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How Leaders Can Create a

Purpose-Driven Culture
Articulating what your organization stands for is not enough; you also
need to live the message. by Rodolphe Durand and Ioannis Ioannou

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How Leaders Can Create a

Purpose-Driven Culture
Articulating what your organization stands for is not enough; you also
need to live the message. by Rodolphe Durand and Ioannis Ioannou
Published on HBR.org / November 07, 2023 / Reprint H07TQC

Johannes Mann/Getty Images

Many companies tout their corporate purpose, emphasizing guiding

principles that reach beyond mere profitability. While some earnestly
prioritize ethical behavior and broad responsibility, others falter in
matching their actions with their rhetoric. What sets them apart? As
professors deeply immersed in both practical industry involvement and
academic research, we study the elements that allow firms to excel,
particularly when integrating environmental and social concerns into
their business strategy. Our points to a pivotal element: Organizational
culture.

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This is because culture provides the underlying assumptions, shared

values, and norms that shape employee mindsets and behaviors.
Companies may profess a commitment to purpose, but without
a supportive culture aligned to that purpose, employees won’t be
supported to enact these shared values in their work. We’ve found that
successfully integrating purpose relies on three strategies:

All Leaders at All Levels Embody Purpose

In a purpose-driven culture, leaders have a key responsibility: They

must clearly communicate and authentically embody the company’s
purpose and values. By leaders, we mean every person who coordinates
a team, orients decisions, and is responsible of any asset allocation.
At all levels of the organization, these leaders need to draw clear
connections between purpose, values, and performance, acknowledging
the inevitabilities of short-term trade-offs in favor of a grander mission,
and navigating the inevitable challenges inherent in purpose-driven
undertakings. Leaders can achieve this by:

Bridging purpose and performance.

Purpose-driven organizations succeed when their purpose is
authentically aligned with strategy and operations. Different companies
use various tools to encourage this alignment. For instance, Netflix’s
culture deck not only outlines core values like “freedom and
responsibility,” it further integrates these principles into its operational
fabric by measuring employees on these values. For example, they state
“We don’t measure people by how many hours they work or how much
they are in the office” but rather by how much value each employee
brings to members. They also encourage leaders and employees to
“act in Netflix’s best interest” and make decisions based on long-term
impact.

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Highlighting the reality of short-term sacrifices.

True commitment to a mission often necessitates difficult choices, and
acknowledgement about the reality of short-term sacrifices. Leaders
should transparently communicate this, illustrating that trade-offs
often pave the way for long-term sustainable success. LUSH serves as a
testament to this, with their refusal to compromise on their anti-animal
testing stance, even when it meant forgoing the lucrative Chinese
market.

Looking to purpose to guide difficult decisions.

The journey towards a purpose-centric culture won’t always be without
obstacles. Leaders must therefore be agile, reflecting upon setbacks and
recalibrating as needed.

Airbnb’s corporate purpose is “to create a world where anyone can

belong, anywhere.” But that purpose was put to the test when
researchers and users raised questions about racial discrimination on
the platform. When faced with backlash and a lawsuit, the leaders
of Airbnb launched Project Lighthouse, aimed at understanding and
combating racial discrimination on the platform. In collaboration with
civil rights organizations, Airbnb developed measures to track when
and how discrimination occurs, while ensuring privacy standards are
upheld. “Any insights will be used to help develop new features and
policies that create a more equitable experience on our platform and
deliver on our enduring mission of creating greater belonging,” the
company shared on its website, tying the initiative back to its purpose.

Overall, leaders shoulder the responsibility not just of directing their

organizations towards purpose but of enacting it daily. Their actions,
decisions, and communications set the example for the broader
organization, accentuating the importance of purpose in everyday
reality.

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Making Purpose Tangible and Aspirational for Team Members

Employees make a firm purposeful and profitable. It’s essential that

they understand how their specific roles may bolster and tangibly
contribute to the company’s overarching purpose. Therefore, while
team leaders set the tone, for a purpose-driven culture to be deeply
entrenched, team members need wiggling space to autonomously orient
choices toward purpose achievement.

We suggest four core actions for executives to consider to help achieve

the right balance of direction and latitude.

Translating purpose into day-to-day functions.

Employees should see how their daily tasks and responsibilities align
with the company’s purpose. Atlassian’s “Team Playbook” serves as
a paradigmatic example. It’s not merely a guide; it consists of a
collection of resources to hold workshops designed to help teams work
better together. It embodies the company’s ethos, like “open company,
no bullshit” and “build with heart and balance,” offering a tangible
representation of how each employee’s role dovetails with the corporate
purpose and the team’s objectives.

Incorporating team members’ perspectives.

