statement of the purpose in business plan

9 Examples: How to Write a Purpose Statement

By Status.net Editorial Team on September 30, 2023 — 15 minutes to read

• Key Elements of a Purpose Statement Part 1
• How to Write a Purpose Statement Step-by-Step Part 2
• Identifying Your Goals Part 3
• Defining Your Audience Part 4
• Outlining Your Methods Part 5
• Stating the Expected Outcomes Part 6
• Purpose Statement Example for a Research Paper Part 7
• Purpose Statement Example For Personal Goals Part 8
• Purpose Statement Example For Business Objectives Part 9
• Purpose Statement Example For an Essay Part 10
• Purpose Statement Example For a Proposal Part 11
• Purpose Statement Example For a Report Part 12
• Purpose Statement Example For a Project Part 13
• Purpose Statement Templates Part 14

A purpose statement is a vital component of any project, as it sets the tone for the entire piece of work. It tells the reader what the project is about, why it’s important, and what the writer hopes to achieve.

Part 1 Key Elements of a Purpose Statement

When writing a purpose statement, there are several key elements that you should keep in mind. These elements will help you to create a clear, concise, and effective statement that accurately reflects your goals and objectives.

1. The Problem or Opportunity

The first element of a purpose statement is the problem or opportunity that you are addressing. This should be a clear and specific description of the issue that you are trying to solve or the opportunity that you are pursuing.

2. The Target Audience

The second element is the target audience for your purpose statement. This should be a clear and specific description of the group of people who will benefit from your work.

3. The Solution

The third element is the solution that you are proposing. This should be a clear and specific description of the action that you will take to address the problem or pursue the opportunity.

4. The Benefits

The fourth element is the benefits that your solution will provide. This should be a clear and specific description of the positive outcomes that your work will achieve.

5. The Action Plan

The fifth element is the action plan that you will follow to implement your solution. This should be a clear and specific description of the steps that you will take to achieve your goals.

Part 2 How to Write a Purpose Statement Step-by-Step

Writing a purpose statement is an essential part of any research project. It helps to clarify the purpose of your study and provides direction for your research. Here are some steps to follow when writing a purpose statement:

• Start with a clear research question: The first step in writing a purpose statement is to have a clear research question. This question should be specific and focused on the topic you want to research.
• Identify the scope of your study: Once you have a clear research question, you need to identify the scope of your study. This involves determining what you will and will not include in your research.
• Define your research objectives: Your research objectives should be specific, measurable, achievable, relevant, and time-bound. They should also be aligned with your research question and the scope of your study.
• Determine your research design: Your research design will depend on the nature of your research question and the scope of your study. You may choose to use a qualitative, quantitative, or mixed-methods approach.
• Write your purpose statement: Your purpose statement should be a clear and concise statement that summarizes the purpose of your study. It should include your research question, the scope of your study, your research objectives, and your research design.

Research question: What are the effects of social media on teenage mental health?

Scope of study: This study will focus on teenagers aged 13-18 in the United States.

Research objectives: To determine the prevalence of social media use among teenagers, to identify the types of social media used by teenagers, to explore the relationship between social media use and mental health, and to provide recommendations for parents, educators, and mental health professionals.

Research design: This study will use a mixed-methods approach, including a survey and interviews with teenagers and mental health professionals.

Purpose statement: The purpose of this study is to examine the effects of social media on teenage mental health among teenagers aged 13-18 in the United States. The study will use a mixed-methods approach, including a survey and interviews with teenagers and mental health professionals. The research objectives are to determine the prevalence of social media use among teenagers, to identify the types of social media used by teenagers, to explore the relationship between social media use and mental health, and to provide recommendations for parents, educators, and mental health professionals.

Part 3 Section 1: Identifying Your Goals

Before you start writing your purpose statement, it’s important to identify your goals. To do this, ask yourself the following questions:

• What do I want to achieve?
• What problem do I want to solve?
• What impact do I want to make?

Once you have a clear idea of your goals, you can start crafting your purpose statement. Your purpose statement should be a clear and concise statement that outlines the purpose of your work.

For example, if you’re writing a purpose statement for a business, your statement might look something like this:

“Our purpose is to provide high-quality products and services that improve the lives of our customers and contribute to the growth and success of our company.”

If you’re writing a purpose statement for a non-profit organization, your statement might look something like this:

“Our purpose is to improve the lives of underserved communities by providing access to education, healthcare, and other essential services.”

Remember, your purpose statement should be specific, measurable, and achievable. It should also be aligned with your values and goals, and it should inspire and motivate you to take action.

Part 4 Section 2: Defining Your Audience

Once you have established the purpose of your statement, it’s important to consider who your audience is. The audience for your purpose statement will depend on the context in which it will be used. For example, if you’re writing a purpose statement for a research paper, your audience will likely be your professor or academic peers. If you’re writing a purpose statement for a business proposal, your audience may be potential investors or clients.

Defining your audience is important because it will help you tailor your purpose statement to the specific needs and interests of your readers. You want to make sure that your statement is clear, concise, and relevant to your audience.

To define your audience, consider the following questions:

• Who will be reading your purpose statement?
• What is their level of knowledge or expertise on the topic?
• What are their needs and interests?
• What do they hope to gain from reading your purpose statement?

Once you have a clear understanding of your audience, you can begin to craft your purpose statement with their needs and interests in mind. This will help ensure that your statement is effective in communicating your goals and objectives to your readers.

For example, if you’re writing a purpose statement for a research paper on the effects of climate change on agriculture, your audience may be fellow researchers in the field of environmental science. In this case, you would want to make sure that your purpose statement is written in a way that is clear and concise, using technical language that is familiar to your audience.

Or, if you’re writing a purpose statement for a business proposal to potential investors, your audience may be less familiar with the technical aspects of your project. In this case, you would want to make sure that your purpose statement is written in a way that is easy to understand, using clear and concise language that highlights the benefits of your proposal.

The key to defining your audience is to put yourself in their shoes and consider what they need and want from your purpose statement.

Part 5 Section 3: Outlining Your Methods

After you have identified the purpose of your statement, it is time to outline your methods. This section should describe how you plan to achieve your goal and the steps you will take to get there. Here are a few tips to help you outline your methods effectively:

• Start with a general overview: Begin by providing a brief overview of the methods you plan to use. This will give your readers a sense of what to expect in the following paragraphs.
• Break down your methods: Break your methods down into smaller, more manageable steps. This will make it easier for you to stay organized and for your readers to follow along.
• Use bullet points: Bullet points can help you organize your ideas and make your methods easier to read. Use them to list the steps you will take to achieve your goal.
• Be specific: Make sure you are specific about the methods you plan to use. This will help your readers understand exactly what you are doing and why.
• Provide examples: Use examples to illustrate your methods. This will make it easier for your readers to understand what you are trying to accomplish.

Part 6 Section 4: Stating the Expected Outcomes

After defining the problem and the purpose of your research, it’s time to state the expected outcomes. This is where you describe what you hope to achieve by conducting your research. The expected outcomes should be specific and measurable, so you can determine if you have achieved your goals.

It’s important to be realistic when stating your expected outcomes. Don’t make exaggerated or false claims, and don’t promise something that you can’t deliver. Your expected outcomes should be based on your research question and the purpose of your study.

Here are some examples of expected outcomes:

• To identify the factors that contribute to employee turnover in the company.
• To develop a new marketing strategy that will increase sales by 20% within the next year.
• To evaluate the effectiveness of a new training program for improving customer service.
• To determine the impact of social media on consumer behavior.

When stating your expected outcomes, make sure they align with your research question and purpose statement. This will help you stay focused on your goals and ensure that your research is relevant and meaningful.

In addition to stating your expected outcomes, you should also describe how you will measure them. This could involve collecting data through surveys, interviews, or experiments, or analyzing existing data from sources such as government reports or industry publications.

Part 7 Purpose Statement Example for a Research Paper

If you are writing a research paper, your purpose statement should clearly state the objective of your study. Here is an example of a purpose statement for a research paper:

The purpose of this study is to investigate the effects of social media on the mental health of teenagers in the United States.

This purpose statement clearly states the objective of the study and provides a specific focus for the research.

Part 8 Purpose Statement Example For Personal Goals

When writing a purpose statement for your personal goals, it’s important to clearly define what you want to achieve and why. Here’s a template that can help you get started:

“I want to [goal] so that [reason]. I will achieve this by [action].”

Example: “I want to lose 10 pounds so that I can feel more confident in my body. I will achieve this by going to the gym three times a week and cutting out sugary snacks.”

Remember to be specific and realistic when setting your goals and actions, and to regularly review and adjust your purpose statement as needed.

Part 9 Purpose Statement Example For Business Objectives

If you’re writing a purpose statement for a business objective, this template can help you get started:

[Objective] [Action verb] [Target audience] [Outcome or benefit]

Here’s an example using this template:

Increase online sales by creating a more user-friendly website for millennial shoppers.

This purpose statement is clear and concise. It identifies the objective (increase online sales), the action verb (creating), the target audience (millennial shoppers), and the outcome or benefit (a more user-friendly website).

Part 10 Purpose Statement Example For an Essay

“The purpose of this essay is to examine the causes and consequences of climate change, with a focus on the role of human activities, and to propose solutions that can mitigate its impact on the environment and future generations.”

This purpose statement clearly states the subject of the essay (climate change), what aspects will be explored (causes, consequences, human activities), and the intended outcome (proposing solutions). It provides a clear roadmap for the reader and sets the direction for the essay.

Part 11 Purpose Statement Example For a Proposal

“The purpose of this proposal is to secure funding and support for the establishment of a community garden in [Location], aimed at promoting sustainable urban agriculture, fostering community engagement, and improving local access to fresh, healthy produce.”

Why this purpose statement is effective:

• The subject of the proposal is clear: the establishment of a community garden.
• The specific goals of the project are outlined: promoting sustainable urban agriculture, fostering community engagement, and improving local access to fresh produce.
• The overall objective of the proposal is evident: securing funding and support.

Part 12 Purpose Statement Example For a Report

“The purpose of this report is to analyze current market trends in the electric vehicle (EV) industry, assess consumer preferences and buying behaviors, and provide strategic recommendations to guide [Company Name] in entering this growing market segment.”

• The subject of the report is provided: market trends in the electric vehicle industry.
• The specific goals of the report are analysis of market trends, assessment of consumer preferences, and strategic recommendations.
• The overall objective of the report is clear: providing guidance for the company’s entry into the EV market.

Part 13 Purpose Statement Example For a Project

“The purpose of this project is to design and implement a new employee wellness program that promotes physical and mental wellbeing in the workplace.”

This purpose statement clearly outlines the objective of the project, which is to create a new employee wellness program. The program is designed to promote physical and mental wellbeing in the workplace, which is a key concern for many employers. By implementing this program, the company aims to improve employee health, reduce absenteeism, and increase productivity. The purpose statement is concise and specific, providing a clear direction for the project team to follow. It highlights the importance of the project and its potential benefits for the company and its employees.

Part 14 Purpose Statement Templates

When writing a purpose statement, it can be helpful to use a template to ensure that you cover all the necessary components:

Template 1: To [action] [target audience] in order to [outcome]

This template is a straightforward way to outline your purpose statement. Simply fill in the blanks with the appropriate information:

• The purpose of […] is
• To [action]: What action do you want to take?
• [Target audience]: Who is your target audience?
• In order to [outcome]: What outcome do you hope to achieve?

For example:

• The purpose of our marketing campaign is to increase brand awareness among young adults in urban areas, in order to drive sales and revenue growth.
• The purpose of our employee training program is to improve customer service skills among our frontline staff, in order to enhance customer satisfaction and loyalty.
• The purpose of our new product launch is to expand our market share in the healthcare industry, by offering a unique solution to the needs of elderly patients with chronic conditions.

Template 2: This [project/product] is designed to [action] [target audience] by [method] in order to [outcome].

This template is useful for purpose statements that involve a specific project or product. Fill in the blanks with the appropriate information:

• This [project/product]: What is your project or product?
• Is designed to [action]: What action do you want to take?
• By [method]: What method will you use to achieve your goal?
• This app is designed to provide personalized nutrition advice to athletes by analyzing their training data in order to optimize performance.

Frequently Asked Questions

What are the key elements of a purpose statement.

A purpose statement should clearly communicate the main goal or objective of your writing. It should be concise and specific, providing a clear direction for your work. The key elements of a purpose statement include the topic or subject matter, the intended audience, and the overall goal or objective of your writing.

How can a purpose statement benefit your writing?

A purpose statement can help you stay focused and on track when writing. It can also help you to avoid going off-topic or getting bogged down in unnecessary details. By clearly identifying the main goal or objective of your writing, a purpose statement can help you to stay organized and ensure that your writing is effective and impactful.

What are some common mistakes to avoid when writing a purpose statement?

One common mistake is being too vague or general in your purpose statement. Another mistake is making your purpose statement too long or complex, which can make it difficult to understand. Additionally, it’s important to avoid including unnecessary information or details that are not directly relevant to your main goal or objective.

How can you tailor your purpose statement to your audience?

When writing a purpose statement, it’s important to consider your audience and their needs. You should tailor your purpose statement to your audience by using language and terminology that they will understand. You should also consider their level of knowledge or expertise on the subject matter and adjust your purpose statement accordingly.

What are some effective templates for writing a purpose statement?

There are many effective templates for writing a purpose statement, but one common approach is to use the following structure: “The purpose of this writing is to [insert goal or objective] for [insert audience] regarding [insert topic or subject matter].”

Can you provide examples of successful purpose statements?

• “The purpose of this report is to provide an analysis of the current market trends and make recommendations for future growth strategies for our company.”
• “The purpose of this essay is to explore the impact of social media on modern communication and its implications for society.”
• “The purpose of this proposal is to secure funding for a new community center that will provide educational and recreational opportunities for local residents.”
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How to Write a Purpose Statement That Serves Its Purpose (With 10 Examples)

If you had 5 minutes – or better yet, 5 seconds, could you describe WHY your organization exists? Would your colleagues describe it in the same way? And more importantly, would they FEEL a strong connection to the company's purpose?

Companies with a clear business purpose statement, and that use their purpose statement to connect with employees, customers, and key stakeholders at a deeper level, have an edge.

Why Company Purpose Matters Even More Today

It’s not a new concept: we tend to feel a bit better going to work or buying a product or service when we know there’s a greater reason for being behind it. It’s often a deciding factor between choosing one brand or company over another. What is new, though, is that the world we live and work in today calls for even more of a spotlight on purpose.

According to a 2021 McKinsey study , nearly 70% of employees are reflecting on purpose because of the pandemic. And, based on a PwC survey , 83% of employees rated “meaning in day-to-day work” as important to them. This has a downstream impact on hiring, morale, retention, and performance.

Your purpose statement is the foundation for how you can attract and retain talent, differentiate your culture, accelerate performance in a competitive, crowded marketplace, and re-energize employees who may be fatigued, apathetic, or skeptical.

The same McKinsey study found that employees who say that they live their purpose at work are:

• 6.5 times more likely to report higher resilience,
• 4 times more likely to report better health,
• 6 times more likely to want to stay at the company, and
• 1.5 times more likely to go above and beyond to contribute to the company (which is the employee engagement outcome many leaders and teams try to achieve).

For these reasons and more, our team believes that every organization should have a purpose statement and should know how to use it to tell your story on the inside and out for business impact so employees, customers, investors, shareholders, potential employees, and customers, and your many other stakeholders and partners see that they have a place in your company’s purpose.

What the Purpose Statement Is

A company purpose statement is its reason for being. It should answer these questions: Why do we exist beyond making money? What would the world lose if we didn’t exist? It goes beyond who you are and what you do. It’s your why and the impact your organization has on others.

Here are six characteristics of great purpose statements:

• Articulate the movement they’re ultimately championing and/or why the company is on the journey they are
• Are grand and aspirational while also believable
• Are differentiated so when viewed together with the mission, vision, and values of your company they are unique to your organization
• Are specific and create clarity, so they mean something to your company
• Are memorable and repeatable
• Have a tone and content that reflects the culture of the organization and fits them like a glove

Done right, company purpose statements are an important aspect of decision-making inside an organization so that it’s consistent with the company’s purpose.

10 Company Purpose Statement Examples

Here are 10 purpose statement examples across a variety of industries with a few thoughts on what makes them strong:

• AT&T: We create connection. This is both aspirational and ties to the company and its products and services over the years – which makes it believable. While it isn’t specific to a product, it creates clarity about what the company sees as its ultimate reason for being – to create connection. This is what we mean by “fitting like a glove”.
• Charles Schwab Corporation: To champion every client's goals with passion and integrity. It speaks to the larger reason for being a company in the financial services industry. It is specific to the movement it focuses on (championing clients’ goals) and it reflects the culture of the organization (passion and integrity). It’s both aspirational and believable.
• CVS Health: Bringing our heart to every moment of your health™ This captures the essence of the company’s focus around people’s lives and health. It’s memorable and repeatable and is used as a tagline. It ties in its brand as well (the heart), which also speaks to company culture and its intended service experience.
• Kellogg’s: Creating better days and a place at the table for everyone through our trusted food brands. You see the statement, company name, think of the products, and know that they go hand in hand. It speaks to the movement the company is championing (better days and a place at the table for everyone). It is grand and aspirational while also being believable. It’s specific and speaks to its industry (trusted food brand).
• Ford Motor Company: To help build a better world, where every person is free to move and pursue their dreams. This is grand and aspirational as well as entirely believable. If you run the screen of “what would be at risk if the company didn’t exist?” the mind goes to images of people not being able to get to their jobs, school, to travel, and be where they want to be. In reading this purpose statement, you learn quite a bit about the company and what it stands for (build a better world, be free to move, help people pursue their dreams).
• Virgin Atlantic: Everyone can take on the world. It speaks to the culture of the company, is easy to remember, and is memorable. It’s aspirational and yet feels believable in the sense that its products and services actually help people “take on the world”. There’s a swagger to this phrase that exudes confidence, feels empowering, and feels right at home with the brand. When you see this purpose statement and think about the company and what it’s all about, you can see (and almost feel) how they belong together.
• McDonald’s: To feed and foster communities. It’s memorable, repeatable, and naturally ties to the business it is in. It also signals in a believable way that its aspirations go beyond food and are also about building communities.
• NIKE: To move the world forward through the power of sport. It’s clear, easy to remember, and specific to the business. You know the industry right away which helps differentiate them (power of sport). It’s aspirational (moving the world forward) and also believable. When you read the purpose statement, you can visualize the essence of the company and its products that help people move.
• Novartis: To reimagine medicine to improve and extend people's lives. It’s specific to the industry (healthcare) and speaks to why the company exists (reimagine medicine) and its higher level reason for being (improve and extend people’s lives). It’s clear and easy to remember.
• Kroger: To feed the human spirit™ This speaks to its industry and focus as a business (food). It’s easy to remember and repeat, reading like a slogan. It’s also aspirational in that it speaks to feeding more than the “person” but also the “human spirit”.

