Ten ways leading companies turn purpose into strategy

How do the firms we studied approach the challenge of measuring purpose? Lots of experimentation, as it turns out. As part of the Unilever Sustainable Living Plan, for instance, Unilever sets company-wide goals for performance and impact, but it also leaves specific impact targets for each brand to determine. “The unifier is top- and bottom-line growth,” said CEO Alan Jope, “and then each brand will have [a] metric that’s most important for its sustainable living purpose.”

Like any firm, Unilever has worked hard to strike the right balance. “To meet the targets set out in the Unilever Sustainable Living Plan, a no-metric world doesn’t help to focus the mind in a large organization,” CHRO Leena Nair told us. “You need some metrics.” But at the same time, Nair added, “it’s not all metrics. It’s a balance. The metrics can’t be all input, and they can’t be all outcome. There has to be a balance of both.” COO Nitin Paranjpe agreed. “I think there is a role for metrics,” he suggested, “but you need to leave them at a relatively high level to not lose sight of the big picture.”

Paranjpe was also clear that companies need to be open and honest about reporting both successes and shortcomings, and they should be prepared to adjust their expectations as they go. “This is a space where the intent that we are articulating is so big and broad, frankly, nobody knows exactly how you’re going to get to those outcomes,” said us, “especially when the technological opportunities and changing consumer patterns are evolving exponentially.” One former C-suite leader at Mastercard expressed a similar sentiment. “You can do quantitative analysis — and, believe me, everybody can do a lovely model,” this person told us. But when it comes to measuring whether a company is achieving its purpose-driven ambitions, “you have to have the right people who can actually step back and have a more differentiated, qualitative assessment of it.”

It may sound strange to hear EY talking about the importance of not measuring something. As one former EY leader told us, “We are accountants and consultants, and we measure everything that moves.” But, as they pointed out, when it comes to the purpose of building a better working world, the “micro-management of measures” can be immensely frustrating for employees.

Doing the right thing is the whole point, after all, and firms don’t need metrics or a business case for that. “None of these numbers are numbers,” a former leader at LinkedIn told us. “These are human beings with real stories.”  

5. Don’t confuse purpose with CSR

CSR is old news. Purpose isn’t a side effort or an add-on.

Today’s most successful purpose-driven firms understand that purpose is not siloed into a single department, team, or person. Purpose is not philanthropy or corporate social responsibility (CSR). Purpose is a scalable, core part of the business, and it doesn’t have to compete for limited time and resources any more — or any less — than the rest of the business does.

The conviction that purpose is not CSR was one of the most common themes in our interviews. Unilever CEO Alan Jope described CSR as “a kind of bolt-on to our regular activities,” whereas the firm’s purpose is core to how the entire business operates. “Everything we do has to be really embedded in the business,” Jope said. Similarly, Royal DSM’s Feike Sijbesma told us, “I don’t believe in CSR in the official way of CSR. I think that it’s out.” A former senior leader at EY echoed these thoughts, saying that defining purpose “wasn’t about corporate responsibility. This was about what we do every day.”

In fact, as Keith Weed, former chief marketing officer at Unilever, who was also in charge of social and environmental sustainability, put it, CSR and philanthropy might even undermine purpose by creating a mentality that “if a group of people over there are doing good, [then] the rest of the company can carry on doing bad, because they’re the good guys negating others’ badness.” To that end, Weed closed down Unilever’s CSR department and mainstreamed sustainability across the company.

At Mastercard, purpose “is not about philanthropy alone. It is not about CSR alone,” said Michael Froman. “It is about getting the private sector to work on their business models so that it is in their economic interest to address these issues.” Shamina Singh, founder and president of Mastercard’s Center for Inclusive Growth, agreed, telling us that “we don’t talk about purpose as some sort of separate thing that happens outside of us. It’s the work we do every day.”

Purpose isn’t separate from company strategy, she added. “This social purpose fits into our business strategy.” These observations reinforce insights from Dr. Andrew White of the Oxford research team, who noted that “these conversations about purpose are transforming how we understand what a firm does, how the firm does it, and how those actions link to core decisions that shift the trajectory of the firm and, in some cases, an entire industry.”

