Is Organizational Purpose Just a Buzzword?

Over the last few years, there has been a growing interest in organizational purpose, which can be partially attributed to the increasing emphasis on sustainable business practices and efforts to curb climate change, declining trust in organizations, as well as younger workers searching for meaningfulness at work. With this increased focus on purpose, some organizations have been quick to incorporate it into their tagline or mission statements. But is purpose just a buzzword? And what is the difference between the seemingly similar terms of purpose, vision, or mission?

We know that purpose is important at both employee and organizational levels. On average, people spend over 90,000 hours at work over the course of their life, so it’s not a surprise that many are searching for meaning in their work. Consequently, purpose has been found to have a tangible impact on key employee outcomes. Research finds that those who perceive their work as higher in significance (job purpose) also tend to demonstrate higher performance. At the organizational level, having a clearly defined purpose can lead to a stronger firm financial performance, specifically in shareholder returns over a 10 year period, or in venture growth.

So, what exactly defines organizational purpose?

Organizational purpose has many definitions, including being “a concrete goal or objective for the firm that reaches beyond profit maximization”, or simply as “a company’s core reason for being.” However, all of the definitions point to an emphasis on the creation of value for all stakeholders, including shareholders, customers, and society in general. While some use the terms mission or vision somewhat interchangeably with organizational purpose, there is a distinct difference. Organizational purpose helps to guide and inform a company’s mission or vision. In other words, while a company’s mission statement or vision might shed light on what the organization is trying to accomplish, its organizational purpose explains the why.

If you are looking for a starting point for fostering organizational purpose, a recent article in Harvard Business Review has a few tips for how you can build in purpose to align your organization. First, consider your employees; with modern workplaces having unique compositions of full-time and part-time employees and contractors, it’s important to think of how each employee experiences their work. Second, consider how your organizational purpose is communicated and embodied in actions throughout the organization. Finally, consider the bigger picture when thinking of a purpose. In the modern workplace, broader societal impacts and sustainability are things that need to be considered.

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Viewpoint Research Team

The Path to Economic And Social Prosperity in Canada

Last week, members of the expert panel on Sustainable Finance released their recommendations on mobilizing Canada’s financial sector, hoping to secure both economic prosperity and better environmental practices. The main takeaway from the panel is that Canada stands poised to become “a decision-maker rather than a decision-taker in a world where sound environmental stewardship is intersecting with market access and becoming critical to competitiveness.” Currently the fourth-largest exporter of oil and the fifth-largest exporter of natural gas, Canada has the potential to become the world’s safest and cleanest producer. Yet for this feat to be accomplished, the energy sector must focus on accelerating innovation, transparency, and market access. 
 
To further innovation, the panel recommends that the federal government “fund an oil and gas clean innovation cluster to pool capital and expertise,” helping to expand the next generation of innovative ventures, and consequently encourage the development and commercialization of cleaner energy-saving solutions.
 
Global perceptions of Canada’s environmental record and the carbon-intensity of oil sands extraction have caused investors in the energy sector to avoid Canada, or demand better data and evidence about the risk to their firms. “If we want to attract global capital back to Canadian resources, it will take an industry-wide commitment to report more comparable and complete data on climate-related financial risks.” Providing this type of transparency is exactly the kind of leadership that investors are seeking from Canada’s industry. 
 
In regards to market access, it is vital that Canada's market more responsibly produce oil and gas. Yet Canadian producers can only invest in cleaner technology if they are able to sell their products. “Though counter-intuitive to some, solving Canada’s market-access stalemate is fundamental to Canada’s ability to contribute to lowering emissions in the world’s global energy supply by displacing higher emissions and less transparent sources.”
 
Our founder, Mac Van Wielingen, strongly argues that this is an opportunity for Canada to be a leader in energy. Having used his decades of experience in the investment management business in capital projects all over the world, Mac’s own recommendations for the future of the energy sector align with those of the expert panel on sustainable finance. In his recent speaking event at the Calgary Petroleum Club, he states: 
 
“The industry must remain passionately committed to innovate and further improve its environmental performance, in the context of a global transition to a low carbon environment...There are two competing visions. One involves a dismantling and diminishment of our leading global industry with enormous financial and social costs. The other is to support the development of a “Clean, Canadian Energy Brand” and strategy to bring more of ourselves into the world, not less. This is Canada’s global leadership opportunity in energy and environmental stewardship.”
 
In addition, Bill Gates, chairman of the board for Breakthrough Energy Ventures (BEV), an investor-led, $1 billion fund committed to funding clean energy innovation, emphasizes the complexity of the issue of climate change. In a recent sit-down with David Rubenstein, president of The Economic Club of Washington, D.C., Gates stated that creative solutions are the key to combating climate changes; projects that utilize “the lens of innovation” are what investors should be focusing on. 

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Viewpoint Research Team

Of Purpose and Profit

This month in Davos, Switzerland, CEOs from around the world were talking about one thing: a letter sent by Larry Fink, CEO of BlackRock. It stirred controversy among many attendants at the World Economic Forum, proselytizing that pursuing purpose over profits is the key to unlocking the full potential of any business. Why should businesses need to worry about anything other than profit? Many would argue that financial growth is all that should drive a business. What could be more important?

It’s a question that’s been asked many times by our founder, Mac Van Wielingen, most notably in his 2017 speech at the Fraser Institute, where he proposes that long-term success depends on much more than just profit. “We are not maximizing one variable, we are combining, making choices, trading off and optimizing among four variables: profit, risk, time, and human experience.”

In a recent study by Deloitte, 40 percent of millennials “believe the goal of businesses should be to ‘improve society’.” As millennials will soon make up about 40 percent of all consumers, it is imperative that organizations examine how long-term sustainability, purpose-driven business decisions, and community investment fit into the bigger picture. Nothing states this louder than the fact that “64% of people globally expect CEOs to lead on social change rather than waiting for government intervention.”

Society needs corporate champions to lead the way down this untested, unfamiliar path. In his letter to CEOs, Larry Fink talks about the intimate relationship between purpose and profit in business. “Purpose is not the sole pursuit of profits but the animating force for achieving them. Profits are in no way inconsistent with purpose – in fact, profits and purpose are inextricably linked.”  He then encourages CEOs to lead the charge on making a positive impact on society. “One thing, however, is certain: the world needs your leadership. As divisions continue to deepen, companies must demonstrate their commitment to the countries, regions, and communities where they operate, particularly on issues central to the world’s future prosperity.” More and more leaders are realizing the interdependency of purpose and profit. If you need proof, read Baupost’s Davos letter orSeth Klarman’s interview regarding the leaders at Davos.

How can your organization prepare itself for a world that increasingly scrutinizes purpose? As Mac Van Wielingen proposes, corporate strategy is the key driver. At every turn in the strategy, ask if unnecessary short-term risk, social value, and environmental sustainability have been taken into account. By infusing the core of your organization with a culture of long-term thinking and social awareness, purpose-driven decisions will be made unconsciously, and social license will come naturally to your business.

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Viewpoint Research Team