How a Purpose Statement Fits Into Your Company’s Mission, Vision, and Values

Purpose is one of several elements of your organization’s DNA that make your company uniquely you. Together, these define who you are as a company and what you stand for. They serve as your North Star for your business – what you do, why you do it, and how you do it.

• Purpose statement: An organization’s reason for being (beyond making a profit) and how the products/services benefit people. It answers the questions for your customers and employees: why do we exist and what would the world lose if we didn’t exist? It has an external focus and remains constant over time. Purpose statements could be centered on society, customers, or community. All the other elements of the DNA tie back to the purpose statement.
• Mission statement: The mission states what the company will do to realize its business purpose. It comes from the perspective of inside the organization. The key elements to the mission statement are that it states the type of business/work you do today, is forward-looking, and speaks to your capabilities. It focuses on what you do and how you do it. A mission statement guides decision-making and informs business strategy, and it could evolve over time while your organization’s purpose remains the same.
• Vision statement: Paints a picture of what our company’s future looks like if we’re successful. It answers the question. It’s a statement of where the organization is heading. It’s future-oriented and aspirational. It’s also connected to the hearts and minds of people and captures hopes and dreams.
• Values and behaviors: These make up the desired ways of work (or culture) that employees need to live to advance the purpose, mission, and vision. Values describe the principles that are expected of employees, and behaviors are the tangible, observable, measurable elements that can be implemented. Both values and behaviors are intended to help employees know what’s expected of them and to guide how they show up at work. They define the company’s culture and personality, and answer the question: What does our company look like in action? Values and behaviors can happen in pockets but are aspirational for others.

Put another way…

• The purpose GUIDES you.
• The mission FOCUSES you.
• The vision INSPIRES you.
• The values ALIGN you.
• The behaviors MEASURE you.

These elements of a company’s DNA form a strategic framework that helps employees know what matters most for the organization, and how day-to-day business plans and tasks fit into the larger whole and greater good. It’s also an important way for employees to see how their sense of purpose fits (or doesn’t) with the place they work.

It’s like a stack of jigsaw puzzle pieces that fit together to form a cohesive picture for everyone to see and share in common.

How to Know When You Need to Update Your Purpose Statement

Because the purpose statement guides your company, it’s important to regularly calibrate between your purpose statement and changing dynamics to ensure they stay connected in all the right ways. Here are some defining moments in a company that signal when it’s time to review your purpose statement and determine whether it’s time to update it:

• New CEO / leadership team: With new leadership comes new perspective on the business. It’s a time when leaders are evaluating the business, weighing options, and setting new directions for the company that will make an impact. It’s important to also evaluate the purpose statement of the company and line it up.
• Merger and/or acquisition: This is a major change to your company that warrants a calibration to your purpose statement (and mission, vision, and values) as new entities, teams, products, and services are at play. It’s a good time to evaluate whether the purpose statement remains true to the company in its new state. At a minimum, it’s critical to drive awareness of your company’s purpose with employees, customers, and other stakeholders so they fully understand and appreciate it.
• New strategy: Purpose statements and company strategy must go hand in hand so if your company has a new strategy (or is working on a new strategy ), check that the purpose statement is still consistent and relevant.
• Significant transformation: Congruency between the company’s purpose and actions is essential. When big changes are happening in a company it’s key to calibrate so the transformation efforts continue to sync and support the company’s purpose and strategic direction. And, if the transformation is changing direction for a company, then the purpose statement (and mission, vision, and values) may need to evolve.
• Recruitment, retention issues, or other people-related issues: More than ever, employees want to work for companies that share a common sense of purpose and values. If your organization is struggling to recruit and retain employees, check your purpose statement and see if it’s as relevant and compelling as it needs to be.
• Heightened competition: Employees, customers, and investors look for differentiation and companies with an edge. Your purpose statement says a lot about your company – who you are, what you stand for, why you exist, and what’s at risk if you’re not there. When competition is fierce, it’s time to look at your purpose statement to see if it defines you accurately, speaks to your aspirations, and helps you stand out.
• Annual strategic planning: Make it a habit to check your purpose statement (along with your vision, mission, and values) annually in the context of your company’s strategic planning, so the most important elements of your organization guide decision-making for key priorities and plans for the year. It’s the ultimate litmus test to see that priorities and plans support your company’s purpose statement (and overall DNA). And, if they don’t line up, to have strategic conversations about what’s changing and why and whether it warrants updating your purpose statement.

How to Write a Purpose Statement

Apply these principles as you consider your approach to developing your company’s purpose statement:

• Make it a strategic business exercise – that sets the direction for your vision, mission, values, and strategy and is the foundation for how people know you as a company. Keep it from being a word-smithing exercise.
• Be intentional – Dig deep to understand the origin of the company and follow that thread through to who you are today, and why you will continue to exist in the future.
• Let leaders set the tone and involve others with purpose – The purpose statement should be shaped by the leadership team and key influencers in the company and then vetted and fine-tuned with employees so that they have shared meaning and ownership. This is bigger than any one person or team writing the purpose statement.
• Iterate – Work a smart process and let the process work so as people’s thinking evolves, the purpose statement captures it.
• Connect to your culture – Let the essence of your culture come through in how you describe the essence of your company.
• Go beyond the ordinary – If you lined up your purpose statement with others in your industry (or even other industries), check that it stands out from the rest.
• Have a plan – This is how you’re going to create the purpose statement and what you’ll do to introduce it to your key stakeholders inside and outside the company.

Steps to Writing Your Purpose Statement

Whether creating a purpose statement from scratch or refreshing an existing one, follow these steps to guide you. How you approach writing your purpose statement may vary depending on where you are as an organization, your starting point, and your culture.

• Intake Compare your current purpose statement with how your organization shows up in internal and external artifacts to see what’s consistent and what’s not. Ask: What’s similar and what’s different that we should consider for the new purpose statement?
• Develop Your Roadmap Determine your plan of action to get to a purpose statement that your organization is fully aligned around. Ask: What are the key steps and milestones to drive toward?
• Identify Your Stakeholders and Engagement Plan Map your plan for who and how you’ll engage people from across your organization in the process. Consider who your champions will be, who will be hands-on in co-creation, and who you want to involve along the way to preview or test concepts. If there are many stakeholders, consider a working group or committee of representatives to advance the work in a more manageable way. And then involve others to preview and test the committee’s work. Ask: When the purpose statement is drafted, who do we need to have on board so they support it and what’s the best way to get those people involved?
• Conduct Stakeholder Listening Based on your engagement plan, hold listening sessions with key stakeholders to understand their thoughts on the business and how that translates to the company’s purpose. Summarize what you’re hearing. Ask: What are the common themes and where are there different points of view that warrant more conversation and alignment?
• Co-create the Purpose Statement Gather all the key stakeholders to co-create the purpose statement together in a hands-on, interactive way. Have a facilitator lead the session and leverage all the work done in Steps 1 through 4. You can walk out with a solid draft of the purpose statement that the group is aligned around and that’s ready to test drive with others.  Ask: Do we have a purpose statement that we all understand, believe in, and can champion?
• Test the Purpose Statement Involve other stakeholders for input and buy-in. Get the draft purpose statement in front of employee groups and see what they say. You can also have key groups of leaders and working group members test drive the purpose statement with their teams. Ask: What resonates, where is further clarification needed, and in what ways do we see this purpose statement being lived in the company?
• Discuss and Refine the Purpose Statement Use the learnings as fodder for discussion with your core working group and champions about what changes to make in the purpose statement and to inform your communications before you revise and finalize the purpose statement. Ask: What feedback warrants changes to the purpose statement? What concepts will require more communication to help people understand?

Key Learnings from Developing Purpose Statements

We’ve worked with many clients to create their purpose statement (and their mission, vision, and values as well). Here are four things to keep in mind:

• The process is as important as the statement – How you engage people and bring them along on the journey is just as important as what the final words are of your company’s purpose statement. You need a purpose statement that will guide the company – and its people – for years to come and that requires involvement from people.
• Involve skeptics – Some may think of this work as a word-smithing activity or that culminates in posters that no one ever reads. To those people, we say … let’s get you involved in this process so we can make sure that doesn’t happen. Build a plan that is skeptic-proof. I’ve heard from many leaders as they go through this process that they were skeptical about this work at first and then became the biggest advocates of the purpose statement they created and the process that was taken to build it.
• Avoid shortcuts that may cause shortcomings – On paper, a purpose statement is just a few words but getting a room full of people (let alone a whole company) to align around the meaning behind the words looks easier than it is. We believe in a “go slow to go fast” approach that by working a smart process you’ll get to a better outcome faster and that will have lasting power. Watch out for shortcuts that can cause shortcomings – for example, skipping listening or testing may save a few days, but you lose out on important insights and cut people out of being involved who could have become champions.
• Embrace input – It can be nerve-wracking to draft a purpose statement and then take it to pockets of the organization for input not knowing if it will be liked or overhauled. However, it’s better to bring people along on the journey and get input before things are finalized for prime time. In addition, when people are engaged earlier, they tend to be more positive. We worked with a client to preview their company’s DNA (including the purpose statement) with more than 1,000 people. The reception was extremely positive and where there was feedback, it was hugely helpful. Most importantly, when it came time to roll out the final content, people were on board and ready to champion it because they had been a part of the process.

You’ve Crafted Your Purpose Statement – Now What?

Having a clear purpose statement is a big step to celebrate. It’s also just the beginning as you think about how to embed it into the organization. Consider these next steps:

• Define your terms – A purpose statement is just a few words, but every single word matters and needs to mean something. Have specific definitions for each word so people in your organization know what it means and use the terms consistently.
• Align the rest of the strategy to the purpose statement – The purpose statement anchors many other components of your company’s strategic framework so everything needs to ladder back to it, including the mission, vision, values, culture, business plans and priorities, and KPIs and metrics. Identify where there are connections to make and/or disconnects to address. Create a strategic framework that shows visually how all the pieces connect together.
• Plan the rollout and activation – Have a plan for how to communicate the company’s purpose across the organization. Think of it in terms of launching, activating, and sustaining so you can embed the purpose in how people think and work. Make it part of the everyday storytelling inside and outside the company. This takes time, consistency across voices and channels, and purposeful communication.

Case Study: A Purpose-Driven Function

We worked recently with a large function in a global organization through these steps. The function originally needed help to roll out and embed their new strategy to its 7,500 employees, but early on it became clear that before employees could align around a strategy, they first needed to come together with one shared purpose. Working these steps led to many defining moments, including:

• During discovery, an employee survey led to useful insights that guided the leadership team’s focus and helped them address some opportunities, and it served as a follow-up loop for communicating the purpose and strategy.
• Leader listening uncovered a wide range of perspectives on the organization’s purpose and path forward. This was critical to uncover early on, so the work to follow could bridge the gaps and bring the leaders together as one aligned team.
• The process of co-creating the purpose statement worked. It got some grumbles at first. “Really, we need to break up into groups and do flip chart exercises?” Yes... and did they ever rise to the occasion. In a few short hours, the group co-created a purpose statement and started using it in the same meeting to make some critical business decisions. It was an instant payoff and the leadership team knew it. They later described that as a defining moment for their leadership team and their company.
• Leaders played an active role in talking about the purpose statement with their teams and ensuring a common understanding of the meaning of each element of the purpose.
• Next-level leaders (directors and above in this case) became immersed in their purpose, mission, vision, values, and strategy at an offsite meeting where every moment of the day was designed purposefully to bring the company’s DNA to life in ways that made it real, relevant, and actionable for them, so they could take the same experience and energy back to their teams to get them grounded in it.
• The purpose statement took on a life of its own as leaders enrolled their teams in it. They held rallies, decorated their sites with signage, gave employees swag, made it part of everyday conversation, and even got teams writing songs about the purpose statement. It took hold because people got inspired and excited about it.

To learn how we helped another organization define its new DNA following a merger of equals, check out this case study .

Final Thoughts

Be purposeful when creating your company’s purpose statement so that it’s strategic, you have organizational buy-in, and it’s tied to business goals for the best outcome. Follow these steps so that your organization has a purpose statement that effortlessly describes why you exist and guides your company for the future in a way that sets you apart, and that employees, customers, and other key stakeholders know and believe in.  

As you reflect on your company’s purpose statement, would it benefit from being updated?

—Kate Bushnell

This quick guide covers a methodology you can use to co-create your purpose statement and maximize leader and employee buy-in. Download Maximizing Strategy Development & Rollout with Top Leaders   today!

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The Essentials of Writing a Powerful Business Purpose Statement

Businesses today share fundamental corporate and social commitments. They seek to inspire the community, attract talent, and out-originate competition. And more and more of them have a purpose that goes beyond profit.

Crafting your Business Purpose Statement is a pivotal step in the early stages of identifying your enterprise’s core values and objectives. It’s the single line that encapsulates the very reason for your company’s existence, serving as a testament to your branding efforts.

A business’s purpose statement mirrors the connection between your core products and services and the positive impact they have on people’s lives. This statement acts as a compass for your company’s daily decisions, guiding your go-to-market strategies and initiatives.

In this article, we have prepared a few tips to help you write a powerful business purpose statement as well as practical guidelines on how to craft it well.

The Differences between Purpose, Mission, and Vision

Before we walk you through the specifics, we would like to make some important distinctions. Namely the differences between vision, mission, and purpose.

• A vision statement describes what your business is looking forward to and working towards. It’s the what of your organization.
• A mission statement outlines the process of turning your vision into a reality. It’s the how of your company.
• A purpose statement sets your reason for doing what you do. The why of your venture’s existence.

The three types of statements reflect different aspects of your organization’s operations and differ in the questions they answer. However, they are closely related plans of action that can help you deliver what your company is ultimately fighting for.

Without further ado, let’s get into the nitty-gritty of how to make your brand stand out with a strong and well-defined purpose statement.

1. It Should Inspire and Show Personality

Defining your purpose statement is a process. Adding the right words to correctly depict the reason for your company’s existence is a bit harder than you may imagine. The answer to your business’s “why” may seem obvious to you, but the key is to ground it in reality and communicate it to your audience successfully.

Start by reflecting on how your company came to be – the reason for creating it, the challenges you’ve overcome, the lessons you’ve learnt and the values you’ve adopted.

If you are an emerging entrepreneur with a completely new venture you can also apply this approach, but in a more personal context. Look back at the significant turning point that prompted you to become a business owner.

If you’re an established business with a long history of success, you can acknowledge the milestones of your firm’s growth. You can identify and define your business heritage and pin-point the specific characteristics of your brand that made it stand out all these years.

Make sure your purpose statement doesn’t include buzzwords or jargon. Use simple and clear language to directly communicate what your company’s here to accomplish.

2. It Should Play a Role with an Outcome

Since your purpose statement answers your company’s why it should set the outcome of what your business ultimately wishes to achieve and see out there.

Start your research by talking to your leadership. Ask them various questions and summarize the recurring themes.

Here are some examples:

• Why are you in this business?
• What do you like the most about working in the company?
• What image do you think the company conveys to the outside world?
• How do you feel about this image? What do you like and dislike about it?
• What specific challenges does the company solve?
• What do you think the purpose of the company is?
• What makes this business different from competitors’?
• Who are the target customers?
• What do you think they value most about this company?
• How do you think the company’s products and services reach their business goals? Do you think it’s effective? Would you say they reflect the business’s purpose?
• What are five words you would describe the company and its culture with?
• What underlying principles and philosophies shaped your responses to the previous questions?

Make sure you involve every leadership member . Think carefully about what you want to ask them. Form clear questions and take detailed notes.

Word your company’s purpose in a way that inspires room for thoughts while directly underlining your organization’s value proposition.

3. It Should Be Short, Yet Powerful

Your business purpose should be credible and easy to remember, especially by your employees. They are your most important resource and every one of them can influence how your organization is represented outside your office walls.

Your employees provide an essential link between you and your customers. Their energy can be a powerful asset to ensure that the entire organization leads with purpose. If they are happy, motivated and find a sense of fulfilment, they can be strong ambassadors of everything your brand stands for.

To find out how your employees feel about the purpose of your company you can ask them questions like:

• What inspired you to apply to this company?
• What do you like the most about working there? What makes you feel proud about it?
• How do you think the company’s products/services help customers?
• In what ways do you identify yourself with the company?
• What do you think is the company’s purpose? How would you put it in a few words?
• Do you think the purpose is reflected in the company culture?

Being in sync with your employees can help you make your business more agile and more responsive to challenges.

Always remember that your employees bring to light your purpose. The better it sticks in their minds the more natural it will be for them to communicate through their work.

4. It Should Create Space for Innovation and Growth

You’ve reflected back on how your organization has matured. You’ve sought and gained employee and leadership insights. Now, it’s important to identify the events and trends that can affect the social, political, economic and technological contexts that your brand operates in.