To be clear, in business today there are important roles for CSR and corporate philanthropy, especially when these efforts are linked to what the sponsoring firms do every day. For example, the Mastercard Foundation supports Mastercard’s financial inclusion work through its Center for Inclusive Growth. Similarly, the LEGO Foundation is linked to LEGO through the research it does on education and child development. Meanwhile, Dan Gray, EY’s global corporate responsibility knowledge leader, told us he views EY Ripples not as a separate undertaking but rather as “a means to extend the value of our skills and experience to people and places we might not otherwise reach in our day-to-day business.”

Effective CSR efforts complement the foundational purpose that sits at the heart of organizational strategy. LinkedIn’s Meg Garlinghouse thinks companies increasingly understand this evolution from CSR to purpose. “I really do think purpose is going to become a norm,” she told us. “What I talk about is a future state where social impact teams cease to exist. Not because they matter less but because they matter more, and it becomes a mind shift rather than an initiative.”

6. Position purpose as a North Star, not a to-do list

Purpose empowers employees to anchor their work into what the company does.

While purpose-driven organizations make sure every employee can connect their work to the company’s purpose, they don’t demand that purpose be lived or experienced identically by each person. An effective purpose is specific enough to be relevant to what a company actually does, but broad enough that it encompasses the diverse roles and responsibilities that exist within the firm. Purpose is a “North Star,” in other words, reflecting the fact that while the “means” may evolve, the “end” remains constant.

Many interviewees used the same image to describe this delicate balance. “In the complex world we are faced with today, it is crucial to provide a constant North Star,” Julie Teigland told us. “Purpose offers that North Star.” As Bob Patton, EY’s Americas Vice Chair of Strategy, put it, “Purpose has to resonate at every level, from the C-suite to business units to teams. When it’s brought to life at the individual level — when each employee can find meaning in their work and see how it contributes to the organization’s purpose — that’s when you see purpose get real.”  

That’s easier said than done, of course. One way companies approach this challenge is by making sure their purpose aligns with their core competencies. As EY Beacon Institute wrote last year, leading firms like Royal DSM take what they already do well and figure out how to use those existing strengths to serve society. Royal DSM’s Feike Sijbesma told us that his company focuses on improving health and nutrition and fighting climate change because these efforts connect with the firm’s core strengths. (This effort is distinct from simply slapping a feel-good purpose slogan on the way a company already operates, without changing any of the underlying operations. That’s purpose-washing, not purpose.)

Another way companies cultivate purpose is by setting goals that are both aspirational and achievable, creating an inspiring “sense of challenge,” as Royal DSM’s Geraldine Matchett put it, to pursue big goals. At the heart of Mastercard’s purpose, “we have a goal of connecting one million micro-entrepreneurs by 2020. We have a goal of connecting 500 million people by 2020,” said Mastercard’s Shamina Singh. Meanwhile, Unilever’s public commitment to the goals of the Unilever Sustainable Living Plan have been “a real tipping point towards galvanizing the organization towards more serious actions,” COO Nitin Paranjpe told us. “Purpose has to extend and even redirect the culture of business as usual,” said Oxford’s Marc Ventresca. This role of institutional provocation is a core theme of the research findings, he observed, noting that “purpose without provocation may not create the urgency necessary to spark new ways of doing business.”

Rather than mandating a top-down approach, Unilever allows each of its many brands to figure out how it can best serve society and move the company closer to realizing its goals. LEGO’s Carsten Rasmussen said that company leadership aims to “translate” LEGO’s high-level purpose into an “operational day-to-day” to make it real for employees across the firm. LEGO even hosts annual “play days” during which all company employees spend a day building with LEGOs because “we need people in this company to connect with the values and the experience,” as Poul Schou, who leads LEGO’s designers as senior vice president of product development, put it.

Leaders need to focus on creating a culture in which, as LinkedIn’s Nawal Fakhoury described it, “as employees, regardless of where you sit in the organization, you understand the ‘why?’ You understand how it connects back to the big picture, but it also feels very personal to you because you understand where you fit in that.” An effective “North Star” balances aspiration with action to make that experience real for everyone at the organization.

