, is also partly about making a profit and earning a living. However, when any profession becomes primarily about making money, it starts to lose its true identity and its interests start to diverge from what is good for society as a whole. As Einstein said, such a loss of higher purpose is not uncommon today: “Perfection of means and confusion of ends seem to characterize our age.”

Consider two industries that have lately fallen in public regard. The pharmaceutical industry’s drop in public esteem has been precipitous. It used to be a greatly admired industry with a clear sense of higher purpose; companies invested heavily to develop miracle drugs that saved, improved, and extended lives, and developed vaccines to prevent devastating diseases such as polio and cholera. As recently as 1997, 80 percent of Americans had a positive view of the industry; this plummeted to less than 40 percent by 2004.⁹ The industry has long been extraordinarily profitable, but its relentless obsession with ever higher revenues and profits has obscured its essential purpose of preventing, curing, and containing diseases. The industry’s loss of purpose has coincided with its declining reputation and a major increase in ethical lapses. In recent years, many drug companies have been spending much more on aggressive, often misleading advertising and less on R&D targeted at the serious illnesses that most afflict humankind.

The financial sector too has a clear inherent higher purpose: to provide people with attractive alternatives for saving and growing their money by investing that money in ways that are maximally beneficial to society. Each type of financing alternative has its own role and purpose: venture capital to fund risky early-stage businesses, debt capital to meet working capital needs and to prevent ownership dilution, equity capital to provide long-term financing for growth and expansion, and so on. But in recent years, the financial sector has become increasingly profit obsessed and short-term oriented. Compensation levels have soared to ridiculous heights as financial incentives have fueled the fire toward immediate, profit-only management, diminishing real value creation. Many banks started to trade on their own accounts in order to generate greater profits. This has led them into many well-documented risky ventures, while also compromising their integrity as financial advisers. No wonder the industry’s reputation is in tatters.

By embracing the idea that their primary, even sole purpose is to make money, businesses sacrifice the great power that comes from having a higher purpose. Worthy, transcendent goals elicit greater levels of creativity, collaboration, diligence, loyalty, and passion from all stakeholders.

Happiness Cannot Be Pursued …

The great Austrian psychologist Viktor Frankl gave us a priceless gift of wisdom over sixty years ago, and it remains highly relevant today. As a psychiatrist in pre–World War II Vienna, he spent nearly two decades treating thousands of people who were depressed and prone to suicide. His quest was to go beyond helping people not be depressed and enable them to be truly happy. Eventually, he developed a comprehensive theory of human happiness firmly grounded in his own clinical work. In his classic book Man’s Search for Meaning (cited by the Library of Congress as one of ten most significant books ever written), he wrote that happiness cannot be pursued; it ensues as the result of living a life of meaning and purpose.¹⁰ The more directly you pursue happiness, the less likely you are to achieve it. Pursuing happiness directly may result in short-term hedonistic pleasure, but it does not lead to authentic, soul-satisfying happiness; that only comes from living a life of meaning and purpose.

Frankl taught that people can discover meaning and purpose in their lives in three ways: by doing work that matters, by loving others unconditionally, and by finding meaning in their suffering.

The last one may be Frankl’s most profound teaching. All of us are guaranteed to experience loss and grief in our lives. But we can choose how to respond to that suffering. As Frankl put it, the last of the freedoms left to us under the most trying of circumstances is the freedom to choose how to respond.¹¹

A simple equation captures this:

Despair = Suffering — Meaning

If we cannot derive any meaning from our suffering, if we think it’s a random event or just our own rotten luck, we experience great despair. At the extreme, this can cause people to take their own lives. But if we can find some meaning, the level of despair goes down; if we can find a great deal of meaning, despair can disappear completely.¹²

Interned by the Nazis in 1942, Frankl was forced to test his theory (called logotherapy, after logos, Greek for “meaning”) in the crucible of the Holocaust. He spent about three years in Auschwitz and various other concentration camps.¹³ Over 95 percent of those who were sent to those camps died there. Frankl survived the ordeal and helped many others do so, because he believed that his own life had a purpose, which was to help others discover their purpose and thus find happiness. Though the only manuscript of his first book had been burned by his captors as soon as he was first arrested, he went on to write thirty-nine books and receive twenty-nine honorary doctorates before dying in 1997 at the age of ninety-two.¹⁴ His work has transformed the lives of millions of people around the world.

… Nor Can Profits

Profits are an essential and desirable outcome for business. Indeed, it is socially irresponsible to run a business that does not consistently generate profits. Profitable companies can grow and continue to fulfill their higher purposes, and their profits fuel the growth and progress of our society. Through taxes, business profits help fund governments and the many public services people rely on.

Just as happiness is best experienced by not aiming for it directly, profits are best achieved by not making them the primary goal of the business. They are the outcome when companies do business with a sense of higher purpose, build their businesses on love and caring instead of fear and stress, and grow from adversity—Frankl’s principles reinterpreted for business. The paradox of profits is that, like happiness, they are best achieved by not aiming directly for them.

If a business seeks only to maximize profits to ensure shareholder value and does not attend to the health of the entire system, short-term profits may indeed result, perhaps lasting many years, depending upon how well its competitor companies are managed. However, neglecting or abusing the other constituencies in the interdependent system will eventually create negative feedback loops that will end up harming the long-term interests of the investors and shareholders, resulting in sub-optimization of the entire system. Without consistent customer satisfaction, team member happiness and commitment, and community support, the short-term profits will prove to be unsustainable over the long term.

