Today, most company leaders believe that their companies’ larger purpose is to make a positive difference in the world — not just to maximize shareholder value. Defining a corporate why and making sure it guides decisions and operations has therefore become a cornerstone of doing business. According to author Hubert Joly, former chairman and CEO of Best Buy, Best Buy’s purpose has been central to the way the company has grown and evolved — and continues to. It’s what helped inspire previously discouraged and anxious employees and boosted the company’s share price about tenfold since 2012. Although the idea of a company guided by purpose is simple to understand, it is very hard to turn into reality. Joly presents five considerations that are critical for defining a powerful corporate purpose.
In 2015, shortly after I became chairman of Best Buy (in addition to being the company’s CEO), I decided to visit all board members. I headed to Michigan to sit with Patrick Doyle, who back then was the CEO of Domino’s Pizza, and one of his colleagues. The most memorable moment of that visit, which also turned out to have the biggest impact on Best Buy, was a question from Patrick’s colleague at the end of our discussion. He asked me, “Have you watched Simon Sinek’s TED Talk about how great leaders inspire action?” I had to admit I had not. Shortly afterward, I did watch it. As Sinek put it, “People don’t buy what you do; people buy why you do it.”
This was an “Aha!” moment for me. For many years, I had been pondering the purpose of companies, as well as work’s role in our individual, human quests for meaning. Although my philosophical exploration had convinced me of the power of both personal and corporate purpose, Sinek’s ideas reminded me that it was critical at that time for Best Buy as a company to articulate its “why.”
Today, most company leaders believe that their firms’ larger purpose is to make a positive difference in the world — not just to maximize shareholder value. More than eight in 10 executives, for example, think that a strong sense of shared purpose drives employee satisfaction, facilitates business transformation, and helps boost customer loyalty. Most executives also understand that purpose helps companies navigate a volatile and unpredictable environment and delivers higher and more sustainable performance.
Defining a corporate why and making sure it guides decisions and operations has therefore become a cornerstone of doing business. Best Buy’s purpose has been central to the way the company has grown and evolved — and continues to. It’s what helped inspire previously discouraged and anxious employees and boosted the company’s share price about tenfold since 2012.
I know from experience that it’s easy to understand the idea of a company guided by purpose — and it’s much harder to turn that into reality. The first step is to articulate the right purpose. Once I decided that Best Buy needed to focus on defining its own why, there was only one question: How should we approach this? From that experience, I learned that the following five considerations are critical for defining a powerful corporate purpose.
#1: Look for your company purpose at the intersection of four circles.
While a lot has been said and written about corporate purpose, what it actually is isn’t always well understood. So first, let me offer this as the definition of the purpose of a corporation: It is the ultimate goal of the business, the essential reason why it exists, and how it contributes to the common good. For example, Google’s original purpose was to “organize the world’s information.” Netflix has defined its purpose as…