7. Bring purpose to life with stories

Purpose-driven firms find guidance and inspiration in the human experience.

Human beings communicate with each other through stories, not statistics, so stories provide an invaluable way for companies to gauge their progress towards their purpose. Sometimes, these stories capture a company’s historical narrative and founding heritage. In other cases, stories highlight personal triumphs and vivid testimonials of stakeholders whose lives the company has improved. More than any number, these stories help firms bring their purpose to life.

Take LEGO. The company’s history stretches back nearly 90 years, and employees in every segment of the firm pepper their conversations with references to LEGO’s founding story and its legacy of serving children. According to Thomas Kirk Kristiansen, the company’s fourth-generation family owner, LEGO’s purpose of creating meaningful play experiences for children “has been the thread throughout the generations” of the company. It “has been there throughout history, so it’s not just something that one clever guy came up with yesterday,” he told us. “It has actually proven for 86 years now that that is a purpose that can survive, which also gives us the belief that it will probably also survive 50 years from now.”

Unilever points to a similarly purpose-driven legacy. In fact, the first thing CEO Alan Jope told us about Unilever’s purpose is that it “goes right back to our founders.” The company’s CFO, Graeme Pitkethly, noted that Unilever’s commitment to “making sustainable living commonplace has been with us, almost, since the foundation of the company. It goes right back to Lord Lever.” He continued: “It means, in Unilever’s case, this is not new stuff. This is what the company was founded on, and has been successfully operating over many decades.”

Younger companies may not have the same heritage to lean on, but that doesn’t mean they can’t leverage stories in a dramatic way. Meg Garlinghouse told us the story of a young woman in India with a hearing disability whose video on LinkedIn showcasing her sign-language skills went viral, both within LinkedIn and externally. These “breakout examples,” as Garlinghouse described them, inspire people and can articulate a firm’s purpose far better than any set of words. They “reinforce why the work we do matters so much,” she said.

8. Lean on purpose during good times, too

Purpose keeps firms focused during times of growth and success.

It’s easy to turn to purpose when a firm is struggling or in crisis, or simply facing a challenging climate owing to digital disruption, a competitive marketplace, or an external acquisition. In these situations, purpose keeps firms anchored and on-track. But purpose isn’t just for times when “all else fails.” Leading companies also use their purpose to stay focused during times of growth and success.

LEGO, for instance, has returned to its purpose during both challenging times and lucrative times. In the early 2000s, the company faced nothing less than an existential crisis and used its core purpose to return to the foundational product lines that had made it such an iconic organization. More recently, after LEGO’s turnaround led to a dozen consecutive years of double-digit annual growth, the company again came back to its purpose to help it stay focused on its core business model and help new employees get acquainted with LEGO’s culture.

As LEGO COO Carsten Rasmussen described it, during times of strong growth and expansion it’s easy to get “a little bit complacent” and “start to take… for granted the things that brought you some success.” Charlotte Simonsen said maintaining LEGO’s values and history during times of growth can be difficult. “In times of crisis you rally around the company and its purpose,” she told us, but “when you experience rapid growth and thus a huge intake of new colleagues it’s simply a challenge to install the purpose, values, and culture in people fast enough.” LEGO’s purpose has helped it acquaint new employees with the company’s unique culture — a challenge for any firm growing rapidly.

Purpose can also be a beacon of continuity during times of transition. We asked Meg Garlinghouse whether LinkedIn’s IPO in 2011, or its subsequent acquisition by Microsoft in 2016, affected employees’ sense of purpose. “You would have thought that those two big events would have had an impact on our company’s culture,” Garlinghouse responded, “but neither has had one iota of an impact. I think it’s because our leadership team has done such an extraordinary job from the beginning in making our vision, our purpose, so core to our culture and our business and brand.” As Julie Teigland from EY told us, “the key to purpose is that it provides a constant, no matter the circumstances.”

9. Accept that purpose is not always a win-win

Purpose is not a business panacea. Sometimes you have to sacrifice short-term financial gain to do the right thing.