Maintaining a clear understanding of the present and the ability to anticipate and study future trends can set you apart. Align your Business Purpose Statement with real-world contexts to give it tangible meaning. This clarity allows you to understand opportunities more deeply, challenge the usual way of doing things, find the best solutions, and build on ideas. Hence, a compelling purpose statement may sometimes be wrestling with conflicting tensions all for the sake of fostering innovation and growth.

Purpose statements that fall into this category include:

With this statement, Workday showcases that there’s a possibility of instilling the human aspect into software and that it’s what they strive for.

With this statement, JetBlue deals with the tension that there are no boundaries to great customer experience.

5. It Should Be Aspirational and Precise

Your purpose statement should give a sort of tingle – a burst of inspiration and excitement. It should make your company want to strive to grow, to innovate, and to set an example. So, adding a pinch of emotion helps everyone involved to embrace it as their own.

The purpose of your business should reflect rational reasons for which it can supercharge your brand, culture, and business strategy as well as your organization’s ethics. Simply stating something, doesn’t make it come to life. Hence, a meaningful purpose statement should be able to influence a good purpose in practice. It should be aspirational and precise, expanding your organization’s opportunities for growth.

A vague example goes like this: “To make the world a better place”. A good example is more like this:

Additionally, your purpose statement can have a general or a social focus. Some companies have a more general statement, which doesn’t necessarily involve a social or environmental aspect.

An example of this is Airbnb’s statement:

It’s precise and showcases the company’s commitment to helping people travel like locals and experience a sense of community they wouldn’t be able to find in a hotel

This doesn’t mean that Airbnb doesn’t care about social or environmental issues. It simply means that it’s not at the very core of their existence.

To show you the difference, a business with a good social purpose is Patagonia:

6. It Should Evolve with Time

Purpose isn’t something that can be achieved once and for all. Companies grow, the business and social contexts change and your purpose statement should stretch along with these. It should always push your team further and it should set the stage for an inexhaustible series of new goals.

Let’s take Tesla as an example. Their original statement was:

But their current statement is:

The change from transportation to energy reflects also the shift in Tesla’s priority from an electric vehicle company to developing technology that makes sustainable energy more accessible.

Benefits of a Powerful Purpose Statement

Your company’s purpose statement establishes your business´s unique and inimitable attributes. It provides your brand with a competitive advantage and it acts as a guide for overcoming unprecedented challenges. It sets the tone that moves your organization forward, but it’s meaningless if not backed by solid and measurable commitments.

We hope our guide can help you create a defined and powerful business purpose statement for your organization. In fact, we would love to see what you’ve crafted, so don’t hesitate to share it with us in the comments below.

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The Poetry of Purpose: Inspirational Purpose Statement Examples

Discover what an effective purpose statement is, read insightful purpose statement examples, and learn how to drive your career, projects, or business.

Directing a business, a project, or even your own career can be an uphill battle if you lack a central point of focus and purpose.

What do you hold onto when priorities seem muddled? How do you lead your team toward shared goals? How do you assure clients that you’re on the same page as them?

That’s what a well-crafted and clearly defined purpose statement is for.

Whether you’re drafting a purpose statement for personal development, a project, or a business, this guide is made for you. Dive in to get a sharper understanding of what a purpose statement is and how to write one — plus, inspiration from insightful examples.

What are purpose statements?

A purpose statement or vision statement explains your “why.” It helps others understand why you do what you do.

However, a purpose statement isn’t just about setting goals or making plans — it’s also about giving those goals and plans real meaning. It’s what adds  soul  to the process.

There are three main kinds of purpose statements: personal (for you), project (for a specific task), and business (for a company). Each of these is crafted to address the unique needs, challenges, and aspirations of its particular area, but they all share the same aim: to bring about clarity, direction, and motivation.

Personal purpose statement

A personal purpose statement highlights what drives you, your goals, and what you truly care about. It covers not only where you want to go but also why you want to go there and the principles you’ll honor along the way.

A personal purpose statement has transformative power, bringing clarity to the chaos, direction amid distractions, and an unwavering foundation when life’s storms hit.

A helpful tip to help you craft your purpose statement is to reflect on moments in the past when you felt most fulfilled or when you made a difference, no matter how small.

With a personal vision statement, every choice and step you take is anchored to something bigger. Crafting one can improve your quality of life, filling your days with purpose, depth, and contentment.

Project purpose statement

A project purpose statement includes a clear declaration of the intent and goals of a project. It provides detailed information about the project objectives, the method that will be used to achieve them, and the values the project aspires to uphold.

Clearly defined objectives lay out the expected outcome of the project. Whether it’s the development of a new software solution or the unveiling of a new product line, these objectives need to be communicated so everyone involved has a clear understanding of what to aim for.

The method, or the plan of action, is where the  project scope  is defined. The scope outlines the specific steps, the extent of the work to be done, and the limits of the project. Defining the project scope helps manage expectations and ensures that resources are used efficiently and the project remains on track.

Values serve as the ethical cornerstone of a project. They set the guiding principles for decision-making so that the project upholds its integrity in the face of challenges.

One of the main benefits of a project purpose statement is its ability to bring clarity and alignment, which increases team engagement. In fact,  78% of adults  are more likely to want to work for a company that leads with purpose. A project purpose statement ensures all involved stakeholders are on the same page, which is essential for building trust and motivating team members.

Business purpose statement

A business purpose statement defines a company’s core values, goals, and mission. It goes beyond profit margins and product lines to capture the overarching ethos and culture that the business champions.

A business purpose statement is instrumental in integrating  strategies for team collaboration . Having a clear vision and values ensures that everyone in the company, regardless of their position, shares the same objectives. This unified approach fosters a more cohesive, efficient, and motivated work environment in which everyone feels they are contributing to a shared goal.

Moreover, when a company is clear about its purpose, this resonates with customers. Notably,  71% of consumers  prefer to buy from a company with a strong purpose.

‎Purpose statement vs. value statement vs. mission statement

“Purpose statement,” “value statement,” and “mission statement” are common buzzwords in the workplace. But how do they differ? Let’s take a quick look at each of them, using the golden arches of McDonald’s as our guide.

Purpose statement

A purpose statement addresses the reason a company exists. It is the driving force for what a company hopes to ultimately achieve. McDonald’s  purpose  is “to feed and foster communities,” which emphasizes its commitment to not just serving food but also positively impacting communities.

Mission statement

A mission statement is about the present moment and how the company operates day-to-day to fulfill its purpose. It’s more specific and action-oriented than the purpose statement.  McDonald’s mission , “Making delicious feel-good moments easy for everyone,” shows that its daily objective is to provide enjoyable and convenient meals.

Value statement

A value statement articulates the principles and beliefs that guide a company’s actions and decisions. It represents the company’s core ethics.

Here is McDonald’s value statement:

Serve:  We put our guests and people first.

Inclusion:  We open our doors to everyone.

Integrity:  We do the right thing.

Community:  We are good neighbors.

Family:  We get better together.

These values outline the principles that dictate how Mcdonald’s conducts business and interacts with stakeholders.

Purpose statement examples

Ever stumbled upon a phrase or slogan from a brand that made you nod in agreement or even see the company in a new light?

That’s the power of an inspirational purpose statement. Looking at purpose statement examples is like window shopping for ideas and inspirations. It can guide you in finding your own words and direction.

Moreover, reading the purpose statements of businesses you admire can help you consider your own priorities and goals.

Personal purpose statements

A personal purpose statement offers a clear view of what fuels your passion and shapes your choices. Merging this clarity into your work can lead to more meaningful experiences and connections.

Here are some examples:

• “I am committed to maximizing my daily output and making the most of my day doing productive tasks.”
• “Building bridges, not walls, in teamwork is my mantra; I believe in harnessing collective strength through collaboration.”
• “Every challenge is a stepping stone, and I aim to achieve success by facing every obstacle head-on.”
• “Clear, open, and effective communication is the foundation of all my interactions, as I value clarity and mutual respect.”
• “I prioritize meaningful relationships, nurturing trust, understanding, and growth in every personal and professional connection.”

Why are personal purpose statements effective?

These statements provide clear direction and intent. They’re concise yet powerful because they convey the individual’s core values and principles in each respective domain.

Project purpose statements

A project purpose statement explains the core objectives and values of your initiative. It paves the way for more structured, impactful, and meaningful outcomes.

Here are some guidelines for writing your statement:

• Productivity:  “Our goal is to work smarter and boost our daily output by 20% by optimizing existing workflows.”
• Delivery:  “We aim to deliver our products on time, making sure 95% of our orders get to our clients when promised.”
• Time management:  “With meticulous planning and execution, we will reduce turnaround time by 15%.”
• Teamwork/collaboration:  “Our project should include the contributions of every team member, leading to a collective achievement of our goals.”
• Innovation:  “To drive forward-thinking solutions in the 21st century, we will push the boundaries of what’s possible and encourage continuous improvement.”

Why are project purpose statements effective?

When employees understand a project’s value, they feel a heightened sense of purpose and are more committed.

Business purpose statements

A well-written business purpose statement inspires trust, loyalty, and motivation within not just the team but also customers.  Sixty-three percent of employees  say that they feel motivated in companies that clearly define and communicate value to customers.

‎Take a look at these real-world examples:

• Satisfying customers:  Amazon’s vision is “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online.”
• Business values:  Patagonia believes in “building the best product, causing no unnecessary harm, and using business to inspire and implement solutions to the environmental crisis.”
• Taking care of employees:  Starbucks promises “to nurture and inspire the human spirit — one person, one cup, and one neighborhood at a time.”
• Commercial success:  Apple aims “to bring the best user experience to its customers through its innovative hardware, software, and services.”
• Innovation:  Tesla, the pioneer of electric vehicles, is on a mission “to accelerate the world’s transition to sustainable energy.”

Why are purpose statements effective?

Purpose statements like these resonate deeply with both employees and consumers. With  66%  of consumers factoring in a business’s purpose during purchase decisions, clear objectives and values hold great sway.

‎How to utilize purpose statements

While crafting a powerful purpose statement is important, you need to weave it into the very fabric of your organization to maximize its impact. It’s not enough to simply have a purpose statement — the real magic happens when it’s applied and practiced daily.

As we dive deeper into this section, we’ll explore practical ways to breathe life into your purpose statement and make it a tangible force that drives your business.

Using personal purpose statements

Personal purpose statements can give you daily motivation and guidance in the workplace. Here are some strategies you can implement to integrate your personal purpose statement into your professional life:

1. Mindful morning rituals

Win the morning, win the day.

Start your day off by reflecting on your purpose statement. Use Motion to set a recurring reminder each morning, prompting you to read and meditate on your statement. This practice will help set the tone for the day and align you with your core purpose.

2. Task prioritization

Every task carries its own weight and significance. So move the ones that align most closely with your purpose statement to the top of your to-do list.

Motion can help you automatically prioritize your daily tasks based on your goals so you’re consistently focused on what matters most to you.

3. Reflective reviews

At the end of the week, use Motion to track and review the progress you’ve made. This is an easy way to reflect on your accomplishments and assess how they fit into your personal purpose statement. It not only gives you a sense of achievement but also provides insights into areas that need improvement.

Using project purpose statements

Having a well-defined project purpose statement and integrating it into the way you manage your teams, tasks, and workflows can help you stay aligned with your core purpose.

Seventy percent of employees  say that their sense of purpose is defined by their work. This makes an effective project purpose statement essential for getting your team on board and improving their sense of purpose.

Here are some strategies you can use to integrate a purpose statement into your projects:

1. Frequent reiteration

At the beginning of each meeting or brainstorming session, revisit the project’s purpose statement. A brief reminder can keep everyone focused and on track.

2. Visual displays

Incorporate your purpose statement into project documentation, dashboards, or even as a pinned note in a collaboration tool.

For example, Motion lets you attach documents, spreadsheets, pictures, and more to a project or task. Having your project purpose statement visible can serve as a constant touchstone on which to base your decision-making.

3. Communication alignment

Leverage communication tools, like Motion, to announce your purpose statement and gather feedback.

‎Open and public communication ensures that everyone understands and buys into the purpose, fostering a collective commitment.

Using business purpose statements

Implementing an effective business purpose statement means aligning all employees, directing the company, and sharing the vision with clients and potential customers.

Consider the following strategies to integrate your business’ purpose statement:

1. Employee onboarding and training

From day one, introduce new hires to the company’s purpose statement. Make it a central part of their onboarding orientation.

‎Use Motion’s meeting assistant to schedule regular training sessions with the team. Doing this can help emphasize your business purpose statement’s significance and help everyone uphold it.

2. Marketing and branding

Your external communications, whether advertising, PR, or social media, should reflect your purpose statement. This not only attracts customers that agree with it but also reinforces your commitment to it. Once it’s out in the open, there’s an added responsibility to consistently deliver on it.

3. Regular feedback

Set aside times during quarterly or annual reviews to revisit the purpose statement. Encourage feedback on how well it’s being integrated, and identify where improvements can be made. This process helps refine its application over time.

Motion helps you realize your purpose

A strong, clear, and tailored purpose is essential to have at every level.

With tools like Motion, you can ensure that your purpose statement comes to life in your everyday life and professional life, projects, and every aspect of your business.

If you can remember your priorities, integrate them into your actions, and communicate them clearly, your purpose statement can be your true North Star.

At Motion, our purpose is to empower individuals like you to navigate the complexities of life with confidence and clarity. We believe that everyone has the potential to achieve greatness, and it starts with harnessing the power of productivity.

Put your purpose statement into action by signing up for our  7-day free trial .

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Business Purpose Definition, Examples and 12-Step Guide

This tool helps you define your Business Purpose, the critical strategic objectives that will orient your entire innovation project. Nailing your business purpose is critical – else, you will be missing that guiding North Star.

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Table of Contents

The ability to adapt, innovate, and strategize effectively has become the cornerstone of success. From dynamic local startups to expansive global enterprises, the imperative remains the same: to cultivate the mission and vision required to thrive amidst constant change. As the business environment continues its metamorphosis, one undeniable truth takes centre stage – the journey of digital innovation and transformation is not a mere event but an ongoing expedition that demands insightful strategic planning.

A business purpose serves as the North Star, guiding organizations through the complexities of the modern landscape. It encapsulates the fundamental “ why ” behind an organization’s existence and defines its role in society. A well-crafted purpose aligns the business goals with societal needs, fostering a sense of direction and significance. It becomes the driving force that propels innovation, shapes strategies, and rallies employees and stakeholders around a shared mission.

In this article, we embark on an exploration that delves into the vital significance of crafting a purpose statement that resonates harmoniously with your business objectives. This statement becomes more than just a guiding principle; it evolves into a strategic linchpin that reinforces your overarching planning endeavours. In our journey through these insights, we aim to illuminate how this purpose statement interweaves seamlessly with elements like business strategy , innovation, the concept of “ jobs to be done ,” and valuable tools like the Business Model Canvas . Together, these components create a holistic framework that navigates the complex waters of contemporary business dynamics, propelling your enterprise toward a future of not just resilience, but enduring prosperity.

What is Business Purpose?

The business purpose also known as organizational purpose or company purpose , is the core rationale behind the establishment of your company, condensed into a concise statement, often just a sentence or two. This statement can be tailored to a specific industry or broad enough to encompass supplementary and prospective business endeavours. It’s essential to discern the business purpose from your company’s vision or mission to fully comprehend its significance.

Human motivation is intricately woven into the collective aspirations of the groups we associate with. The key query lies in the alignment between these shared objectives and each individual’s personal sense of purpose.

In the context of innovative teams, the essential factor is intrinsic motivation, driven by the desire to effect tangible positive changes in the world. Such teams flourish within organizations that share a business purpose. Hence, the optimal functioning of an innovation endeavour and the cultivation of a team culture that is personally gratifying and globally impactful necessitate the synchronization of individual and collective aims.

The term “ purpose ” encapsulates an organization’s highest-level goal. For innovation teams, this might range from a straightforward objective like “Discover an optimal solution for our customer’s needs ” to an audacious aspiration like Google’s “ Massive Transformative Purpose (MTP) “, of making information universally accessible and valuable.

The purpose essentially forms the nucleus of an organization’s existence. The purpose of an organization ideally reflects the sum of the individual meanings of its members. Each individual within the organization should discern their personal significance reflected in this overarching purpose. The organization’s efficacy is inherently compromised if its members lack a personal connection to its purpose.

Beyond the internal scope, the concept of meaning profoundly impacts how your organization is perceived externally. In today’s market, customers increasingly inquire about the driving purpose behind a company and whether it resonates with the right mindset. This customer curiosity stems from their search for alignment between the company’s purpose and their own sense of significance. Both employees and customers are becoming progressively discerning of organizations that claim noble purposes while adhering to self-serving approaches.

People are now asking what implications your organization and product have for society or even the world as a whole. Being attentive to what really matters to employees and customers will lead to an organization that is continually asking itself, “Am I still relevant?” This is a question that is absolutely necessary in times of exponential change.

Business purpose encompasses several key aspects:

• Mission: The company’s mission statement articulates its purpose succinctly. It outlines the core activities, values, and goals that drive the organization’s operations.
• Values: These are the guiding principles and ethical beliefs that shape the company’s behaviour and culture. Values help establish the moral compass for decision-making and interactions within the organization.
• Long-Term Vision: A well-defined purpose includes a long-term vision that describes the desired future state the company aims to achieve. This vision provides direction and inspiration for employees and stakeholders.
• Social Impact: Business purpose considers the positive impact the company strives to make on society, whether through its products, services, sustainability efforts, community involvement, or other initiatives.
• Stakeholder Consideration: A purpose-driven organization recognizes the importance of addressing the needs and interests of all stakeholders, including employees, customers, investors, suppliers, and the broader community.
• Differentiation: Business purpose can set a company apart from its competitors by offering a unique value proposition that resonates with customers and stakeholders.
• Employee Engagement: Clearly defined purpose can foster employee engagement and motivation by providing a sense of meaning and alignment with their personal values.
• Adaptability: A strong purpose can guide the organization through changes and challenges, helping it adapt while staying true to its core identity.

