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When corporate purpose becomes a competitive advantage

Dernière mise à jour : juin 8


What is corporate purpose?


According to HBR, a purpose explains how employees are makin a difference, given them a sense of meaning. It goes beyond the maximization of profit and is not a simple statement outlining your commitment to corporate social responsibility. Your corporate purpose should empower employees to take ownership of their job.

Inspiring others is not an easy task, but organization often have a few individuals or teams that exceed the norms. By examining the purpose that drives excellence in your organization, you can identify a story that will resonate with every employee.

What are the benefits?


Building and spreading purpose across your organization can be time consuming. One might ask if it is worth the time and energy. It is.

Fostering a collective identity in your organization will help improve employee engagement, which will increase productivity. According to a study by Gallup, the behaviors of highly engaged organizations result in 21% greater profitability. On the flip side, HR Drive states that disengaged employees cost American companies up to $550 billion per year. Purpose can also improve employee retention and recruitment. According to a research by PwC, millennials are 5.3 times more likely to stay when they have a strong connection to their employer’s purpose (2.3 times for non-millennials). A strong corporate purpose can also help in the recruitment of top talent, which is often cited as a major challenge by organizations we advise.

Two Case studies outlining the impact of purpose


Alcoa: Safety as a purpose

In the late 80s, Paul O’Neill, the new CEO of Alcoa, made a famous speech to investors about how he intended to make Alcoa the safest company in North America. Investors asked questions about inventory and capital ratios, but O’Neill always returned to workplace safety. Investors, baffled with O’Neill’s single focus on safety, believed the new CEO would kill the company and told their clients to sell their stocks.


However, by the time O’Neill retired, the company’s annual income had increased fivefold, and the market capitalization had increased by $27 billion all while Alcoa became one of the safest companies in the world.


Lost workdays due to accidents and injury rates plummeted as safety meant streamlining processes across the company, thus improving productivity and engagement across the organization. Investors who sold their stocks ended up losing out on great returns.


Source: Charles Duhigg. 2012. The Power of Habit. This book is on Melka’s recommendation list, you can read an excerpt Here. CVS: Banning tobacco products to focus on health

In 2014, CVS decided to stop selling tobacco products in all its pharmacies. This bold move cost them an estimated $2 billion in annual sales. However, they used the opportunity to outline their new corporate focus on health by rebranding from CVS Caremark to CVS Health.

With this new purpose in mind, they grew via the pharmacy benefits management and acquisitions of pharmacy services provider (e.g. Omnicare Inc. in 2015). This broader healthcare commitment had to be reflected in the company’s desire to change the future health of Americans. A research has shown that consumers who bought their cigarettes at CVS were 38% more likely to stop smoking after the ban. Source: Forbes. 2017. After CVS stopped cigarettes sales, smokers stopped buying elsewhere, too. In conclusion, as more and more companies define their purpose, it is important to avoid falling in a trap where your purpose only become words written on the wall at your company headquarters. A purpose is lived everyday and cascades from the CEO and the executive team to every employee in the organization.