The most common objection to the above argument is that many businesses are highly profitable and are not actively managed to optimize the value for all stakeholders. Instead, they put the interests of their investors first. Doesn’t this disprove our argument? Not at all. Most businesses are simply competing against other similar businesses that are organized and managed with the same overall values and goals—maximizing profits. The real question is, how does a traditional profit-centered business fare when it competes against a stakeholder-centered business? As we detail in appendix A, there is compelling evidence that conscious businesses significantly outperform traditional businesses over the long run.

If business leaders become more aware that their business is not a machine but part of a complex, interdependent, and evolving system with multiple constituencies, they will see that profit is one of the important purposes of the business, but not the sole purpose. They will also begin to see that the best way to maximize long-term profits is to create value for the entire interdependent business system. Once enough business leaders come to understand and accept this new business paradigm, Conscious Capitalism will reach a take-off point and the hostility toward business will start to dissipate.

Work and Purpose

Everyone craves meaning and purpose in life, but few people find such fulfillment at work. The oral historian Studs Terkel wrote movingly about American workers struggling to earn a living and to create a life and legacy: “It is about the search, too, for daily meaning as well as daily bread, for recognition as well as for cash, for astonishment rather than torpor; in short, for a sort of life rather than a Monday through Friday sort of dying.”¹⁵

George Bernard Shaw wrote of the joy of meaningful work in this famous passage: “This is the true joy in life, the being used for a purpose recognized by yourself as a mighty one; the being thoroughly worn out before you are thrown on the scrap heap; the being a force of Nature instead of a feverish selfish little clod of ailments and grievances complaining that the world will not devote itself to making you happy.”¹⁶

Unfortunately, the level of personal and emotional engagement people have with paid work today is abysmally low. The absence of purpose results in work that is devoid of meaning and that therefore does not tap into our higher human capacities. Team members feel disconnected and become indifferent toward their work. Gallup conducts team member engagement surveys every year and has found the level of engagement with paid work has been shockingly low for the past ten years. In 2010, only 28 percent of team members were found to be engaged in (or emotionally connected to) their work. About 53 percent were indifferent, and 19 percent were actually hostile.¹⁷ This reflects an appalling, almost tragic waste of human potential. The difference in business impact and personal happiness between a team member who is inspired, passionate, and committed and one who merely shows up for a paycheck is enormous. The blame for this does not lie with “lazy and unmotivated” workers, but with companies that fail to create purposeful workplaces in which people are given the opportunity to find meaning, purpose, and happiness in their own lives by contributing to the valuable work of the company. To us, this represents the “shame of management,” in the same sense that Peter Drucker referred to the rise of the consumer movement as the shame of marketing.

While engagement with paid work at for-profit businesses has remained abysmally low, involvement with volunteer and paid work at nonprofits has grown dramatically. In Blessed Unrest, Paul Hawken estimated that there were approximately two million nongovernmental organizations (NGOs) in the world and showed that their numbers are growing rapidly.¹⁸ People are devoting enormous amounts of time, effort, and money to causes that usually have nothing to do with their narrowly defined self-interest. The reason is that these activities nourish people in ways that working for most businesses simply does not.

To tap this deep wellspring of human motivation, companies need to shift their emphasis from profit maximization to purpose maximization.¹⁹ By recognizing and responding to the hunger for meaning that is a quintessential human condition, companies can unlock vast sources of passion, commitment, creativity, and energy that lie largely dormant in their team members and other stakeholders.

Purpose-driven motivation is intrinsic motivation and is far more effective and powerful than extrinsic financial incentives. Companies that primarily use financial incentives to motivate their team members soon discover that it is a double-edged sword. It can work reasonably well as long as the company’s financial performance is outstanding. But when financial performance lags, such companies inevitably experience a crisis of morale. For publicly traded companies, the stock price becomes a barometer of the morale of team members and executives. These firms have a hard time pulling out of slumps, whereas purpose-driven companies recover faster. They remain true to their purpose even when times are bad, and the best ones become even more committed to their core purpose.²⁰

Matching Individual Passions with Business Purpose

People are most fulfilled and happiest when their work is aligned with their own inner passions. Personal passion, corporate purpose, and business performance all go together. For a passionate foodie, working for Wegmans or Trader Joe’s or Whole Foods Market can be truly fulfilling. For outdoors enthusiasts, Patagonia, REI, and L.L.Bean are wonderful places to work. In such settings, work becomes so much more than a job. It even goes beyond having a satisfying career. It becomes a calling—something we were born to do.

It is therefore critical for purpose-driven organizations to hire, at every level of the company, people who align strongly with the purpose of the enterprise. If the business hires people who think the purpose is silly or irrelevant, they will not align with it and will be—literally—at cross purposes. The good news is that when an organization has a strong purpose and communicates it clearly and consistently, the organization naturally attracts people who align with the purpose.

Having a sense of purpose and deriving joy from their work help companies overcome obstacles in their path and the objections of naysayers. Biz Stone, the cofounder of Twitter, recalls, “When Twitter was just starting out, our biggest challenge was friends and colleagues telling us, ‘This is not useful.’ We overcame that challenge because we found joy in our work. When you love what you do, when you are what I call emotionally invested in your work, then you can overcome almost any challenge with ease.”²¹

Companies also must take into account personal alignment with purpose when promoting anyone into a higher leadership position. Any enterprise that hires senior leaders from outside the company risks the subversion of its purpose by either indifference or hostility. Many companies in recent years have made the mistake of bringing in highly paid, high profile outside leaders who didn’t align with the purpose or the values of the enterprise. A great example is The Home Depot, which brought in a former top executive from General Electric (Bob Nardelli) who wasn’t aligned with its purpose or culture. Eventually, this led the cultural “immune system” of The Home Depot to reject his leadership style. The organization declined under his leadership until he was removed and replaced by someone who was better aligned with the company’s purpose and culture.

In the next chapter, we look at how companies can discover and grow their unique purpose.