1- Crafting a Mission Statement in Business Purpose

Crafting a mission statement within a business purpose requires careful consideration and clarity. A mission statement succinctly communicates your organization’s core activities, values, and goals. Here are steps to guide you through the process:

• Reflect on Core Activities: Begin by reflecting on what your organization does. Identify the primary products, services, or solutions you offer. Consider how these offerings provide value to customers or address specific needs.
• Define Your Values: Your mission statement should align with your organization’s core values. Identify the guiding principles and ethical beliefs that shape your company’s behavior and decisions.
• Articulate Goals: Outline the specific goals your organization aims to achieve. These could be related to growth, innovation, customer satisfaction, or any other key objectives.
• Be Concise: Keep your mission statement concise and to the point. Aim for a few sentences that capture the essence of your organization’s purpose.
• Address “Why” and “How”: While your business purpose answers the “Why” of your existence, your mission statement can touch on the “How.” Explain how your organization plans to achieve its purpose through its core activities.
• Consider Stakeholders: Think about how your mission statement resonates with various stakeholders, including employees, customers, and investors. It should convey a clear and compelling message to all.
• Inspire and Motivate: Craft a mission statement that inspires both internal and external audiences. It should motivate your team and communicate the value you bring to customers.
• Avoid Generic Language: While your mission statement should be concise, avoid using generic or clichéd language. Make sure it uniquely reflects your organization’s identity.
• Review and Revise: Once you draft your mission statement, review it carefully. Ensure it accurately represents your organization’s purpose, values, and goals. Revise as needed for clarity and impact.
• Share for Feedback: Share your mission statement with colleagues, stakeholders, and external parties. Gather feedback to ensure that it resonates and effectively communicates your organization’s essence.
• Align with Business Strategy: Your mission statement should align with your overall business strategy. It should guide your decision-making and strategic direction.
• Capture Essence: Like your business purpose, your mission statement should capture the core essence of your organization’s reason for being. It should be a guiding light for your actions and endeavours.

Distinguishing between a mission statement and a vision statement reveals subtle distinctions. Our perspective is that a vision statement tends to cast a more outward gaze. It signifies the potential societal impact that a company’s endeavours can generate.

On the other hand, a mission statement outlines those actions, at least broadly. A company’s mission should seamlessly align with its values, purpose, and vision, all while pledging to undertake specific measures. Gaining insight from various vision statement examples can prove beneficial.

The most famous recognized mission statement is Google’s: “To organize the world’s information and make it universally accessible and useful.” The correlation between Google’s products, services, and its mission is palpable. The organization behind TED Talks embodies a succinct mission statement, yet it resonates seamlessly with their output: “ Spread ideas .”

The American Red Cross’s mission statement beautifully encapsulates hope and altruism: “To prevent and alleviate human suffering in the face of emergencies by mobilizing the power of volunteers and the generosity of donors.” Examining company websites serves as a facile means to explore how they articulate their mission. Such insights shed light on industry and consumer priorities.

Purpose statements, visions, missions : these foundational documents epitomize the roadmap a company treads upon. They galvanize and harness a company’s resources, guiding them cohesively toward a shared objective.

Values are built upon the foundation of an organization’s purpose and assume a pivotal role in steering behaviours. They serve as a navigational tool for actions, even amid uncertain circumstances. Especially within the realm of innovation teams, where autonomy is abundant, values emerge as guiding tenets for conduct. As an illustration, if your team upholds the value of financial responsibility, there’s no necessity for a specific policy against costly first-class flights; team members are naturally inclined toward budget-friendly choices to conserve resources.

It plays a pivotal role in shaping an organization’s identity, culture, and actions. They are the fundamental principles and ethical beliefs that guide how the company operates, interacts with stakeholders, and makes decisions. Here’s more information about the significance and impact of values within an organization:

• Foundation of Culture: Values define collective beliefs, attitudes, and behaviours that shape the work environment and interactions among employees.
• Behavioural Guidelines: Values act as behavioural guidelines, providing a framework for decision-making and aligning actions with ethical standards.
• Consistency: Values foster consistency by promoting uniformity in actions and decisions across the organization.
• Ethical Framework: Values establish an ethical framework that ensures integrity and adherence to ethical standards in all interactions.
• Decision-Making: Values act as a moral compass, guiding employees’ decisions to align with organizational principles.
• Employee Engagement: Clear values contribute to employee engagement, creating a stronger connection between employees and the company’s mission.
• Attraction and Retention: Values attract like-minded individuals and play a role in retaining employees who align with the company’s principles.
• Reputation: Values influence an organization’s reputation, enhancing trust and standing through ethical behaviour.
• Differentiation: Values differentiate the company by showcasing its unique approach and priorities, resonating with customers seeking alignment.
• Long-Term Sustainability: Values contribute to sustainability by building lasting relationships with stakeholders and fostering trust.
• Cultural Alignment: Values promote alignment among diverse teams, creating a sense of unity and shared purpose.
• Continuous Improvement: Values drive commitment to continuous improvement, fostering adaptation and growth in changing environments.

Values extend a more explicit framework for actions compared to purpose. They translate our all-encompassing worldview into actionable principles that navigate behaviour. This hierarchy extends to vision —the team’s long-term aspiration, encompassing achievements envisioned for the next five to ten years. Goals, positioned at a more tactical level, function as the means to realize the vision and span from weeks to years. Additionally, our vision and goals dictate the strategic assets and capabilities a company invests in.

3- Crafting a Vision Statement

Crafting a vision statement is a forward-looking endeavour that paints a picture of your organization’s desired future. A well-crafted vision statement encapsulates your aspirations and guides your strategic direction. Here’s how to create an impactful vision statement:

• Envision Success: Imagine what your organization looks like in the future, typically five to ten years ahead. Visualize the achievements, impact, and growth you aim to realize.
• Be Inspirational: A vision statement should inspire and motivate. Use language that evokes enthusiasm and excitement among your team and stakeholders.
• Relate to Purpose: Align your vision statement with your business purpose. Ensure it reflects how your organization plans to fulfill its purpose and make a positive impact.
• Stay Realistic: While aspirational, your vision statement should also be realistic and achievable. It should stretch your organization’s capabilities without becoming unattainable.
• Focus on Outcomes: Highlight the outcomes and changes your organization seeks to create. Describe the improvements you want to bring to your industry, community, or the world.
• Embrace Innovation: If innovation is a core value, express it in your vision statement. Emphasize how you plan to innovate and lead in your field.
• Consider Stakeholders: Craft a vision statement that resonates with stakeholders, from employees to customers to investors. It should reflect their interests and aspirations.
• Be Timeless: Aim for a vision statement that remains relevant over time. While specific goals and strategies may evolve, the overarching vision should endure.
• Link to Strategy: Ensure your vision aligns with your business strategy. It should provide guidance for decision-making and strategic planning.
• Make it Memorable: Craft a statement that’s easy to remember and repeat. A memorable vision statement becomes ingrained in your team’s mindset.
• Test for Alignment: Share your vision statement with various stakeholders and gather feedback. Ensure it resonates with their expectations and aligns with your organization’s identity.
• Revise and Refine: Crafting a vision statement might involve several iterations. Revise and refine until you capture the essence of your organization’s future aspirations.

Business News Daily says that a company’s vision statement should explain the “Why” of a business purpose. In other words, what is the company’s plan for remaking the world?

Every business purpose ought to be crafted in collaboration with its corresponding vision statement. The strength of business purposes is inherently linked to the moral core that supports them. We hold that a company’s presence should be validated by the positive impact generated by the products and services it offers. Effectively, values operate as a social compact within a team, fostering collective engagement in shaping core values. There are no inherently incorrect values; instead, values are tailored to harmonize with the specific requirements of distinct cultural environments .

4- Social Impact in Business Purpose

Business purpose that incorporates a focus on social impact goes beyond financial success to contribute positively to society. This approach acknowledges the role of businesses in addressing social and environmental challenges. Here’s how social impact intersects with business purpose :

• Purposeful Direction: A business with a social impact purpose is driven by a commitment to create meaningful and positive changes in the world. This purpose guides the company’s strategies, decisions, and actions.
• Aligned Initiatives: Socially responsible businesses align their initiatives, products, and services with societal needs. They seek to provide solutions that improve lives, address issues, and contribute to the greater good.
• Sustainable Practices: Businesses with a social impact purpose often adopt sustainable practices to minimize their environmental footprint. They consider the long-term consequences of their operations on the planet.
• Community Engagement: Socially conscious companies actively engage with local communities through initiatives, partnerships, and support. They strive to make a positive impact on the areas where they operate.
• Ethical Standards: Social impact businesses uphold high ethical standards in their interactions with employees, customers, suppliers, and other stakeholders. They prioritize fairness, transparency, and responsible practices.
• Employee Fulfillment: A purpose that emphasizes social impact can enhance employee engagement and satisfaction. Employees are motivated by contributing to a larger cause beyond profit.
• Stakeholder Alignment: Businesses focused on social impact resonate with stakeholders who share similar values. Customers, investors, and partners are drawn to organizations that prioritize social responsibility.
• Innovative Solutions: A social impact purpose encourages innovation to address societal challenges. Companies develop products and services that tackle pressing issues in creative and effective ways.
• Reporting and Transparency: Social impact businesses often report on their efforts and progress, demonstrating accountability to stakeholders and showing the tangible results of their initiatives.
• Long-Term Vision: A commitment to social impact involves a long-term perspective. Businesses aim for sustainable growth that benefits society over time, contributing to a better future.
• Reputation and Trust: Organizations with a strong social impact purpose build a positive reputation and earn the trust of stakeholders. This trust translates into brand loyalty and enduring relationships.
• Global Contribution: Socially conscious businesses recognize that their impact extends beyond borders. They may engage in global initiatives to address widespread issues and contribute to international causes.

5- Stakeholder Consideration in Business Purpose

A purpose-driven business recognizes the importance of its stakeholders and their diverse interests. Stakeholder consideration involves understanding and addressing the needs, expectations, and impacts of various groups that are influenced by the company’s actions. Here’s how stakeholder consideration is integral to a meaningful business purpose :

• Holistic Approach : A purpose-driven business takes a holistic view of its stakeholders, considering not only shareholders but also employees, customers, suppliers, local communities, regulators, and more.
• Needs and Expectations : Understanding stakeholder needs and expectations is crucial. A purposeful business aligns its actions with what matters most to its stakeholders.
• Responsiveness : Businesses with stakeholder consideration are responsive to feedback and concerns. They engage in open communication and adapt their strategies based on stakeholder input.
• Ethical Accountability : Purpose-driven companies uphold ethical standards in their interactions with stakeholders. They prioritize transparency, honesty, and fairness in all engagements.
• Win-Win Mindset : A business purpose that takes stakeholders into account and aims for outcomes that benefit both the company and its stakeholders. This fosters positive relationships and long-term sustainability.
• Social Responsibility : Purposeful businesses recognize their social responsibility to the communities they operate in. They engage in activities that contribute positively to local well-being and development.
• Employee Well-Being : Employees are significant stakeholders. A business purpose that considers employees’ well-being fosters a positive work environment, job satisfaction, and talent retention.
• Customer Focus : Understanding customer needs and preferences is essential. A purpose-driven business delivers products and services that align with customer expectations, building trust and loyalty.
• Environmental Impact: Stakeholder consideration extends to environmental impact. Purposeful businesses adopt eco-friendly practices to reduce negative effects on the environment.
• Innovation Collaboration: Businesses that consider stakeholders collaborate with them on innovative solutions. Stakeholders often provide valuable insights that drive the creation of products and services that meet their needs.
• Regulatory Compliance: Purpose-driven companies ensure compliance with regulations and standards that impact their stakeholders. This builds trust and demonstrates a commitment to responsible practices.
• Long-Term Relationships : Businesses that prioritize stakeholder consideration build strong and lasting relationships. These relationships contribute to the company’s reputation and success over time.

6- Differentiation in business purpose

A strong business purpose is key to differentiation. It helps create a unique position in the market that resonates with customers and stakeholders. Guided by this purpose, companies develop offerings that stand out, going beyond price-focused competition.

Porter’s generic strategies highlight Differentiation, as a strong purpose enhances differentiation strategy. For instance, a purpose centered on sustainability can be integrated through eco-friendly offerings that attract environmentally-conscious customers.

By embedding differentiation into its purpose, a company strives to stand out in the market and build a distinct brand image. This purpose-driven differentiation involves:

• Distinct Identity: A differentiated business purpose gives a company a clear identity that separates it from competitors. It showcases the company’s unique values, goals, and aspirations, creating a strong impression.
• Customer Connection: A purpose that resonates with customers on a personal level fosters a deeper connection. It goes beyond products or services, addressing customer needs and desires at a fundamental level.
• Innovation: A purpose that emphasizes innovation sets the stage for novel solutions. It encourages the company to constantly evolve and create products or services that address challenges in creative ways.
• Long-Term Sustainability: Purpose-driven differentiation contributes to long-term sustainability. When customers align with a company’s purpose, they are more likely to remain loyal, even in the face of short-term market shifts.
• Employee Engagement: Differentiation in purpose creates an engaging environment for employees. They become part of a meaningful journey, working towards a unique mission that sets their company apart.
• Brand Loyalty: A distinct business purpose cultivates brand loyalty. Customers who connect with the purpose are more likely to remain loyal and become advocates for the brand.
• Market Resilience: Purpose-driven differentiation helps a company weather market changes. Customers who identify with the purpose are less likely to switch to competitors, providing stability even in turbulent times.
• Strategic Direction: A differentiated purpose serves as a North Star for decision-making. It guides strategic choices that align with the company’s unique identity and resonates with stakeholders.

7- Employee Engagement in business strategy

Employee engagement within a business purpose signifies creating a work environment where employees feel deeply connected to the company’s mission, values, and goals. It goes beyond job satisfaction and involves fostering a sense of purpose, ownership, and commitment among employees. When employee engagement is aligned with the business purpose, several key benefits emerge:

• Aligned Efforts: Engaged employees understand and embrace the business purpose . They align their efforts with the company’s overarching goals, working together towards a common mission.
• Shared Identity: A strong business purpose creates a sense of identity and belonging among employees. Engaged employees see themselves as integral parts of a meaningful journey, leading to a more cohesive and united team.
• Intrinsic Motivation: Engaged employees are intrinsically motivated. They find meaning and satisfaction in contributing to a purpose they believe in, which leads to higher job enthusiasm and motivation.
• Higher Performance: Engaged employees consistently perform at their best. Their dedication and sense of ownership drive them to excel in their roles, positively impacting overall company performance.
• Innovation: When employees feel engaged with the business purpose , they are more likely to think creatively and contribute innovative ideas that align with the company’s mission.
• Improved Collaboration: Engaged employees are more likely to collaborate effectively. They share knowledge, ideas, and support, fostering a collaborative work environment.
• Higher Retention: Employees who feel engaged are more likely to stay with the company. They are invested in the purpose and values, leading to lower turnover rates.
• Enhanced Adaptability: Engaged employees are more adaptable to change. They are willing to embrace new strategies and directions that align with the business purpose .
• Positive Culture: A business purpose that resonates with employees contributes to a positive company culture. Engaged employees embody the purpose, of influencing others and promoting a sense of positivity.
• Employee Advocacy: Engaged employees become advocates for the company. They speak positively about the organization, both internally and externally, contributing to a strong employer brand.
• Customer Satisfaction: Engaged employees provide better customer service. Their commitment to the business purpose translates into delivering superior experiences to customers.
• Long-Term Growth: Engaged employees are more likely to invest in their professional growth within the company. They see a future aligned with the purpose and are more committed to their career development.

8- Adaptability for business purposes

Adaptability within a business purpose involves crafting a purpose that enables the organization to respond effectively to changes, challenges, and evolving market dynamics. An adaptable business purpose recognizes that the world is constantly changing and seeks to remain relevant and impactful despite uncertainties. Here’s how adaptability is integrated into a business purpose:

• Change Readiness: An adaptable business purpose acknowledges that change is inevitable. It emphasizes the need to be prepared and proactive in responding to shifts in the industry, technology, and customer preferences.
• Future-Focused: An adaptable purpose is forward-thinking, anticipating trends and developments that might impact the business. It ensures the company is poised to capitalize on emerging opportunities and mitigate potential risks.
• Continuous Improvement: An adaptable purpose values ongoing improvement. It encourages a culture of learning, experimentation, and innovation to refine products, services, and processes over time.
• Resilience: An adaptable purpose builds resilience in the face of setbacks. It fosters the mindset that challenges are opportunities for growth and learning, rather than insurmountable obstacles.
• Customer-Centricity: An adaptable purpose centers around customer needs and preferences. It encourages the organization to evolve and tailor offerings to stay aligned with changing customer expectations.
• Flexibility: An adaptable purpose allows for flexibility in strategies and approaches. It acknowledges that the path to achieving the purpose might require adjustments and pivots based on new information.
• Agility: An adaptable purpose promotes organizational agility. It encourages the ability to quickly respond to changes, make decisions, and reallocate resources as needed.
• Inclusive Decision-Making: An adaptable purpose involves diverse stakeholders in decision-making. It recognizes that different perspectives enhance the ability to navigate uncertainty effectively.
• Scenario Planning: An adaptable purpose incorporates scenario planning to anticipate various future scenarios. This helps the organization be better prepared to handle different outcomes.
• Employee Empowerment: An adaptable purpose empowers employees to contribute to change initiatives. It fosters a culture where employees feel comfortable suggesting improvements and driving innovation.
• Open Communication: An adaptable purpose emphasizes transparent and open communication. This facilitates the exchange of information and ideas, helping the organization navigate change more effectively.
• Long-Term Vision: An adaptable purpose maintains a long-term vision while being flexible in short-term strategies. It provides a sense of direction while allowing adjustments to achieve that vision.

