Purpose is the driving force behind a company’s capability to achieve enduring success. To become great, a company’s guiding direction must be more than simply making money: it must have a purpose that appeals to the moral convictions of its key stakeholders, in particular the leadership team.

I’m not opposed to companies making profits. Indeed, this is the paradox of purpose. By aiming for something more than money, companies actually make more money, especially in the medium to long term.

Why is purpose so vital to achieving enduring success? Because purpose is founded on an individual’s own ideas about what is right and worthwhile. Since these ideas are normally rooted in one or more moral traditions, they create the possibility of a shared purpose, linking the leadership team and the rest of the organization.

With a shared purpose comes a clear sense of direction, which boosts morale and helps leaders make difficult and radical decisions. It supports innovation, reduces risk aversion, motivates people to think in new ways, and encourages leaders to put ideas into practice. It also helps build and maintain relationships. If your customers share your purpose, like those who buy from Anita Roddick’s The Body Shop, they are likely to prefer your products to those of a competitor.  Today, the companies that generate the best ideas, build the strongest relationships, and hold on to their brightest stars will prosper and grow.

Four Competitive Purposes

A global company can base its purpose on four moral traditions: discovery, excellence, altruism, or heroism.  These traditions link back to four of the greatest philosophers—Søren Kierkegaard, Aristotle, David Hume, and Friedrich Nietzsche—and produce organizations that stand the test

of time because they are based on ideas that have stood the test of time.

1. Discovery appeals to the adventure within us, the explorer who wants to race beyond knowledge. Discovery put men on the moon, America on the map, and the dot-coms in business. Discovery was the driving force behind Tom Watson of IBM, who plastered the slogan

“THINK” around the offices. It is also the purpose of Sony, described by its founder as a “place of work where engineers can feel the joy of technological innovation.”

Richard Branson, the creative spirit behind the Virgin Group, embodies discovery: a means that allows him to understand the world better, and thus offer a distinctive new service. Branson is a modern-day explorer, who has broken records on sea and land, seeking to go faster and farther than anyone else.

2. Excellence appeals to the perfectionist within us, the artist whose exacting standards allow no compromise. Excellence has built great cathedrals and successful businesses. Excellent firms prefer to turn away customers rather than compromise their quality standards.

Warren Buffett has built an empire based on the highest principles of investment: He only buys shares in a company—or buys a whole company—if exacting criteria are fulfilled.  His excellent Berkshire Hathaway has averaged over 20 percent annual ROI since 1965. Steve Jobs has been a symbol of excellence at Apple, NeXt, Pixar, and Apple again, and he will bring the same purpose to Disney. Jobs’ commitment to excellence is obvious in the sleek, intuitive design of the iPod, but it can also be seen in the Apple I, which was originally envisaged inside a case made from koa, an exotic light-colored wood from Hawaii.

3. Altruism appeals to the caring person within us, the philanthropist who strives for the good of all. Altruism lies behind major political movements, charities, and many businesses that exist to serve their customers. Altruism may take the form of helpful personal service, delivering products at affordable prices, or using technology to improve or save lives. Many businesses are animated by this ethic.

During its explosive growth Wal-Mart was animated by the character of its founder, Sam Walton, whose desire to get the best deal was based on his empathy with his customers.

4. Heroism appeals to the winner within us, the competitor who seeks to dominate his or her field and set the standards. Heroism resulted in many spectacular growth companies, from

Standard Oil to Microsoft. Bill Gates’ plan to put his operating system onto every desktop was a heroic obsession.  It is not the specific goals that tap into human aspirations, but the ambition and daring evident in those goals. 

The difference between heroism and excellence can be seen in the contrast between Microsoft and Apple.  Apple engineers tinkered at perfection, while Microsoft was busy taking over the world.  Henry Ford was the Bill Gates of his age, a man whose heroic purpose was to democratize the automobile, and who achieved this with a small team that shared that purpose.

There are other important purposes that a company can be based upon, such as religion and patriotism (nationalism).  With its Christian principles, ServiceMaster celebrates the worth of

each employee—its motto is “Honor God in All We Do.”

Many major companies whose purpose has been based on patriotism are now seeking new purposes. Deutsche Bank, for example, having been the German bank, under the leadership of

its Swiss CEO Dr. Josef Ackermann, has become an international firm.

Purpose achieves powerful results.  Purpose drives great companies and individuals. If you examine any story of enduring business success, you will find a moral foundation of purpose. Discovering an authentic purpose is the first step to setting organizations on their way to greatness.

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Originally Published in Leadership Excellence, December 2006