How does purpose impact an organization’s performance? That’s the question Harvard Business School Professor Rebecca Henderson explored during a recent lecture streamed via Facebook Live.

“It’s clear that purpose is fashionable,” said Henderson, who teaches the online course Sustainable Business Strategy. “There are 10, 20, 30, 40, maybe 100 books written about business and purpose. Lots of companies coming out and saying, ‘We have values. Purpose is why we exist.’”

To further illustrate this point, Henderson cited a recent survey showing that 89 percent of executives believe an organization with shared purpose will have greater employee satisfaction, while 85 percent say they’re more likely to recommend a company with strong purpose to others.

But what is purpose? Many business leaders talk about their firm’s mission and values, however, there’s more to it than that. Being purpose-driven means having a concrete goal or objective that can benefit society as a whole. One that extends beyond financial performance and serves the greater good.

          Related: What Does "Sustainability" Mean in Business?

According to Henderson, it’s been a long-standing thought that the primary task of a company is to make money. But the rising prominence of purpose in business begs the questions: What’s going on? Why are all these firms suddenly talking about purpose?

If you weren’t able to tune in for the live lecture, check out a full recording of it below:


WHY PURPOSE? WHY NOW?

In Henderson’s view, there are several reasons why companies are honing in on purpose:

  • Our historical focus on “me” and “right now” seems increasingly problematic in light of the large-scale challenges facing society, such as inequality and environmental issues
  • Both millennials and baby boomers are increasingly demanding that their work have meaning
  • New research in economics and psychology is highlighting the role that purpose can play in driving employee motivation, productivity, and creativity

“At the very least, there is no good reason to believe that adopting a purpose will reduce your performance,” Henderson said. “If you do it authentically and appropriately, there are good odds that it will increase your performance in the world.”

Sustainable Business Strategy

Over the course of the talk, Henderson covered a lot of ground, addressing:

  • How recent findings in psychology show that engaging and empowering employees is vitally important to spurring motivation
  • The role that people management best practices play in boosting profitability, and why, across industries, the most productive firms are more than twice as productive as the least productive firms
  • The ways in which being a purpose-driven organization is correlated with doing better
  • And why simply adopting a purpose isn’t enough for firms to maximize performance

Using real-world examples and data from companies including Toyota, Southwest Airlines, and Nordstrom, Henderson presented a compelling case for why now, more than ever, it’s important for business leaders to focus on purpose.  

          Related: 4 Accessible Ways Companies Can Drive Social Change

“Adopting a purpose will not hurt your performance if you do it authentically and well,” Henderson said. “If you’re able to link your purpose to the strategic vision of the company in a way that really gets people aligned and facing in the right direction, then you have the possibility of outperforming your competitors.”

Do you want to learn how business can be a catalyst for system-level change? Explore our three-week online course Sustainable Business Strategy and find out what you can do in your career to become a purpose-driven leader.

Matt Gavin

About the Author

Matt Gavin is a member of the marketing team at Harvard Business School Online. Prior to returning to his home state of Massachusetts and joining HBS Online, he lived in Charlotte, North Carolina, where he held roles in content writing and social media. He has a background in video production, and previously worked on several documentary films for Boston’s PBS station, WGBH. In his spare time, he enjoys running, cycling, exploring New England, and spending time with his family.