Benefits of Creating Business Purpose

Creating a business purpose offers a range of benefits that can positively impact your organization, its stakeholders, and the broader community. Here are some key advantages:

• Clear Direction: A well-defined purpose provides a clear sense of direction for your organization. It helps align everyone’s efforts toward a common goal, reducing ambiguity and enhancing focus.
• Inspiration and Motivation: A compelling purpose inspires employees, customers, and stakeholders. It fosters a sense of motivation and passion, driving increased engagement and commitment.
• Differentiation: A distinct purpose sets you apart from competitors. It helps you stand out by offering a unique value proposition that resonates with customers and stakeholders.
• Employee Engagement: A meaningful purpose gives employees a sense of meaning and fulfillment in their work. It enhances job satisfaction, morale, and overall well-being.
• Strategic Decision-Making: A clear purpose guides strategic decisions. It ensures that every choice, from product development to partnerships, is aligned with your core identity and values.
• Cohesive Culture: A purpose-driven organization often develops a strong and cohesive company culture. It creates a shared sense of identity and values among employees.
• Customer Loyalty: When customers resonate with your purpose, they’re more likely to become loyal advocates. They feel a deeper connection to your brand beyond just products or services.
• Innovation: A purpose can fuel innovation by inspiring creative solutions to address challenges that align with your purpose. It encourages thinking outside the box.
• Community Impact: A purpose that focuses on social responsibility and positive impact contributes to the well-being of local communities and the broader society.
• Attracting Talent: A purpose-driven organization attracts like-minded individuals who align with your values. It helps you recruit and retain employees who share your vision.
• Long-Term Sustainability: Organizations with a clear purpose tend to have a longer-term perspective. They prioritize sustainability and responsible practices.
• Positive Reputation: A purpose that aligns with positive societal impact enhances your reputation. It builds trust and goodwill among customers, partners, and stakeholders.
• Adaptability: A strong purpose can guide your organization through changes and challenges. It helps you adapt while staying true to your core identity.
• Measurable Goals: Your purpose can guide the setting of measurable goals that reflect your desired impact. It provides a framework for tracking progress.
• Overall Alignment: A well-crafted purpose aligns your organization’s various elements, from mission and values to strategy and operations, creating a harmonious whole.

And a profound impact of thoroughly comprehending your business purpose is the ability to articulate your intentions clearly. Purpose statements play a pivotal role in charting the company’s trajectory by highlighting priorities and forging a guided path ahead. Furthermore, purpose statements steer managerial decisions in alignment with the business’s aspirations.

“We intend to have success,” of course every manager says. But what steps will be taken to further that success? Answering the following questions as you develop clear goals for your business:

• What constitutes your ultimate Business Intention? What pinnacle achievement do you ultimately seek?
• What fuels your motivation? (elaborating on the legacy you aim to leave behind)
• What is your Vision? (illustrating the destination you aspire to reach)
• What encompass your key objectives? (outlining tangible targets you aspire to accomplish)
• How are your actions synchronized with your business purpose? Does your company’s purpose statement resonate with how the business generates revenue?

In the world of digital transformation, businesses usually define their intentions in a few specific ways. Consider these examples:

• Leveraging new technology
• Preparing to unleash innovations
• Recreating your value proposition
• Developing new products

Business Purpose Examples

• Google: Google’s purpose emphasizes the democratization of information. Their aim is to organize the vast amount of information available online and make it universally accessible and useful. This purpose underlies their search engine, but it also guides their development of various tools, technologies, and services that empower people with knowledge.
• Tesla: Tesla’s purpose is centred around sustainability and reducing dependence on fossil fuels. By accelerating the transition to sustainable energy, they’re not only creating electric vehicles but also pushing for advancements in energy storage and solar power, contributing to a cleaner future.
• Patagonia: Patagonia’s purpose goes beyond profitability. They aim to produce high-quality products while minimizing environmental harm. Their commitment to environmental activism and encouraging responsible consumption is a testament to their purpose.
• Warby Parker: Warby Parker’s purpose combines affordability with social consciousness. By offering affordable eyewear and following a “buy a pair, give a pair” model, they’re addressing both the accessibility of eyewear and making a positive impact in underserved communities.
• Airbnb: Airbnb’s purpose focuses on fostering connections and a sense of belonging. Their platform allows people to experience local culture while providing hosts an opportunity to earn income. This sense of community aligns with their purpose of enabling people to belong anywhere.

Integration of Business Model Canvas and Business Purpose

The Business Model Canvas is a powerful tool that complements and interacts with a company’s business purpose. It provides a visual framework for understanding how various components of a business work together to create and deliver value to customers, while the business purpose defines the fundamental reason for the company’s existence. These two elements are intricately connected, with each informing and influencing the other.

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You can now access the complete Business Model Canvas Package, including a full presentation, related models and instructions for use.

The UNITE Business Model Canvas

A clear business purpose serves as the North Star that guides decisions made across the Business Model Canvas . It shapes the key building blocks of the canvas, including customer segments , value propositions , channels , customer relationships, and more. For instance, a purpose-driven company aiming to provide eco-friendly products will reflect this commitment in its customer segments and value propositions, tailoring its canvas to cater to environmentally conscious consumers.

And, Business Strategy outlines how a company plans to achieve its goals, and these goals should be directly linked to the overarching purpose. A purpose-driven organization’s strategy might involve sustainable sourcing, ethical production, and responsible marketing practices. These strategies then influence components of the Business Model Canvas, such as key partnerships, resources, and revenue streams.

Furthermore, the business goals set within the business strategy act as milestones that reflect the realization of the business purpose. These goals, whether they involve market share growth, societal impact, or financial success, guide the operational choices captured in the Business Model Canvas. The canvas, in turn, provides a tangible way to visualize how these goals translate into actionable components, enabling the alignment of resources, processes, and activities toward achieving the desired outcomes.

Adding to this framework, the “Jobs to be Done ” concept addresses the fundamental needs that products or services fulfill. Integrating this approach enhances the alignment between canvas components and purpose. This integration not only enhances customer-centricity but also strengthens the alignment between canvas components and the overarching business purpose .

Finding Your Business Purpose

Finding your business purpose is a transformative process that involves deep introspection and strategic exploration. It’s about discovering the fundamental reason for your organization’s existence and the positive impact it aspires to make.

What problem do you want to solve? Do you want to spread brilliant ideas all over the globe, like TED ?, Make transportation as reliable as running water, like Uber? Or help humankind reach its potential, like the non-profit organization AIESEC? Or do you just want to build a more fuel-efficient car? If you said the latter, your team has a purpose. If you’re more drawn to the former, you have a Massive Transformative Purpose (MTP).

The UNITE Business Intentions

The UNITE Business Intentions model underscores the vital significance of aligning a company’s business purpose with broader societal and environmental considerations. This approach places a strong emphasis on integrating ethical and responsible practices into the core of a business’s purpose. It serves as your compass for defining your Business Intention – the pivotal strategic goals that will guide your entire innovation project. Precisely articulating your business intentions is of utmost importance; otherwise, you risk losing that essential guiding North Star. You can download it now.

You can now access the complete Business Intentions Package, including a full presentation, related models and instructions for use.

A Massive Transformative Purpose (MTP) triggers a fundamental shift in perspective by addressing a global issue, aiming to contribute to its resolution and create a distinct, potentially improved future. Echoing the words of Peter Diamandis, “Find something you would die for, and live for it.” An MTP holds the potential to foster exponential growth by instilling an entirely new mindset and facilitating customers in aligning their personal significance with your purpose. Indeed, in their book “ Exponential Organizations ,” Salim Ismail, Michael Malone, and Yuri van Geest contend, “An exponential organization simply doesn’t work if not driven by a Massive Transformative Purpose.”

Every decision-making process is subjected to daily scrutiny to ensure it authentically represents the organization’s essence. However, even the purpose itself requires periodic examination. Thus, even an MTP is subject to constructive evaluation from time to time, to gauge its continued relevance. As serial entrepreneur Marc Degen, a contributor to this book aptly phrases it:

“Change is standard, so you better accept what’s happening, adapt, and enjoy the ride!” Marc Degen

Your company should possess a single, well-defined purpose statement that serves as a guiding force, influencing collective decisions. This statement elucidates the underlying reason for the company’s existence.

It’s pivotal to distinguish the business purpose , and this differentiation from your company’s vision or mission holds significance. While the latter terms are indispensable for your business’s triumph, they carry distinct legal implications from the business purpose.

Steps of Creating a Business Purpose

Developing a meaningful business purpose is a deliberate and strategic undertaking that extends beyond the creation of a simple declaration. It demands a profound grasp of your organization’s values, ambitions, and its position within the larger scope. An intricately crafted purpose acts as a navigational guide, steering your strategic choices, igniting inventive thinking, and nurturing a collective identity among stakeholders. The following table of steps outlines a systematic approach to crafting a purpose that genuinely connects with your organization and those it serves:

Thinking Through a Business Purpose Statement

In the ever-evolving landscape of business, the question of whether to prioritize stability or adaptability becomes crucial. Is your organization more inclined towards being a stable entity or does it lean towards embracing change and innovation? Does your structure foster a culture of continuous learning or does it value permanence and security above all? Moreover, how does your organization perceive change – as a necessary part of growth or as a potential threat to the established order?

Regardless of where your organization currently stands, the imperative for all is to reassess operational approaches, organizational structures, and the business environment that cultivates change. It’s vital to create a business ecosystem where change isn’t seen as disruptive but as a catalyst for progress. A successful company’s purpose transcends profit-seeking and shareholder interests; it encompasses a broader vision that speaks to societal needs and positive impact.

Deliberating upon a business purpose statement involves a thoughtful contemplation aimed at distilling the essence of your organization’s reason for existence. This process goes beyond mere words and delves into the core values, aspirations, and impact your business seeks to make. A well-crafted purpose statement serves as a beacon, guiding your actions, shaping your identity, and resonating with stakeholders. Below are the key considerations to navigate this introspective journey:

• Reflect on Values: Begin by reflecting on the core values that underpin your organization. Identify the principles that guide your decisions, define your culture, and differentiate you from others.
• Clarify Aspirations: Consider the long-term aspirations of your business. Envision the positive changes you aim to bring to your industry, community, or the world at large.
• Align with Impact: Think about the impact you wish to create through your products, services, or initiatives. How do you intend to improve lives, solve problems, or contribute positively to society?
• Engage Stakeholders: Involve your stakeholders in the process. Understand their expectations, concerns, and what they value most about your organization.
• Embrace Uniqueness: Embrace what sets your organization apart. How does your uniqueness contribute to the greater good? How can you leverage it for a meaningful purpose?
• Unify Passion and Expertise: Explore the intersection of your team’s passion and expertise. How can these strengths be harnessed to fulfill a purpose that aligns with your values?
• Visualize Impact: Envision the world or industry as it would be if your purpose were fully realized. What positive changes would you witness?
• Craft Concisely: Condense your insights into a concise statement that captures the essence of your purpose. Make it emotionally resonant, impactful, and reflective of your values and aspirations.
• Test for Resonance: Share the statement with diverse stakeholders and gather their feedback. Does it resonate with them? Does it capture the essence of your organization’s identity?
• Ensure Alignment: Ensure that the purpose statement aligns with your organization’s goals, actions, and intended impact. It should serve as a touchstone for decisions and initiatives.
• Foster Commitment: Communicate the purpose statement widely within your organization. Cultivate a sense of commitment and ownership among employees, encouraging them to embody the purpose.
• Evolve and Adapt: Recognize that your purpose statement can evolve as your organization grows and circumstances change. Regularly review it to ensure alignment with your trajectory and values.

A common pitfall to avoid is viewing innovation and digital transformation as destinations themselves. These terms have been echoing since the early days of the dot-com era (and crash!), It’s imperative to steer clear of the common mistake many businesses make: understanding that innovation and transformation are means to an end, not ends in themselves. The same principle holds true for technology. All of these are tools employed to achieve a comprehensive Business Intention.

To change requires a belief in one’s own ability to be able to carry out that very change. Large corporations often feel that they lag behind start-ups on aspects related to innovation, for example, speed, agility, costs, etc. But the more we have worked with clients and compared large organizations to start-ups, the more we are convinced that scale if properly exploited , can actually be an advantage, not a liability for innovation.

Sizeable enterprises possess a multitude of assets and capabilities in their core and distinct domains, empowering them to stand out in the market and scale innovations beyond the scope of any startup. It’s our collective responsibility to help them uncover and leverage these strengths. While large organizations may appear rigid today, it’s important to recognize that this rigidity isn’t inherent but rather a product of design. If an organization seeks different outcomes, it must alter its design. This transformation is entirely achievable

Final Thoughts

That’s a lot. But then again, writing a company’s governing documents is a task not to be taken lightly.

If you’d like help in understanding how your business purpose is or isn’t setting you up for success, we’d love to talk to you. We’ll help connect people who understand business purposes at work to you so your vision and intentions are clear.

You’ll find contact information elsewhere on our website.

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Purpose Statement: All You Need to Know

Every organization in the world knows “what” they do, most know “how” to do it, but only a few know “why” they do what they do. This “why” isn’t about profit maximization. It’s the reason for the organization’s existence.

See also: Mission Statement

What is a Purpose Statement

A purpose statement is one that clearly explains this “why” and its impact on human, societal, or environmental goals. It addresses the question – “What would the world lose if the company disappeared?” in the most believable, authentic, and inspiring words.

The simplest and most popular definition of a purpose statement is “A higher-order reason for an organization’s existence that goes beyond making money and adds value to society.” [1]

Why having a purpose is important

At its best, a purpose can act as a North Star, a guiding light that allows everyone in the organization from the leadership to the newest employee to understand what they must accomplish and serves as a filter for daily decisions.

In an organization with a well-defined purpose statement, every employee understands the “Why” behind the organization’s existence, defines it in the same way, and more importantly, feels a strong connection to that purpose.

While this might sound theoretical, its real-world implications are profound.

A study by Korn Ferry titled “People on a mission” found that organizations that took the challenging steps of defining their core purpose not only saw strong bottom-line results but also transformed all aspects of their business.

The study revealed such companies posted compounded annual growth rates (CAGR) of 9.85% compared to 2.4% for the whole S&P 500 Consumer Sector [2].

A purpose can also strongly influence an organization’s ability to attract and retain talent and customers. However, it has less effect on suppliers, prices, and other legal aspects:

Elon Musk’s companies, Tesla, and SpaceX, though very different in terms of what they do, exemplify the role of a well-defined purpose in shaping success.

As quoted by Mr. Musk, “Putting in long hours for a corporation is hard. Putting in long hours for a cause is easy.” This statement is well supported by the fact that Tesla and SpaceX have consistently ranked among the top choices for engineering talent in the US [3].

Post-pandemic, the significance of a company’s purpose has grown even more pronounced and had a downstream impact on hiring, morale, retention, and performance of employees.

According to a 2021 McKinsey study [4], nearly 70% of employees are reflecting on purpose because of the pandemic. The same study also found that employees who said they live their purpose at work were:

• Six and a half times more likely to report higher resilience.
• Four times more likely to report better health.
• Six times more likely to want to stay at the company.
• One and a half times more likely to go above and beyond for the company’s success.

In another PwC survey [5], 83% of the employees rated “meaning in day-to-day work” as important.

Elements of a good purpose statement

Before we define the elements of a purpose statement, it is important to distinguish between a company’s Purpose, Vision, Mission, Values, and Positioning.

Starting with the Purpose, an organization’s Vision, Mission, Values, and Positioning can be imagined as layers with each influencing the other as shown:

Many organizations use the terms Purpose and Mission interchangeably; However, the purpose defines the “why” while the mission is a big, bold step that is part of the ‘how’.

Purpose statements vary from being vague (e.g., Kroger’s “To feed the human spirit” [6]) to grandiose (e.g., Intel’s “create world-changing technology that improves the life of every person on the planet” [7]) to boring (e.g., Decathlon’s “to be useful for people” [8]).

A well-crafted purpose statement must represent the organization’s aspirations and send clear signals about what the company stands for. Creating one is as much a creative act as a strategic one.

A Harvard study analyzed 66 purpose statements from leading organizations around the world and gathered insights from senior leaders and employees. The learnings were used to develop a diagnostic framework that helps craft the best purpose statement for an organization based on its specific situation [9].

Known as the “SABRE” framework, it is based on five dimensions – four dimensions of content (i.e., what the purpose means) and one dimension of statement formulation (i.e., how the purpose statement itself is worded):

Must address a Societal cause

At a foundational level, a purpose statement must address a specific, pressing human, societal, or environmental need that the organization seeks to address or alleviate. However, not all organizations directly address such needs by virtue of their operations.

General-purpose companies, such as Microsoft or Airbnb, do not have a direct social or environmental impact due to their day-to-day operations, whereas social-purpose companies, such as Tesla, prioritize addressing social or environmental issues as a core mission alongside profitability.

Purpose statement for general-purpose organizations

Regardless of their type, an organization can still incorporate elements of societal impact into its purpose statement.

For example, Microsoft defines its purpose as “to empower every person and organization on the planet to achieve more” [10] which goes to show that even when a company is not directly involved in a societal cause, its purpose can still include elements of societal aspects.

Microsoft’s purpose can manifest itself in both ways, general purpose (its cloud computing business) as well as social purpose (X-Box adaptive controller for disabled kids, Office accessibility tools, AI for the visually impaired etc.).

Similarly, Airbnb’s purpose statement – ‘create a world where anyone can belong anywhere’ [11] is both grounded in everyday experience and stretches to an incredibly ambitious goal that seeks to break down barriers caused by cultural, geographical, and racial differences.

Airbnb went a step further to introduce the “Open Homes” program [12] which has helped countless people with temporary housing in times of natural calamities and crisis – a classic example of a social purpose manifestation.

Purpose statement for social-purpose organizations

It is easier to include the societal element in the purpose statement of companies that have a social purpose built into their core operations.

Tesla is a classic example. Its purpose statement is simple yet very powerful – “Accelerating the world’s transition to sustainable energy” [13].

