Purpose and people in business: value creation comes from sharing and listening

In recent years, the concept of purpose has become increasingly central in defining corporate identity and strategy. It is no longer just a question of stating what you do or how you do it, but of answering the most profound question: why you do it. In an ever-changing economic and social context, the business purpose is a powerful engine of meaning and cohesion, capable of guiding strategic action, motivating people, encouraging innovation and strengthening the link between business, society and the environment.

But what exactly is meant by purpose? What is its concrete role within organisations? And how do you train leaders and managers who can internalise it and translate it into everyday value?

To answer these questions, we interviewed Luca Manelli, Assistant Professor of Strategy and Enterprising Family at POLIMI Graduate School of Management, where he is also the scientific co-director of the Family Office Observatory and the Purpose in Action Observatory.

Professor Manelli: what is meant, today, by the concept of purpose?

In order to define the concept of purpose correctly, it is important to first distinguish what we are talking about: there is a personal purpose, which each individual can cultivate in their life, and an organisational purpose, which concerns businesses and institutions. They both share an aspiration: to give a higher meaning to what you do every day. If we focus on companies, especially for-profit businesses, purpose is their raison d’être, a tension toward an objective that goes beyond simply maximising profit.

In the Purpose in Action Observatory’s recent research work, we defined purpose as the combination of the aspiration to create value for society and the environment, and the ability to steer the organisation’s behaviour towards that goal. It is important to stress that purpose is not an alternative to profit but transcends it. Often, a false dichotomy is created: either you aim for profit or you pursue purpose. In fact, it is possible – and desirable – for the two dimensions to coexist. There are many companies that demonstrate how a genuine, shared purpose can go hand in hand with excellent financial performance.

Another important feature of purpose is its dynamic nature. Purpose is not an immutable formula, but it can evolve over time, adapting to the historical, social, technological and cultural transformations that the company faces. Many companies are developing processes of “rediscovery” or “change” of their purpose. The important thing is to trigger processes of work, dialogue, and reflection on the purpose of one’s own firm – only through these processes can the transformative and strategic power of purpose be enabled

What role does the purpose play in organisations, and what strategy do you adopt to make it an engine of growth in companies that engages everyone? What mistakes should we avoid making?

Our research clearly shows that just stating a purpose is not enough. An authentic purpose must enable strategic decisions, guide value creation and drive long-term growth. For this to happen, there must be some basic conditions.

First of all, the purpose must be shared by the people who make up the organisation. Sharing means that the purpose actually influences the employee's perception of their role and the contribution they make every day. If this connection is not achieved, the purpose remains a simple statement, a rhetorical expression without any impact on the company’s day-to-day. It isn’t necessary for everyone to adhere to it absolutely, but it requires a critical mass of people who recognise it as authentic and transformative.

Clarity is another essential element. The purpose must not only be felt: it must be understood. People need to know what the company’s purpose is, but also how this relates to strategies, decisions, culture and business model. In an organisation where the purpose is ambiguous or absent, value creation is hampered.

Not all purposes, moreover, have the same strategic potential. Especially for for-profit companies, the purpose must be closely linked to distinctive value-creation mechanisms. It must motivate economic action, enable differentiation, inspire new readings of the market and promote innovation. That's what we call a strategic purpose.

There are virtuous cases that demonstrate the transformative power of a strategic purpose. Just think of LEGO, which has managed to overcome significant obstacles by reinventing itself thanks to a redefinition of its purpose: it is no longer just a manufacturer of plastic bricks, but a company committed to “inspire and develop the builders of tomorrow.” This has allowed apparently opposing technology, such as virtual reality, to be integrated and new growth strategies developed in an increasingly digital context.

Among the most common mistakes, one of the most insidious for companies is to start by writing the purpose statement before they have even done a cultural analysis or any strategic reflection. In such cases, the risk is that the purpose will be perceived as something lowered from above, imposed by top management and unconnected to the reality of the organisation, and therefore, at best, a mere communication exercise. Another typical mistake, especially in multinational companies, is the failure to integrate the purpose into the different geographies and operating units: if it remains confined to the headquarters, it loses its cohesive and transformative force. Finally, it is crucial that the purpose is supported by governance, preventing it from being neutralised by non-aligned boards or shareholders. The example of Emmanuel Faber and Danone is emblematic in this regard.

How do you train managers and leaders who are able to embrace the concept of purpose and really make the most of it? What are the features which characterise POLIMI Graduate School of Management’s approach to this?

To train leaders who can internalise and really capitalise on the purpose, there are three complementary dimensions: inspiring, understanding and doing. Often, in traditional management training, these three areas are not integrated. Business schools tend to focus on ‘understanding’ and ‘doing’, while organisations that talk about purpose often limit themselves to ‘inspiring’.

The most effective – and also the most responsible – approach is one that manages to unite all three dimensions. ‘Inspiring’ means igniting a positive tension in managers towards change, motivating them to build new business models. ‘Understanding’ means providing robust theoretical tools: understanding what purpose really means, knowing the business cases of success and failure, distinguishing what purpose is from what it isn’t. “Doing”, finally, involves equipping managers with concrete tools, frameworks, metrics and practices to bring purpose into everyday operations. This is the biggest challenge: translating an abstract concept into tangible actions.

In this scenario, POLIMI Graduate School of Management stands out for its ability to integrate inspiration, understanding and operation, offering comprehensive, realistic, and impact-focused education. It is not enough to have good intentions: we need to know how to turn them into value. This is what enables today's and tomorrow's leaders to make purpose not only real, but also lasting, authentic and strategically relevant.

To guide organisations to discover and enhance purpose within their realities, POLIMI Graduate School of Management has created the “Purpose in Action” Eduseries, a free, easy-to-access online training course with testimonials from CEOs, academics, and international managers.

Purpose in Action was born with the aim of exploring the main dimensions of Purpose and its transformative role, providing managers and other professionals with the necessary tools to integrate it into their working reality and combine sustainable growth with a positive impact on society.