Doing the right thing can be good for the bottom line. But not always. Today, the world’s most authentically purpose-driven firms — the companies best positioned to thrive over the long term — are willing to sacrifice profit and growth, especially in the short term, to do more good and less harm. This message isn’t something every business likes to hear. We’d much rather discuss how purpose is always a “win-win,” and tell ourselves that businesses don’t have to make any sacrifices to play a more positive role in society.

“Early in our interviews, we saw evidence of we call ‘profit inertia,’” said Oxford’s Abrar Chaudhury. Profit inertia describes “the set of factors that together reinforce a narrow focus on near-term profit and make it difficult for businesses to shift focus beyond doing more of the same.” Chaudhury continued: “The insight here is that progressing the purpose journey often means corporations have to rethink legacy assumptions about operations, strategy, and governance in ways that make transformation possible.” Ventresca added that “the firms that think about performance over the long term are the ones that recognize and manage challenges to the profit inertia thesis, making the short term a stepping stone to longer-term value creation.”

While profit and purpose do often go hand-in-hand, that’s not the case every time. For instance, a firm truly committed to living its purpose is willing to say “no” to a business opportunity that doesn’t align with that purpose. Many of the people we interviewed shared such examples. One former leader at EY remembered a particular client proposal. “Yes, we can do the work,” the line of thinking went. But “no, we should not do the work. And we didn’t.”

Charlotte Simonsen described how LEGO has established strict guidelines for which industries it will and will not partner with. The company won’t allow partnerships in cosmetics, medicines, alcohol, tobacco, or weapons, for instance, even though these partnerships might prove lucrative. “You could argue that we could make more money short-term if we had a less strict policy on partnerships, but that wouldn’t fit with who we are and the signals we want to send to children,” she said. “And from a brand perspective it would only be a short-term profit.”

Her colleague Poul Schou, pointed to other opportunities the company has turned down. “We’ve always said we don’t want to do modern military lines,” Schou told us. “A lot of our competitors, they have army green military tanks in the line. We know they are taking part of the market, but we’ve said — even though it would be attractive for us, [and] I’m sure we could sell a lot — we will not go there.” Schou also explained that when it comes to deciding whether to green-light partnership opportunities, “we wouldn’t go after companies where it didn’t really have any purpose behind that. If it’s a no-go on the brand and purpose level, then we’ll just stop the meeting.”

Authentically purpose-driven firms are committed to looking at the way they currently do business to better understand what they might need to stop doing, even if it’s making them a lot of money. Unilever CEO Alan Jope put it bluntly: “Any brand that cannot put purpose at its center doesn’t have a role in our portfolio long term,” he said. “We will exit brands that cannot find a way of being purposeful.” LinkedIn’s Meg Garlinghouse told us that “one of the things that we are putting time and resources towards is making sure that there aren’t any unintended consequences of our product and platform.” Oxford’s Andrew White agreed. “This wisdom is the gist of understanding trajectory decisions, or the cumulative insights and decision criteria that enable a firm to redefine core practices and processes over time,” he said.

Sometimes, doing the right thing means collaborating with competitors. These firms recognize that business has a role to play in solving global challenges, from climate change to wealth inequality to poverty, but they also recognize that a single business can’t solve these challenges on its own. That’s why they’re working to drive change at the industry-, sector-, and systems-wide levels. For these companies, making purpose real is about building coalitions that encompass entire supply chains and systems, even if that means partnering with the competition.

In many cases, of course, purpose and profit do go hand-in hand, and there is a traditional business case for purpose. Just a few years ago Harvard Business Review Analytic Services and EY Beacon Institute, in collaboration with Oxford University, published research under that very name (“The Business Case for Purpose”) that found executives around the world believe purpose can drive innovation and increase customer loyalty, among other findings. Purpose can be a competitive advantage; as Mastercard’s Michael Froman told us, “Managing and leading with purpose is one of the ways that I think we distinguish ourselves.” It can be good for attracting and retaining high-quality employees. It can be good for sales and growth.

But not always. Truly purpose-driven companies recognize that living their purpose means giving up the expectation of a guaranteed win-win, particularly in the short term. It means being willing to do the right thing, even if requires sacrificing profits and growth. Even if it requires making key stakeholders, such as investors and shareholders, uncomfortable. As Froman put it, the reason firms “do” purpose “is not necessarily because it is delivering short term significant boosts to the bottom line. It is because it goes to the definition of the company and its culture, how we want to position ourselves vis à vis governments, vis à vis our employees, vis à vis the communities in which we operate.”