This conveys huge environmental ambition and directly relates to what Tesla does – develop products that are not only sustainable but far superior to fossil-fuel alternatives, which might one day put an end to the era of fossil-fuel transport on the planet.

Must be Authentic

Stakeholders, both internal and external, look for companies in which they can place their trust. An organization’s stated purpose must accurately and honestly reflect its true aims. Otherwise, it can erode confidence and credibility in the eyes of these stakeholders.

ExxonMobil, for example, states its purpose as “Fueling the world safely and responsibly” [14]. However, the company downplayed the adverse impact of climate change for decades despite the knowledge of its causes and dangers since the 70s [15] [16].

Exxon has since been one of the prime targets of activists and politicians angered by the oil industry’s efforts to block action on climate change. Similarly, Philip Morris International’s purpose statement (which it changed in 2016) is “to deliver a smoke-free future”, but in 2022 alone, it shipped over 621 billion cigarettes [17].

Authenticity is also crucial to maintaining employee motivation and engagement. When employees perceive a mismatch between the stated purpose and the daily realities of organizational life, it can lead to disenchantment and, ultimately, the decision to quit.

For example, Volkswagen’s values include “sustainability and community: for the future. for everyone” [18]. However, when the group was hit by the Dieselgate emission scandal, its employee satisfaction took a significant hit.

Before the scandal broke, VW was rated the best in almost every dimension of workplace satisfaction when compared to peers such as BMW, Mercedes, and its own subsidiary, Audi.

When news of its emissions testing misconduct emerged, those positive numbers tanked, and VW was rated worst in 12 out of 13 dimensions of an employment survey [19].

Leaders can identify gaps between a company’s stated purpose and its actual direction by including questions related to the purpose statement in regular employee surveys.

Companies that misrepresent themself in their purpose statement also end up disappointing customers and investors which can give rise to accusations of purpose-washing, dilute brand value and damage reputation [20].

Must be Believable

A good purpose statement must be believable in the sense that it must be within the power of the organization to allocate resources and assess progress towards fulfilling that purpose.

Statements that are too grandiose, such as a small NGO claiming to “eliminate hunger in the world” or vague statements such as “to help make the world better” often fail the believability test and end up being uninspiring. Stakeholders then end up asking “But how?”.

For example, AT&T’s statement – “Connecting people to greater possibility – with expertise, simplicity, and inspiration” [21] scores high on the believability dimension as it aligns perfectly with AT&T’s operations in wireless communication and is well within the means of its resources.

Must be relevant to Beneficiaries

A clear purpose statement can not only clarify but also inspire desired behaviors toward its beneficiaries. But to do that, it must clearly indicate who the beneficiaries are – the segment of society (or the environment) it intends to benefit.

In a 2020 survey by PwC that covered over 2,000 CEOs, more than half the respondents (51%) failed to mention any beneficiaries (the who) in their purpose statements [22].

Statements that fail to mention beneficiaries remain all but abstract.

For example, statements such as “to improve profit, sustainable growth, and long-term stability” and “improve health and well-being” could potentially create confusion as to whose health are we talking about — is it customers, employees, the public, or another group?

A good way to avoid this is to put the beneficiaries at the forefront of the statement and reference how the organization benefits them.

For example, S&P Global’s purpose statement – “We accelerate progress in the world by providing intelligence that is essential for companies, governments and individuals to make decisions with conviction” clearly communicates the role of S&P along with the section of stakeholders it intends to serve [23].

Must be Engaging

This is the dimension of a purpose statement that lays emphasis on how it is worded.

Great purpose statements are engaging and inspiring and appeal to the heart as much as to the mind. They are crisp, impactful, and leave a lasting impression on memory. In contrast, when statements are too long, they become unclear and lose their grip on people’s attention.

For example, compare Mastercard’s:

“We work to connect and power an inclusive digital economy that benefits everyone, everywhere by making transactions safe, simple, smart and accessible, Connecting everyone to Priceless possibilities” [24]

with that of Bank of America’s:

“To help make financial lives better through the power of every connection.” [25]

While Mastercard’s statement is detailed and lays emphasis on inclusivity, safety, and accessibility, it is also lengthy and less likely to be remembered. In contrast, Bank of America’s purpose statement is concise, powerfully conveys its intent, and leaves its mark in the memory.

While there are no definite guidelines as to how a purpose statement must be worded, the following guidelines come in handy:

• A purpose statement must be inspiring – It must be aspirational, inspirational, and even poetic and must reveal the “engine” that keeps a company running.
• Must be as short and sweet as possible to aid memorability. (For example, Google’s short yet powerful – “To organize the world’s information”)
• Must have an outcome (For example, Barbie’s “To inspire the limitless potential in every girl”)
• Must create tension – a great purpose statement must unite conflicting intentions that create a space for continuous innovation and growth. For example, IKEA’s “To create a better everyday life for the many people” [26] conveys the company’s goal to make durable, sustainably made furniture (which can be expensive) but at the lowest possible cost.
• Must strike a balance between aspiration and precision. It must be aspirational but not vague, precise but not limiting and must leave room for a company to grow. For example, Lego’s “To inspire and develop the builders of tomorrow” [27]
• It should be systemic and rational but also emotional; it should resonate with members of the organization and inform their decision-making.

A purpose statement can evolve with time

Companies are not static. There are many examples of successful companies that reinvented their business. Samsung started as a company trading dried fish and groceries while Nokia started as a pulp mill.

As a company grows or the context around it changes, its purpose may need to be reframed.

For example, Tesla changed its purpose statement from “we exist to accelerate the planet’s transition to sustainable transport ” to “we exist to accelerate the planet’s transition to sustainable energy .”

Tesla’s offerings today expand beyond cars into products such as solar roofs, power-wall batteries that power homes during outages, and megapacks that stabilize renewable energy electric grids during peak power demand.

Additionally, with the shift towards stakeholder capitalism, companies are forced to redefine what success looks like and how to achieve it. With the change in the traditional mindset of maximizing value for shareholders to maximizing it for all stakeholders, companies are increasingly finding their very purpose questioned.

For example, British Petroleum (BP) has been an energy company involved in extractive industries since its founding. In 2020, BP changed its purpose to reflect its commitment to become a net-zero carbon emitter. Its purpose statement changed from “Making energy more” to “reimagining energy for people and planet” [28].

Delivering value with purpose: The 5P framework

Companies that live by their purpose radiate authenticity and do well by doing good. Leaders allocate capital and resources with purpose in mind while employees use purpose as a guiding star for decision-making. Customers, suppliers, partners, and investors in such companies recognize their value proposition.

But developing such dynamics can be hard. It requires leaders to embed purpose throughout the organization.

McKinsey & Company has proposed a five-step framework that companies can use to make purpose real, steer clear of potential vulnerabilities, and help unlock meaningful value [29]:

Called the 5Ps framework, it consists of five critical elements:

1. Portfolio strategy and products

Demonstrating purpose in the products and services requires a two-step process. First, the business portfolio must align with the company’s purpose. Second, a company must fill out its businesses with products and services that match its chosen portfolio and winnow out those that don’t.

While most companies will not have the choice of starting from a clean slate in terms of the industries and sectors, almost all can identify ways to reshape their business mix in an active, purposeful way.

For example, BP has reimagined what an energy company can be. It not only exited its petrochemicals businesses but also announced plans to shrink its legacy oil & gas businesses by 40% by 2030.

BP is on the path to scale up its low-carbon energy businesses such as bioenergy, hydrogen, and electric-vehicle charging, and to put itself on a path to become a net-zero carbon emitter by 2050 or sooner [30].

Google’s parent company, Alphabet prioritizes “freedom and focus” and in line with it, google restricts Play Store apps that promote gambling and those that offer personal loans with excessive annual percentage rates.

Likewise, toy companies are genuinely embracing diversity, equity and inclusion by learning and collaborating with identity-based communities to improve products. Mattel, the company that manufactures Barbie now offers dolls in a wide variety of body sizes, skin tones, hair textures, and ability status [31].

2. People and culture

As every purpose is about human beings, a company’s employees and its stakeholders serve as sources of strength and a hard check against inauthenticity. An organization’s purpose must align at critical points with its people and culture.

This process starts with hiring. As changing people can be hard, managers must actively screen for individuals who share values that align with the company’s purpose. Human resource decisions must be grounded in purpose and must drive people’s development and career pathways.

Mindsets and behaviors linked to company purpose must be well-articulated and “role-modeled”. Aligning with purpose is not about management saying some nice words and calling it a day. Unless it is reflected in key performance indicators (KPI), benefits are limited.

People want purpose and meaning from their work. Organizations that can genuinely satisfy this need are the ones with the most engaged employees. Passionate employees radiate enthusiasm to customers and communities alike.

Studies have shown that organizations with engaged employees achieve earnings-per-share growth that is more than four times that of their competitors [32].

3. Processes and systems

This element addresses the “how” of the business model: the operational initiatives and governance mechanisms that an organization depends upon to realize its purpose.

While some aspects of these elements are dictated by regulations and industry standards, an organization must go beyond to be the best and set an example. Embedding purpose into a company’s processes and systems requires looking beyond a firm’s four walls.

For example, Patagonia, whose purpose is “to save our home planet”, does not stop at being carbon-neutral in its own processes. Acknowledging that the bulk of its emissions (95%) comes from its supply chain and materials manufacturing, Patagonia has stood up and taken responsibility for all of it.

It holds itself accountable by setting ambitious goals across the company and its network of partners in alignment with a set of standards based on its Science Based Target Initiative (SBTi) [33].

4. Performance metrics

As only that which gets measured gets managed, it is crucial to measure purpose. This means identifying the KPIs attached to a company’s purpose, tracking them over time, and incenting employees to meet purpose targets.

Since purpose expresses what a company stands for and aspires to be, purpose metrics should extend beyond the day-to-day operations to include allocation decisions such as capital expenditures and M&A, as well as company-wide transformation initiatives.

Organizations are increasingly adopting such practices. For example, a global study that looked at the prevalence of ESG-linked pay for executives found that 38% of the listed firms followed the practice in 2021 compared to just 1% in 2011 [34].

Companies can use a range of KPIs and tools but, because every purpose is unique to an organization, off-the-shelf solutions are seldom as effective as the ones that are carefully tailored.

Companies can also go beyond monetary incentives to encourage community outreach by celebrating offices and employees who contribute measurably to the organization’s mission. Behavioral economics principles can be used to “nudge” for positive behavior, such as energy saving or waste reduction.

Sometimes, simply showing employees and other stakeholders how the organization is progressing along metrics such as diversity or sustainability reinforces the purpose and helps build momentum for more.

5. Positions and communication

A company’s purpose must be hardwired into its positions, communications, and external engagement. Artificial expressions of purpose ring false, and stakeholders recognize inauthenticity.

Sadly, In the rush to stand for something, organizations have risked putting the purpose ‘story’ ahead of the purpose plan and actions. When ‘purpose promise’ does not match the ‘purpose experience’, organizations face a real risk of reputational damage.

For example, when McDonald’s launched ‘McPlant’, its meat-free burger, critics were quick to point out McDonald’s inaction on sustainability issues and the lack of a clear link between the launch of ‘McPlant’ and its current sustainability plan.

McDonald’s has been years behind competitors like White Castle and Burger King in fully introducing plant-based burger options [35].

Purpose-washing: The dangers and how to avoid it

Companies today are in a rush to match their core purpose with the values of society, such as inclusion, fairness, and respect and have become more outspoken about environmental and social issues.

Customers, employees, investors, and communities are increasingly expecting businesses to express a clear and public position on issues that matter to them.

Unfortunately, such highly visible pledges of purpose commitment have, paradoxically, also resulted in public concern and backlash. 56% of people now believe that purpose-driven marketing is a way for firms to promote their goods, rather than a real commitment to solve social or environmental problems [36].

What is purpose-washing

When an organization’s purpose statement is communicated to external stakeholders, a lack of perceived authenticity can easily escalate into accusations of purpose-washing – a term that combines the concepts of greenwashing and woke-washing.

Greenwashing refers to companies portraying themselves as environmentally conscious even though their actions do not align with their claims. Woke-washing is an accusation that arises when companies claim to care about socio-political issues, but stakeholders believe they do not.

In both cases, claims that are based on a broader purpose that goes beyond economic profit maximization are not perceived as consistent with actions.

Examples of companies accused of purpose-washing

The below table gives an overview of companies in different industries that have faced accusations of purpose-washing for varied reasons:

Source: Purpose-washing: What it is, and how to avoid it, King’s Business School [36]

Numerous companies across industries have come under fire for misalignment between their stated purposes and actual behavior for a variety of reasons and to different degrees.

Staying clear of purpose-washing

In addition to the obvious ethical concerns, negative consequences of purpose-washing include a decrease in trust, damaged reputation, and substantive financial losses. When organizations take a public stance based on their purpose, they join a broader public conversation on the topic.

According to research by Paul A. Argenti, professor of corporate communication at Dartmouth College’s Tuck School of Business [45], there are three considerations that managers must bear in mind when they speak in public or take a stand on matters related to their purpose:

Does the issue align with the organization’s strategy?

An organization’s strategy is based in part on the company’s mission and values. If there is a misalignment with the issue being spoken out on, such statements will be viewed as inauthentic.

Can the organization meaningfully influence the issue?

If the organization does not have the expertise and resources to make a difference or is not willing to commit financial resources towards the cause, then the organization risks being seen as hypocritical or being accused of “woke-washing.”

Will the constituencies agree with speaking out?

Every organization works with constituencies – distinct groups or entities that have a stake or interest in the organization’s decisions and actions. (e.g., customers, investors, employees, etc.). If the key constituencies agree with the position taken by the organization, then the risk of disrupting future business is greatly reduced. However, when these constituencies disagree, it becomes crucial to discuss and carefully weigh the position based on relative importance to business.

If a company meets all the above conditions, it can join or even initiate a public conversation around its purpose without the risk of being accused of purpose-washing. However, if only two of the conditions are met, it is better to wait and join the debate later rather than acting as a conversation starter.

When just one condition is met, it is critical to keep track of the situation and determine

whether and when it is suitable to voice a stance. If none of the conditions are met, the company should refrain from commenting on the matter.

Initiating effective purpose-driven campaigns

Once an organization decides to take a public stance, three guiding principles are important.

First, it must carefully consider how to communicate its commitment in a meaningful manner. It is insufficient to merely issue campaigns and merchandise relating to their purpose as the perception of authenticity relies strongly on stakeholders correctly interpreting the alignment of the stated purpose with the company’s practice.

Second, the stance must be unambiguous. Research indicates that staying neutral and thus not taking a clear stance, can lead to a lack of perceived authenticity [46]. While striving for fair representation is vital, it is also critical that a company’s stance is clear, well-thought-out and displays a real commitment to its principles.

Finally, the message must be consistent for it enhances authenticity.

Thus, purpose can be a source of powerful competitive advantage, but only when it is genuine and infused into an organization’s business model.

Read also: Mission Statement

1. “The Power Of Purpose: The 7 Elements Of A Great Purpose Statement (Part 1)”. Forbes, https://www.forbes.com/sites/afdhelaziz/2020/02/18/the-power-of-purpose-the-7-elements-of-a-great-purpose-statement/?sh=1470a4473fad . Accessed 08 Apr 2024.

2. “People on a mission”. Korn Ferry Institute, https://www.kornferry.com/content/dam/kornferry/docs/article-migration/Korn_Ferry_People_on_a_Mission_1219.pdf . Accessed 08 Apr 2024.

3. “The 20 employers engineering students most want to work for”. Business Insider, https://www.businessinsider.in/policy/economy/news/the-20-employers-engineering-students-most-want-to-work-for/slidelist/93758602.cms . Accessed 08 Apr 2024.

4. “The search for purpose at work”. McKinsey & Company, https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/the-search-for-purpose-at-work . Accessed 08 Apr 2024.

5. “Putting Purpose to Work: A study of purpose in the workplace”. PwC, https://www.pwc.com/us/en/purpose-workplace-study.html . Accessed 08 Apr 2024.

6. “Our Purpose”. Kroger, https://www.thekrogerco.com/about-kroger/ . Accessed 08 Apr 2024.

7. “General Information about Intel Corporation: What Are Intel’s Purpose, Commitments, Values, Vision, and Brand?”. Intel, https://www.intel.com/content/www/us/en/support/articles/000015119/programs.html . Accessed 08 Apr 2024.

8. “About us”. Decathlon, https://sustainability.decathlon.com/about-decathlon . Accessed 08 Apr 2024.

9. “What Makes a Great Corporate Purpose Statement”. Harvard Business Review, https://hbr.org/2023/09/what-makes-a-great-corporate-purpose-statement . Accessed 07 Apr 2024.

10. “What we value”. Microsoft, https://www.microsoft.com/en-us/about/values . Accessed 07 Apr 2024.

11. “Airbnb 2019 Business Update”. Airbnb, https://news.airbnb.com/airbnb-2019-business-update/ . Accessed 07 Apr 2024.

12. “Airbnb’s Open Homes platform hopes to house 100,000 displaced people”. The Spaces, https://thespaces.com/airbnbs-open-homes-platform-hopes-to-house-100000-displaced-people/ . Accessed 07 Apr 2024.

13. “About”. Tesla, https://www.tesla.com/about . Accessed 07 Apr 2024.

14. “Who we are”. Exxon Mobil, https://corporate.exxonmobil.com/who-we-are . Accessed 07 Apr 2024.

15. “Exxon’s Climate Denial History: A Timeline”. Greenpeace, https://www.greenpeace.org/usa/fighting-climate-chaos/exxon-and-the-oil-industry-knew-about-climate-crisis/exxons-climate-denial-history-a-timeline/ . Accessed 07 Apr 2024.

16. “ExxonMobil loses bid to nix climate change lawsuit”. The Associated Press, https://apnews.com/article/climate-environment-darren-woods-lawsuits-9650332ea94d2ee22eb415e80b142134 . Accessed 07 Apr 2024.

