What Makes A Purpose-Driven Organization? | 4 Misconceptions About Purpose-Driven Companies

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The last 10-15 years have seen a dramatic increase in talk about being purpose-driven organizations, mission-focused companies, and business that do good by doing good. But there's a lot of misconceptions around what it really means to be a purpose-driven organization. In the video, we cover 4 misconceptions about purpose-driven organizations and provide examples of companies that are truly purpose-driven.

1. Being a purpose-driven organization is not about corporate social responsibility (CSR).
2. Being a Purpose-driven organization is bigger than just your mission statement.
3. Being a purpose-driven organization is more than just your business model.
4. Being a purpose-driven organization is not always about what you sell.

My litmus test for being a purpose-driven organization: Do your people know how to answer the question "What are we fighting for?"

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What makes a purpose-driven organization?
And how do you know if you have one?

Let's talk about purpose. Specifically let's talk about being a purpose-driven organization. I mean, we know, we've known this for probably 20 years.

We've believed the researchers for maybe the last five to ten. That purpose-driven organizations outperform their competitors; they outperform the industry. That people want a sense of meaning from their work, that people wanna derive a sense of true value that they're creating.

People want a sense of purpose, and they want it for more than just their personal lives. They want it as work as well. And so a lot of organizations have responded by trying to migrate their organization to a truly purpose-driven organization.

But I thought it'd be helpful to talk about what a purpose-driven organization is not, so that we can get an idea of what makes a truly purpose-driven organization.

So today I wanna share four misconceptions about purpose-driven organizations. Things that would make employees feel a sense of purpose, but may not work out the way that we hope.

The first misconception is that a purpose-driven organization sort of equals CSR: Corporate social responsibility. And no one would say this outright.

No one would just say, "oh, well if we just give a certain percentage to social causes, we suddenly become a purpose-driven organization."

But if you look at the way organizations talk about what they do in terms of CSR, or you could just call them what they are often; PR campaigns.

If you look at what they do, they really are trying to say that we do good business by doing good. You don't; you just give a certain percentage of your profits to good causes. Your business model may actually be in contrast to some of those causes. Now, in contrast, there are organizations whose business models, the entire purpose around their organization is in and of itself almost a form of corporate social responsibility.

But it's also not just about what people are working for in terms of a mission statement. That's actually the second misconception. Your purpose as an organization is bigger than your mission statement. You know what, and I've talked about this before. Mission statements are actually a relatively terrible way to convey a sense of purpose to employees because we have a very one-and-done mentality around them.

That leads us to really the third misconception about purpose and being a purpose-driven organization. We know that it's not just CSR, we know that it's bigger than your mission statement, but it's also not necessarily your business model.

The fourth and final misconception about purpose – which is that it's not necessarily what you sell.

So how do you know when you actually are one of these purpose-driven organizations?

How do you know when employees actually do feel a sense of purpose that inspires them and motivates them everyday? Versus a mission statement that sounds good when you read it in the 10-K, but nobody even remembers. Or versus a business model that's actually at odds with what your CSR/PR campaigns say is the good that you provide in the world.

How do you know?

Well, for most leaders, I think there's actually a simple test that you can give. Do your people have a clear and concise answer to the question: "What are we fighting for?"

"What are we fighting for?"