10. Celebrate your successes — and acknowledge your shortcomings

By being open and transparent about their progress towards their purpose, firms communicate authenticity and build trust.

The purpose journey is neither easy nor simple. The conventional short-term, profit-first mindset of business is extraordinarily difficult to shift. “In this world of short-term pressures, how is it that you are able to get this balance right?” asked Unilever COO Nitin Paranjpe. “It’s not always easy. The world is unforgiving, but when you get it right it’s magic because people, planet, and profit will benefit.” CEO Alan Jope agreed: “We generally do the right thing in the world, often after considering other alternatives, but finally we end up doing the right thing.”

Fortunately, what people seek from businesses today is purpose, not perfection. That’s why firms serious about progressing along the purpose journey celebrate their progress and acknowledge their shortcomings. Business leaders may fear being candid about their mistakes, but transparency not only doesn’t harm a company — it actually builds a priceless reservoir of public trust. Consider LEGO’s sustainability efforts. The company has aggressive goals for reducing its environmental impact, and Tim Brooks, LEGO’s head of environmental responsibility, was frank with us about how much further it has to go. “We know there’s an impact in making LEGO, in making it and shipping it, and all of the things that we do,” he said.

Approaching these challenges with humility, honesty, and transparency sends a clear signal to employees and customers that a firm is serious about doing better and playing a more positive role in society. LEGO understands that “we don’t have all the answers,” Brooks told us, which is why the company engages all its stakeholders — including children — to help it meet its environmental goals. “Our view,” Brooks told us, “is that we will work our absolute hardest to reach that date [2030], and we hope we’re judged by consumers and the general public on the efforts we have made If we don’t hit it, but we didn’t really try, that’s a different case to, We didn’t hit it, but we threw everything we had [at the challenge].”

Unilever’s Paranjpe expressed a similar sentiment. “Be honest. While you say many things, be willing to acknowledge your limitations and where you haven’t managed to achieve very much,” he told us. “People will respect you for being honest and trying, and not trying to be perfect, because nobody is.” The most important thing, Paranjpe added, is to “be on that journey.” LEGO’s Tim Brooks, suggested that consumers see sustainability, like purpose, as a journey. “I don’t think they expect companies to have all the answers on day one; I think they do expect a journey. What they are after is an effort, that you at least start on that journey and you’re not seen as blocking that journey.”

There’s no single “pathway” to purpose

If there’s a single message, business leaders should take away from these ten core findings from EY Beacon Institute and Oxford Saïd Business School, it’s this: There’s no single “pathway” to purpose. “Our research found several factors that combine to create alternative paths to purpose,” as Oxford’s Ventresca put it. “That said, the critical factor is the degree to which there is sustained attention and integration across the factors.”

Every firm “does” purpose differently. Making your organization a better actor in society is a journey. Every firm is at a different place along this journey, and everyone is learning from trial and error as they go. There’s no single “right” way, and there’s no “wrong” way — except not to make a sincere effort to try. There’s also no finish line — no point when a company suddenly switches from “not purposeful” to “purposeful.”

At EY, we’re on a purpose journey of our own. We don’t have all the answers, and we’re learning how to build a better working world through trial and error, just like any other organization. When it comes to bringing our purpose to life for every employee, we have a long way to go. But we’re trying. The question is, as Julie Teigland phrased it, “Have we taken purpose and embedded it in the day-to-day? Do our colleagues identify with actively driving to build a better working world?’” If the answer isn’t a resounding “yes” from every one of our 270,000-plus colleagues around the world, we have more work to do.

The most important thing is that businesses are on the purpose journey, progressing with authenticity, humility, and a determination to do the right thing. Ultimately, as LEGO’s executive chairman and former CEO Jørgen Vig Knudstorp told us, “We need to get business to be a stakeholder, and go beyond profit optimization to also say, We are a contributor to society, and we serve more bottom lines than just the financial bottom line.”