17. “Is PMI Really Creating a ‘Smoke-Free Future’?”. Exposetobacco.org, https://exposetobacco.org/news/pmi-smoke-free-future/ . Accessed 08 Apr 2024.

18. “Our Values and Actions”. Volkswagen, https://www.vw.com/en/our-values-and-actions.html . Accessed 08 Apr 2024.

19. “How Volkswagen Rallied Its Employees After Its Emissions Scandal (At Least For Now)”. Forbes, https://www.forbes.com/sites/karstenstrauss/2017/07/26/how-volkswagen-rallied-its-employees-after-its-emissions-scandal-at-least-for-now/ . Accessed 07 Apr 2024.

20. “The Evolution Of Purpose Wash And How To Avoid It”. CEO Today, https://www.ceotodaymagazine.com/2020/12/the-evolution-of-purpose-wash-and-how-to-avoid-it/ . Accessed 07 Apr 2024.

21. “Our Purpose”. AT&T, https://about.att.com/pages/corporate-profile . Accessed 07 Apr 2024.

22. “Why corporate purpose statements often miss their mark”. PwC, https://www.strategy-business.com/article/Why-corporate-purpose-statements-often-miss-their-mark . Accessed 08 Apr 2024.

23. “We are S&P Global.”. S&P Global, https://www.spglobal.com/en/who-we-are/ . Accessed 08 Apr 2024.

24. “About Mastercard”. Mastercard, https://www.mastercard.us/en-us/vision/who-we-are.html . Accessed 08 Apr 2024.

25. “Our company”. Bank of America, https://about.bankofamerica.com/en/our-company . Accessed 08 Apr 2024.

26. “The IKEA vision and values”. IKEA, https://www.ikea.com/gb/en/this-is-ikea/about-us/the-ikea-vision-and-values-pub9aa779d0 . Accessed 08 Apr 2024.

27. “Purpose”. Kirkbi, https://www.kirkbi.com/about/purpose/ . Accessed 08 Apr 2024.

28. “Presentation – Bernard Looney”. BP, https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/investors/2q-strategy-2020-bernard-looney-strategy-overview.pdf . Accessed 08 Apr 2024.

29. “More than a mission statement: How the 5Ps embed purpose to deliver value”. McKinsey & Company, https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/more-than-a-mission-statement-how-the-5ps-embed-purpose-to-deliver-value . Accessed 08 Apr 2024.

30. “Insight: Inside BP’s plan to reset renewables as oil and gas boom”. Reuters, https://www.reuters.com/business/sustainable-business/inside-bps-plan-reset-renewables-oil-gas-boom-2023-03-07/ . Accessed 08 Apr 2024.

31. “She’s a Barbie girl, in a new world”. Mashable, https://mashable.com/feature/barbie-diverse-inclusive . Accessed 08 Apr 2024.

32. “The Power Of Purpose: The Business Case For Purpose (All The Data You Were Looking For Pt 2)”. Forbes, https://www.forbes.com/sites/afdhelaziz/2020/03/07/the-power-of-purpose-the-business-case-for-purpose-all-the-data-you-were-looking-for-pt-2/ . Accessed 08 Apr 2024.

33. “The Climate Crisis Is Our Business”. Patagonia, https://www.patagonia.com/climate-goals/ . Accessed 08 Apr 2024.

34. “Executive Compensation Tied to ESG Performance: International Evidence”. SHIRA COHEN, IGOR KADACH, GAIZKA ORMAZABAL, STEFAN REICHELSTEIN, https://onlinelibrary.wiley.com/doi/full/10.1111/1475-679X.12481 . Accessed 08 Apr 2024.

35. “Hold the beef: McDonald’s avoids the bold step it must take to cut emissions”. Guardian, https://www.theguardian.com/environment/2021/dec/10/mcdonalds-emissions-beef-burgers . Accessed 08 Apr 2024.

36. “Purpose-washing: What it is, and how to avoid it”. KING’S BUSINESS SCHOOL, https://www.kcl.ac.uk/business/assets/research/literature-review-purpose-washing.pdf . Accessed 08 Apr 2024.

37. “Munroe Bergdorf accuses L’Oréal of racial hypocrisy”. The Guardian, https://www.theguardian.com/fashion/2020/jun/02/munroe-bergdorf-accuses-loreal-of-racial-hypocrisy . Accessed 07 Apr 2024.

38. “H&M Apologizes for ‘Monkey’ Image Featuring Black Child”. The New York Times, https://www.nytimes.com/2018/01/08/business/hm-monkey.html . Accessed 06 Apr 2024.

39. “What Was the Dieselgate Scandal?”. International Environmental Technology, https://www.envirotech-online.com/news/air-monitoring/6/international-environmental-technology/what-was-the-dieselgate-scandal/59471 . Accessed 06 Apr 2024.

40. “This article is more than 5 years old Stonewall and Primark criticised for Pride T-shirts made in Turkey”. The Guardian, https://www.theguardian.com/world/2018/aug/02/stonewall-and-primark-criticised-pride-t-shirts-made-in-turkey-lgbt-rights . Accessed 08 Apr 2024.

41. “The Starbucks Anti-Pride Controversy, Explained”. Bon Appetit, https://www.bonappetit.com/story/starbucks-anti-pride-controversy . Accessed 08 Apr 2024.

42. “6 months later: Activist marketing takeaways from Nike, Ben & Jerry’s calls for racial justice”. Marketing Dive, https://www.marketingdive.com/news/6-months-later-activist-marketing-takeaways-from-nike-ben-jerrys/591421/ . Accessed 08 Apr 2024.

43. “Why Audi’s Super Bowl Ad Failed”. Forbes, https://www.forbes.com/sites/jeffkauflin/2017/02/06/why-audis-super-bowl-ad-failed/ . Accessed 08 Apr 2024.

44. “How M&M’s Became the Latest Flash Point in the Culture Wars”. Time, https://time.com/6249551/m-m-candy-mascots-culture-wars/ . Accessed 08 Apr 2024.

45. “When Should Your Company Speak Up About a Social Issue?”. Harvard Business Review, https://hbr.org/2020/10/when-should-your-company-speak-up-about-a-social-issue . Accessed 08 Apr 2024.

46. “Woke brand activism authenticity or the lack of it”. Abas Mirzaei, Dean Wilkie and Helen Siuki , https://www.researchgate.net/publication/355082665_Woke_brand_activism_authenticity_or_the_lack_of_it . Accessed 07 Apr 2024.

47. “Your Corporate Purpose Changed. Has Your Strategy Kept Up?”. Harvard Business Review, https://hbr.org/2022/07/your-corporate-purpose-changed-has-your-strategy-kept-up . Accessed 07 Apr 2024.

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If you aspire to lead or start a company, you’ll play a crucial role in driving its vision, goals, and plan for success. A purpose statement establishes the foundation you need to do that effectively.

While some degree programs touch on the topic of purpose statements, you might not realize how this concept can apply to your future career . 

Here’s how you can take the skills you’ve learned from your business degree and use them while writing an effective company purpose statement. 

What is a Purpose Statement?

The first step to understanding a purpose statement is to distinguish it from a mission statement because each plays a different role in your business plan .

Mission Statement vs. Purpose Statement

A purpose statement is a single statement that defines the reason your company exists—beyond simply making a profit. It also illustrates how your product or service positively impacts the people you serve. Once your purpose is established, you’ll need a series of goals to drive that purpose. That’s where the mission statement comes in.

First and foremost, a mission statement is actionable. It explains the path you need to take to reach your purpose. So, while a purpose statement is focused on the future, a mission statement is rooted in the present.

Unlike a company mission, your company purpose isn’t something that can be completed or checked off a list. A purpose statement illustrates the ongoing pursuit to push your company forward.

What Does a Purpose Statement Do?

A purpose statement sets expectations, both internally (for leadership and employees) and externally (for customers and investors). It acts as your company’s blueprint for the future and helps guide all the decisions you make—from how you manufacture your products to the words you use in your marketing.

Your purpose also influences your customer. In fact, 63% of global consumers prefer to purchase products and services from companies that stand for a purpose, according to recent research.

The study found that companies that stand for something bigger than what they sell, communicate their purpose, and demonstrate commitment are more likely to attract consumers and influence purchasing decisions.  

Leaders around the world are taking note of the rise of purpose-driven companies , too. Lise Kingo, CEO and executive director of the UN Global Compact, stated, “The idea of business as an agent of change and a purveyor of positive values is gaining traction and legitimacy around the world. With a growing number of companies taking steps to be more responsible in how they treat employees, communities, and the planet, we are seeing business emerge as a real player and solution-provider in the quest to put our world on a better course.”

Beyond attracting customers and increasing your bottom line, clarifying your company purpose is important for these reasons:   

1. Distinguishes Your Business from Competitors

One important role of your purpose statement is to define what makes your company unique. After all, your competitors might be able to replicate your product or service, but they’d be hard pressed to duplicate your unique purpose.

People can be genuinely inspired if your company has a solid purpose. When customers and employees understand what drives your passion and ignites your purpose, they’re more likely to get on board with it.  

2. Helps Meet Goals

A strong purpose statement sets a path for how your company will move forward, which will help you see and set clear goals. These goals should go beyond financial performance; they should also measure how your purpose is progressing toward the social impact you’re trying to make.

3. Informs Company Culture

A recent employee survey by Harvard Business Review found that only 28% of employees felt connected to their company’s purpose, and 34% thought they were contributing to their company’s success. According to the article, a lack of purpose among employees can create a negative company culture where employees feel unmotivated and unaligned.

So how do you avoid this?

Creating a purpose-driven culture starts with clear communication between employees and leadership—as well as listening and being open to feedback. When everyone understands and supports the company's purpose, it creates a united front where everyone from the top down is working toward the same goals.

Furthermore, multiple studies show a purpose-driven culture is a positive one. This is because employees feel more engaged and motivated when they can connect the work they do with how it contributes to the organization’s purpose .

How Do I Write a Purpose Statement?

Creating a company purpose statement is no small task. It requires a deep understanding of why your company exists and where it hopes to go in the future. If you’re still feeling stuck, here are some steps to take as you're developing your company's purpose.

Step #1: Define what you do.

But more specifically, lay out what your company does to solve a particular problem for your customers.

Step #2: Pinpoint your passion.

Think about what inspires the work you do. For example, are you passionate about creating sustainable products? Do you strive to be the most innovative? Are you focused on serving local communities?

Step #3: List your values.

Understanding the things your company is passionate about will help you come up with specific values that align with your purpose. Those values might include things like sustainability, innovation, integrity, quality, etc.

Step #4: Create a draft.

Once you’ve defined what you do and why you do it, take pen to paper and start drafting ideas for your purpose statement.

As you’re writing, make sure your purpose statement is:

• Short (about 1-2 sentences)
• Easy to understand
• Aspirational (but not vague)

Step #5: Get feedback.

Ask others in your organization to review what you’ve written and consider their feedback as you hone your purpose statement.  

Step #6: Leave room for growth.

Keep in mind that a purpose statement is a constant work in progress, and changes will happen as your business evolves.

Examples of Effective Purpose Statements

Use these company purpose statements to draw inspiration from:

• Southwest Airlines lets its personality shine through in its purpose statement: “Connect people to what's important in their lives through friendly, reliable, and low-cost air travel.”
• Kellogg’s and Coke keep it short and sweet: “Nourishing families so they can flourish and thrive.” – Kellogg’s,  “Refresh the world. Make a difference.” – Coke
• If you’re looking for an example of an empowering purpose statement, here’s Dove’s: “Discovering the value of 'real' beauty and improving self-esteem worldwide.”
• Both The Red Cross and Whole Foods have purpose statements that make an emotional connection: “Our deepest purpose as an organization is helping support the health, well-being, and healing of both people—customers, Team Members, and business organizations in general—and the planet.” – Whole Foods, “To protect life and health and to ensure respect for the human being .” – The Red Cross
• Crayola and Lego lean on their ability to inspire: “Encouraging children to be creative, and enabling parents to inspire them.” – Crayola, “To inspire and develop the builders of tomorrow.” - Lego

Now that you know what a company purpose statement is, why it’s important, and how to develop your own, you’ll be ready to put this important business skill into practice in your own organization.

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A statement of purpose is an integral component of your small business's overall strategic operation plan. This document contains your company's core philosophy and values, from which you measure the worth of all business decisions and strategies. Crafting an understandable and attainable statement of purpose helps you and your management team to create policies and measure the success of your company as a whole.

Statement of Purpose Definition

The statement of purpose for your small business defines your company's core goals and purpose. According to Web Marketing Today, an Internet marketing website, the statement also forms the basis for your small business's brand and the promises your company intends to make to consumers. A statement of purpose isn't as broad as a mission statement, which seeks to incorporate business strategies and procedures into the document. Instead, a statement of purpose focuses primarily on the short message that will guide your company in formulating its business practices and procedures, without spelling out what those methods will look like when your business opens its doors.

Avoid Vague Statements

Just because your small business's statement of purpose doesn't include your company's plans for business operations, doesn't mean you should be vague in crafting its language. Your company's statement of purpose shouldn't simply be "make money." The statement of purpose should describe the way in which your small business wants to become successful while carving out a place in the local business community. Focusing the statement with specific language can help your management team come up with strategies and methods to accomplish the goals your statement of purpose sets.

Think About Customer Need

Thinking about the needs your small business is fulfilling for customers can help you craft a statement of purpose that positions your company strategically, as opposed to functionally, according to Web Marketing Today. This allows your mission statement to transcend just creating products and instead focus on providing services for customers. A statement of purpose focused on function allows your business the flexibility to meet consumer needs regardless of the products your company currently offers for sale.

Creating Attainable Goals

An unattainable ideal, including the pursuit of perfection, doesn't make for a good statement of purpose because your employees and management team can't adequately judge if its practices are working towards that goal. It's perfectly acceptable to create a lofty goal for your small business, but this goal should also be within the realm of possibility. This allows your management personnel to gauge the worthiness of proposed business plans and the success of current business strategies.

• Web Marketing Today: Building Your Brand
• Cambridge Rindge & Latin School Research Guide: Writing a Statement of Purpose

Jonathan Lister has been a writer and content marketer since 2003. His latest book publication, "Bullet, a Demos City Novel" is forthcoming from J Taylor Publishing in June 2014. He holds a Bachelor of Arts in English from Shippensburg University and a Master of Fine Arts in writing and poetics from Naropa University.

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What is a Business Statement of Purpose for an LLC or Corporation?

When starting a Limited Liability Company or C Corporation, businesses in most states must provide a written statement of business purpose in their formation documents (Articles of Incorporation or Articles of Organization). The business purpose statement describes why, and for what legal purpose, will the business exist. This is not the same as a company’s mission or vision statement, which businesses often leverage when seeking financing, attracting customers, and rallying employee morale.

In most states’ Articles of Incorporation and Articles of Organization, the purpose statement is a brief explanation of what business activities the company is requesting legal approval to conduct in the state.

Note some states ask for a “statement of lawful purpose” and a “statement of specific purpose.” The first being rather general and the second providing a more detailed description about the business activities the company will participate in.

A handful of states ask for NAICS (North American Industry Classification System) codes instead of a written statement to identify a business’s industry and activities. Those states include Alaska, Arkansas, Georgia, Louisiana, Mississippi, New Hampshire, and New Mexico.

In this article, I’ll share some information about purpose statements to help business owners better understand what might be expected as they prepare their formation documents. To ensure that a business statement of purpose provides enough information to satisfy states’ requirements while giving a company enough room for growth in the types of activities it conducts, entrepreneurs can benefit from consulting their attorneys for guidance.

Most states provide their formation document templates online. The statement of purpose field in some forms doesn’t provide much room, so sometimes business owners need to attach a separate page to expand on the purpose, which they may then attach to the filing.

A Corporation’s Articles of Incorporation Purpose Statement

States typically do not require C Corporations to be very specific in their purpose statements within the Articles of Incorporation . To avoid creating a too-limited scope of business activities, companies often create a broad statement of business purpose. Business owners should consult their attorneys about what is best.

An example of a non-specific statement is: “The purpose of the corporation is to engage in any lawful activity for which corporations may be incorporated in this state.”

In some state’s Articles of Incorporation, that (or a similar) statement is present as a placeholder that the preparer may use or modify.

When states require a more detailed explanation of a corporation’s purpose, companies sometimes use the state’s default verbiage and add something specific about the type of business it conducts.

An LLC’s Articles of Organization Purpose Statement

Many states require a Limited Liability Company (LLC) to provide a general statement of purpose in their formation documents (called Articles of Organization , or in some states referred to as a Certificate of Organization or Certificate of Formation). Several states ask for a more specific purpose statement.

Here’s an example of what a general LLC purpose statement might look like: “The purpose of this limited liability company is to engage in any lawful activity for which Limited Liability Companies may be organized in this state.”

In states that require a more detailed statement, business owners must provide a more descriptive account of the type of activities the company will participate in. For example, a website development company might include, “provide website design and related services,” or an automobile mechanic shop  might say, “provide vehicle repair, maintenance, and related services.” Again, the exact wording an entity uses will depend on where the business is located and the unique nuances of the company.

Because Articles of Organization identify why an LLC legally exists, it’s helpful for business owners to discuss the wording of their statement of purpose with their attorneys.

A Nonprofit’s Articles of Incorporation Purpose Statement

Nonprofit organizations must consider how their statement of purpose will affect their authorization to do business in their state and their tax-exempt status with the IRS.

Different types of 501c categories exist for nonprofit organizations that wish to be exempt from federal income tax. Most nonprofits seek 501(c)(3) status, which provides federal income tax exemption and eligibility to receive tax-deductible charitable contributions. A nonprofit’s statement of purpose in its state’s Articles of Incorporation is one of the factors the IRS will consider when deciding if it will classify an organization as a 501(c)(3) .

