BM_IMD_REPORT-How-Authentic-is-your-Corporate-Purpose

engaging with all stakeholders in a transparent manner”. Most of the interviewees mentioned that
corporate purpose had been present since the founding of their company, and that purpose was
core to the long-term vision of the company. In the few instances where purpose had been
articulated more recently, this had been done as the result of a strategic decision.
Why do some companies lead the way in paying attention to authenticity, while others do not?
Several cited the importance of a clearly thought out long-term vision, the embedding of values in
the company culture, and established attitudes and beliefs in what the future looks like, as well as
what the company’s role in society should be. Interviewees concurred that family owned companies
found this easier to instill; a founder with a vision and continued involvement of the family owners in
the business contributes to keeping these values present and alive in the business activities.
However, other companies have chosen to focus on relating corporate purpose to their business
because they believe it is good for business – both in terms of brand building and mitigating
reputational risk, as well as representing a real long-term business decision. For example, IKEA – a
family owned company, thus without short-term shareholder constraints – is able to invest heavily in
renewable energies such as wind farms and is committed to becoming totally carbon-neutral by
2020 because it believes this is the soundest long-term business decision in alignment with its
corporate purpose.
7.2 Impact
Internal
Corporate purpose seems to have two main types of impact on internal stakeholders. On the one
hand, it provides consistency, unifies employees and serves to anchor them in firm values when
making operational decisions. Equally important is the impact purpose has on creating passion and
engagement among employees, resonating at a deeper and more individual emotional level, which
builds and strengthens a personal commitment to the company’s work. Contributing to something
larger is something employees feel proud of and it creates energy. Several companies also
mentioned how purpose helps to attract and retain talent, as people who are aligned with the
purpose are drawn to the company.
External
Corporate purpose has a diversity of impacts on external stakeholders. First, when companies
participate proactively in conversations about their broader impact, they ensure that they can
actively influence higher-level agendas (such as sustainability) and address concerns proactively,
heading off potentially controversial and damaging issues before they arise. Second, the consistency
afforded by having an authentic purpose contributes to building the company brand among
consumers; in an increasingly transparent world with consumers who are both aware and concerned
about the impact companies have on society, this is critical. In a world in which social media ensures
that conversations are happening all the time, across a broad variety of platforms, hardwiring the
company brand through a strongly articulated corporate purpose is becoming increasingly critical.
“While we are sleeping, someone else is awake,” commented a director at BMW.
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