The Importance of Operating Within a Business’s Stated Purpose

No business owners relish the thought of lawsuits against their companies. However, the possibility of legal action is a risk for organizations in all industries. When the unthinkable does happen, courts will consider a variety of factors in determining liability. Among them is whether the company has been adhering to all of its compliance responsibilities, including operating within its statement of purpose. If a business is found conducting activities that do not align with what the entity describes in its formation documentation and operational documents (i.e., corporate bylaws or LLC Operating Agreement ), the court might rule against the business entity and its owners. Also, it may put the business in jeopardy of fines, penalties, or even dissolution.

How CorpNet Can Help

My team at CorpNet has extensive experience helping entrepreneurs prepare their LLC and corporation registration forms in all 50 states. After you’ve discussed your statement of business purpose with your legal advisor, we will ensure it, along with all of the other required information, is conveyed accurately on your formation paperwork.

Contact us to get started and enjoy the peace of mind that comes with having a reputable, reliable business filing partner by your side!

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Pro Forma Business Plan

Financial planning is essential for any business to grow, thrive, and succeed.

Whether it’s a new opportunity or an impending threat—planning for different hypothetical situations strategically and financially creates a safety net that safeguards your business from hitting failure.

Well, pro forma statements, with their forward-looking nature, help you evaluate your future finances and strategize for business accordingly.

But what is it really?

In this blog post, we will learn everything about pro forma business plan statements and steps to create.

Ready to dive in? Let’s get started.

What are pro forma financial statements?

Pro forma statements are projected financial statements that predict the future financial position of a business based on current trends and assumptions. These statements offer a snapshot of financials under different scenarios, helping companies plan efficiently.

A pro forma statement serves as a financial blueprint allowing businesses to set realistic goals, anticipate risks, assess outcomes, and track their goals. When included in a business plan, these statements typically include the income statement, balance sheet, and cash flow statement.

Why integrate pro forma statements into your business plan?

Although pro forma isn’t calculated using generally accepted accounting principles, these statements offer significant value while making important strategic decisions.

That said, let’s check out more benefits of adding statements of pro forma projections to your business plan:

• Pro forma statements help secure funding from investors by offering them an insight into your expected profitability, growth rate, ROI, and the overall financial health of your company.
• A pro forma statement aids in strategic decision-making by helping you evaluate the financial impact of different situations. For instance, the impact of launching a new product or expanding into a foreign market.
• Pro forma statements nudge you to make timely adjustments to your business strategies by helping you set and track your financial metrics.
• A pro forma statement helps you prepare for different situations by identifying potential challenges and prompting you to develop efficient strategies.

Types of pro forma statements

Let’s now understand the type of pro forma statements to include in your business plan.

1. Pro forma statements based on financial statements

A pro forma includes three financial statements—pro forma income statement, pro forma balance sheet, and pro forma cash flow statement.

Let’s understand these three types in detail.

Pro forma income statement

The most important aspect of financial planning and management is projecting the sales, revenue, costs, and expenses of a business in the future.

Pro Forma income statements do exactly that. They offer insight into expected revenue and expenses and help you assess a business’s profits and retained earnings in a specific financial period.

Pro forma income statements are often used to evaluate the financial viability of launching new products, business expansion, mergers, acquisitions, and other strategic decisions. These statements help you assess what a business income would look like in certain situations.

Pro forma balance sheet

Pro forma balance sheets are similar to actual balance sheets in terms of formatting. However, certain or all the values in such balance sheets are projected based on certain events such as loans, acquisitions, or mergers.

You can use these balance sheets to assess the financial health of your company at a certain stipulated time in the future. It offers an expected value of assets, liabilities, and equity under different situations, thereby, helping you make informed choices.

Moreover,  you can use a pro forma balance sheet to evaluate the impact of a specific loan, acquisition, merger, or financing round on a business’s financials by offering you an overall understanding of making such decisions.

Pro forma cash flow statement

Pro forma cash flow statements illustrate the cash inflow and outflow over a period. It is used to assess the financial health of your company and to ensure that the business never runs out of cash.

Pro forma cash flow projections can be for short-term, mid-term, and long-term. It is often used to evaluate if the company will have enough cash to make significant purchases and investments and to maintain day-to-day operations.

2. Pro forma Statements based on purpose

While an income statement, cash flow statement, and a balance sheet remain quintessential parts of pro forma projections, there are different types of pro forma statements based on distinct purposes.

Full-year pro forma projections

Full-year pro forma statements take into account the financials for the fiscal year till the present time and then add projected outcomes for the remaining year. This will help you illustrate the company’s financial position by the end of the year.

Such statements offer investors a comprehensive overview of the business and its expected performance.

Investment pro forma financial projections

An investment pro forma statement shows how securing a loan and making their interest payout will affect the business’s financial position in the future.

Such financial pro formas are required when you want to convince your business partners about the value of potential financing.

Pro forma projections for acquisition

Such pro forma projections merge the past financial statements of your business and the business you want to acquire to show how the financials would have looked in case of a merger. It helps you decide on acquisition and merger opportunities.

Projections for risk analysis

While preparing your startup financial plan , you need to account for various progressive and aggressive situations that may affect your company’s financial health.

These pro forma statements consider various best-case and worst-case scenarios to evaluate the company’s future financial performance in different situations. It helps you plan for risks and equips you to face them strategically.

Now that you’re aware of the different types of pro forma statements, let’s understand the process of creating pro forma statements useful for your business.

How to create pro forma statements for your business plan

Here’s a quick step-by-step guide to creating your pro forma financial statements.

1. Form your assumptions

To create your comprehensive pro forma statements, you first need to form realistic assumptions for different business components. This includes projecting your sales, expenses, revenue, and capital expenditure for different scenarios.

You should also consider the funding you will require and the investments you would make under different business circumstances.

Ensure that you carry out extensive research and study the historical data to form realistic projections. These projections will form the basis for your income statement, balance sheet, and cash flow forecast.

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2. Create a pro forma income statement

A pro forma income statement offers an estimate of a company’s financial performance in the future. To get an insight into your expected revenue, expenses, and net profit, create your projected income statement as follows:

• Calculate your COGS (cost of goods sold) and subtract it from your revenue projections to determine your gross profit.
• Estimate your operating expenses. Take everything from rent to salaries into account and then calculate your operating income.
• Also, calculate your other income and expenses and make necessary adjustments to get your net pro forma profit.

Now, place these together in your P&L format and add them to your business plan.

3. Create a pro forma cash flow statement

Next, prepare a pro forma cash flow statement. It’s similar to preparing your actual cash flow forecast. However, here you take the values from your pro forma income statement to plot the cash inflow and outflow.

Be it a new investment, purchase of an asset, repayment of debt, or your operating activities—plot every activity that involves money.

The calculations will either give you a negative or a positive cash flow. To clarify,  a negative cash flow indicates a scarcity of money and a positive cash flow indicates extra money at hand to make new purchases or investments.

Now, add your pro forma CFS to the business plan and use it to assess the future cash position of your business.

4. Create a Pro forma balance sheet

A pro forma balance sheet will offer a financial snapshot of your business at a certain point in time in the future. To prepare your pro forma balance sheet:

• List down your current and long-term assets, and calculate your total assets.
• Make note of your liabilities, both short-term and long term to calculate your total liabilities.
• Add your equities, liquidity, and retained earnings from an income statement to your balance sheet.
• Ensure that the liabilities are equal to your assets and add them to your business plan.

Following this, you will have your pro forma statements ready in no time. Ready to jump right in? Let’s take a quick look at a pro forma business plan template to place your statements together.

Pro forma business plan example

Refer to this example of a pro forma business plan and use it as a reference point to build yours.

Executive Summary

In this pro forma business plan, we forecast our company’s sales, expenses, capital expenditures, and funding needs over the next five years. Our projections show positive net income, a strong financial position with increasing equity, and healthy cash flow, underscoring our business’s viability and long-term potential.

Auto Gear, a leader in auto products and services, has been operating for 10 years across 10 countries. With a solid financial track record, we aim to expand into new markets, seeking $8 million in funding to facilitate this growth.

Business Plan Pro Forma

This section provides detailed pro forma statements for sales, expenses, capital expenditures, funding requirements, and cash flow, illustrating the viability and growth potential of Auto Gear.

Sales Forecast

Auto Gear forecasts 20% annual sales growth driven by market expansion, innovation, and enhanced customer service.

• Year 1: $12 million
• Year 2: $14.4 million
• Year 3: $17.28 million
• Year 4: $20.74 million
• Year 5: $24.89 million

Expense Forecast

Auto Gear anticipates slower expense growth due to economies of scale in the long term.

• Year 1: $8 million, 15% increase
• Year 2: $8.8 million, 10% increase
• Year 3: $9.5 million, 8% increase
• Year 4: $10.07 million, 6% increase
• Year 5: $10.58 million, 5% increase

Capital Expenditure Forecast

The capital expenditure at Auto Gear will report a 20% annual growth to accommodate research and new product launch shifts

• Year 1: $2 million
• Year 2: $2.4 million
• Year 3: $2.88 million
• Year 4: $3.46 million
• Year 5: $4.15 million

Funding requirements

Auto Gear needs $8 million in funding for research, new product launches, and marketing to support its expansion in new markets.

Cash flow forecast

Auto Gear’s pro forma cash flow statement predicts positive cash flow throughout the forecast period, ensuring liquidity and operational stability.

• Year 2: $3.2 million
• Year 3: $4.6 million
• Year 4: $5.6 million
• Year 5: $6.8 million

Before we conclude this blog post, here’s one last segment that needs clarity.

Pro forma statements vs. budgets

Pro forma and budgets are important financial statements that offer a future financial overview of your business. However, that’s the only similarity between them.

With this table, you can understand the differences between these two statements better.

Simply put, pro forma projections assist in long-term financial planning while a budget helps in the achievement of short-term goals.

Prepare your Pro Forma Financial Statements with Upmetrics

Accurate and forward-thinking business and financial planning is quintessential to building a successful business.

That being said, pro forma projections offer the numerical perspective of your business’s financial position and performance in the future. It’s much easier to make decisions when you have clearly outlined sales, revenue, expenses, and funding demands in sight.

Don’t worry. It’s quite easy to create your pro forma projections when you have a business planning app like Upmetrics at your disposal.

Its financial forecasting feature allows you to plan for multiple scenarios and create financial statements and projections for up to 7 years. It generates interactive visual reports and offers AI functionality to simplify financial planning.

This easy-to-use tool has everything you need to plan efficiently.

Frequently Asked Questions

Is a pro forma the same as a p&l.

Pro forma income statements are based on projections. They reflect the expected revenue, expenses, and profitability of a business under specific situations in the future. Profit and loss (P&L), on the other hand, unless specified as pro forma, reflects the exact figures of revenue and expenses in the current situation.

What’s usually included in the pro forma of the business plan?

The pro forma statements in a business plan typically include an income statement, a cash flow statement, a balance sheet, and sometimes even a break-even analysis. Now, if you’re publicly publishing the pro forma, it’s essential to comply with Securities and Exchange Commission guidelines .

Can a pro forma business plan help in securing loans or investments?

Yes, pro forma when based on realistic assumptions and projections, offers a realistic overview of the company’s financial health in the future. It offers investors a thorough understanding of how their funding will be utilized and the expected profitability, growth, and financial standing of a business.

Are there tools or software that can help create a pro forma business plan?

Yes, there are many tools and resources available to help you create your pro forma business plans. Upmetrics is one of the easiest and most cost-effective business and financial planning tools that will help you create detailed pro forma statements with its automated financial forecasting features.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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What was Trump found guilty of? See the 34 business records the jury decided he falsified

Donald Trump was found guilty of 34 felony counts of falsifying business records after prosecutors successfully convinced a jury he disguised hush money reimbursement as legal expenses. He is the first former president to be convicted of a crime.

Each count is tied to a different business record that prosecutors demonstrated Trump is responsible for changing to conceal or commit another crime .

Those records include 11 checks paid to former lawyer Michael Cohen , 11 invoices from Michael Cohen and 12 entries in Trump's ledgers.

The jury found that Trump authorized a plan to reimburse Cohen for the $130,000 hush money payment issued to Stormy Daniels and spread the payments across 12 months disguised as legal expenses.

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Breakdown of 34 counts of falsifying business records

Here are the 34 business records Trump was found guilty of falsifying, as described in Judge Juan Merchan 's jury instructions :

• Count 1: Michael Cohen's invoice dated Feb. 14, 2017
• Count 2: Entry in the Detail General Ledger for the Donald J. Trump Revocable Trust dated Feb. 14, 2017
• Count 3: Entry in the Detail General Ledger for the Donald J. Trump Revocable Trust dated Feb. 14, 2017
• Count 4: A Donald J. Trump Revocable Trust Account check and check stub dated Feb. 14, 2017
• Count 5: Michael Cohen's invoice dated March 16, 2017
• Count 6: Entry in the Detail General Ledger for the Donald J. Trump Revocable Trust dated March 17, 2017
• Count 7: A Donald J. Trump Revocable Trust Account check and check stub dated March 17, 2017
• Count 8: Michael Cohen's invoice dated April 13, 2017
• Count 9: Entry in the Detail General Ledger for Donald J. Trump dated June 19, 2017
• Count 10: A Donald J. Trump account check and check stub dated June 19, 2017
• Count 11: Michael Cohen's invoice dated May 22, 2017
• Count 12: Entry in the Detail General Ledger for Donald J. Trump dated May 22, 2017
• Count 13: A Donald J. Trump account check and check stub May 23, 2017
• Count 14: Michael Cohen's invoice dated June 16, 2017
• Count 15: Entry in the Detail General Ledger for Donald J. Trump dated June 19, 2017
• Count 16: A Donald J. Trump account check and check stub dated June 19, 2017
• Count 17: Michael Cohen's invoice dated July 11, 2017
• Count 18: Entry in the Detail General Ledger for Donald J. Trump dated July 11, 2017
• Count 19: A Donald J. Trump account check and check stub dated July 11, 2017
• Count 20: Michael Cohen's invoice dated Aug. 1, 2017
• Count 21: Entry in the Detail General Ledger for Donald J. Trump dated Aug. 1, 2017
• Count 22: A Donald J. Trump account check and check stub dated Aug. 1, 2017
• Count 23: Michael Cohen's invoice dated Sept. 11, 2017
• Count 24: Entry in the Detail General Ledger for Donald J. Trump dated Sept. 11, 2017
• Count 25: A Donald J. Trump account check and check stub dated Sept. 12, 2017
• Count 26: Michael Cohen's invoice dated Oct. 18, 2017
• Count 27: Entry in the Detail General Ledger for Donald J. Trump dated Oct. 18, 2017
• Count 28: A Donald J. Trump account check and check stub dated Oct. 18, 2017
• Count 29: Michael Cohen's invoice dated Nov. 20, 2017
• Count 30: Entry in the Detail General Ledger for Donald J. Trump dated Nov. 20, 2017
• Count 31: A Donald J. Trump account check and check stub dated Nov. 21, 2017
• Count 32: Michael Cohen's invoice dated Dec. 1, 2017
• Count 33: Entry in the Detail General Ledger for Donald J. Trump dated Dec. 1, 2017
• Count 34: A check and check stub dated Dec. 5 2017

Jurors saw copies of these records entered as evidence. Evidence from the entire trial is available on the New York Courts website .

Contributing: Aysha Bagchi

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Notice Concerning Withdrawal of Shelf Registration Statement and Filing of New Shelf Registration Statement in Japan

Osaka, Japan, June 3, ‎2024 -- Takeda Pharmaceutical Company Limited (“Company”) announced today that after the Company withdraws the Shelf Registration Statement regarding the issuance of new shares filed on June 1, 2023, it will file a Shelf Registration Statement in Japan regarding the issuance of new shares or disposition of treasury shares. The purpose of the filing is to issue new shares of common stock or dispose treasury shares in a timely and flexible manner in association with the continued implementation of a Long Term Incentive Plan (“LTIP”). For details of the LTIP, please refer to “Launch of a New Employee Stock Purchase Plan and Long Term Incentive Plan for Company Group Employees Overseas” released on June 24, 2020.

Purpose of Shelf Registration: Please see above.

Class of Securities to be Offered: Shares of common stock of the Company

Scheduled Issue Period: For the period from the scheduled effective date of the Shelf Registration to the date that is one year after such scheduled effective date (currently scheduled from June 11, 2024 to June 10, 2025)

Scheduled Issue Amount: Up to JPY 220 billion

Use of Proceeds: The issuance of new shares of common stock or disposition of treasury shares related to the Shelf Registration will be conducted based on the LTIP and is not intended to raise funds.

Terms of Offering: To be determined.

The scheduled issue amount above is the estimated maximum total of both (1) the number of LTIP units that will vest and (2) the number of LTIP units that will be granted during the scheduled issue period, calculated under certain conditions. Share dilution during the fiscal year ending March 31, 2025, from vesting of the LTIP and the stock grant systems for company group management introduced in 2014 is expected to be less than 1.1% in total.

This announcement has been prepared to publicly disclose the filing of a Shelf Registration Statement in Japan and is not intended to, and does not, constitute, represent or form part of any offer, invitation or solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this announcement or otherwise.

About Takeda

Takeda is focused on creating better health for people and a brighter future for the world. We aim to discover and deliver life-transforming treatments in our core therapeutic and business areas, including gastrointestinal and inflammation, rare diseases, plasma-derived therapies, oncology, neuroscience and vaccines. Together with our partners, we aim to improve the patient experience and advance a new frontier of treatment options through our dynamic and diverse pipeline. As a leading values-based, R&D-driven biopharmaceutical company headquartered in Japan, we are guided by our commitment to patients, our people and the planet. Our employees in approximately 80 countries and regions are driven by our purpose and are grounded in the values that have defined us for more than two centuries. For more information, visit www.takeda.com .

Investor Relations (English) Christopher O’Reilly [email protected] +81 (0) 3-3278-2543

Investor Relations (Japanese) Christopher O’Reilly [email protected] +81 (0) 3-3278-2306

Media Relations Brendan Jennings [email protected] +81 (0) 80-2705-8259