Actively seeking team members’ insights on the complex interplay
between purpose and profitability can foster a sense of inclusivity,
ensuring all team members feel valued and integral to the decision-
making process. A company that engages employees on purpose is
Cisco, which has created a culture of trust, innovation, and giving back.
Cisco encourages employees to pursue their passions, to collaborate
with their peers, and to contribute to causes they care about. By
actively engaging their workforce in discussions on critical themes
like sustainability and diversity and connecting them with actual pain
points in working together in teams, companies can harness grassroots-

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level insights, especially those directly interfacing with markets or

customers.

Finding a balance between purpose-aligned autonomy and defined

decision-making guidelines and principles.
Empowering employees to make decisions in their daily tasks, informed
by the organization’s core values, can spur innovative, customer-centric
solutions. For example, Zappos, an online shoe and clothing retailer
that has a purpose to “deliver happiness,” has trained employees to
have purpose inform choices within their discretion by giving them
the freedom to wow their customers with exceptional service, without
following scripts or policies.

A purpose-driven culture also provides decision-makers and employees

with clear principles and guidelines for taking decisions, especially in
the face of complex or nebulous situations. For example, Starbucks has
a set of detailed guiding principles and commitments that inform its
actions and policies around diversity, equity and inclusion (DEI), which
is core to their purpose. Starbucks has also developed a simple tool that
helps Starbucks employees make better ethical decisions as part of its
standards of business conduct.

Through experimentation and emphasizing of exceptional situations

that employees have tackled, a purpose-driven culture is continuously
reinterpreted, incarnated, and amended both in responses requiring
autonomy as well as for those that require acting by the book.

Offering constructive feedback mechanisms.

To enable continuous growth and alignment with purpose, team
members and leaders should receive feedback on how their decisions
relate to corporate purpose. For example, Spotify, a music streaming
service company that has a purpose to “unlock the potential of human
creativity,” provides feedback and support through agile methods.
Teams are empowered to work autonomously yet collaboratively to

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creatively solve problems and create new products, while artists

and listeners have a platform to express and discover creativity. By
connecting their system of scaling agile delivery to their purpose,
Spotify can foster a culture of innovation and excellence that benefits
both the company and its users.

Overall, ensuring that the corporate purpose isn’t an abstract concept

for teams and their members is crucial. When everyone perceives
their daily tasks as puzzle pieces fitting into a grander purpose, their
engagement, motivation, and alignment with organizational values
invariably surge. All of which nurture a purpose-driven organizational
culture.

Anchoring Purpose through Recognition and Incentives

Recognizing and rewarding purpose-driven behaviors forms the

bedrock of embedding a purpose-driven culture. The challenge lies in
crafting systems that welcome but do not improperly incentivize these
behaviors while consistently echoing the company’s core purpose. In
this context, leaders could start by:

Showcasing real sacrifices for purpose.

Prioritizing purpose, even at the expense of immediate benefits, sends
a compelling message about the depth of a company’s commitment.
Patagonia offers a profound illustration of this. By directly advising
customers against excessive consumption, they’ve underscored their
dedication to sustainability, in addition to their readiness to potentially
sacrifice short-term profits, sparking admiration as well as loyalty
among employees.

Recognizing and celebrating purpose-driven impact.

Employees need to see the ripple effect of their work as aligned with
purpose: how it impacts customers, communities, and society at large.
LUSH has adeptly achieved this. By leveraging multiple communication

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channels, including videos and events, they spotlight their influence

on pivotal issues, from environmental conservation to human rights.
Showcasing purpose-based impact goes hand in hand with highlighting
the success stories of employees. They foster recognition for what’s been
achieved.

Moreover, it’s also about demonstrating alignment between personal

and corporate values making purpose an enacted reality for a
company’s stakeholders. As an example, Salesforce’s “Trailblazer
Stories” isn’t merely a collection of testimonials of successful contracts.
They are inspiring examples of how individuals and organizations
have used Salesforce’s products and services to transform their careers
and businesses, and to make a positive impact on the world. This is
fully aligned Salesforce’s purpose which is “to power the purpose of
organizations of all sizes working to build a better future.” Celebrating
behaviors that mirror company’s purpose instills a sense of pride,
fostering a broader, collaborative environment where employees learn
and iterate based on mutual feedback and by witnessing the positive
impact of their work on their customers.

Integrating purpose into incentive schemes.

Weaving purpose metrics into reward programs ensures that
performance evaluation is holistic, accounting for both business
outcomes and alignment with company ethos. Unilever’s remuneration
and promotion policy stands out, integrating sustainability metrics
with executive compensation. This approach not only underscores the
importance of sustainable practices but also motivates employees to
actively participate in initiatives that resonate with the company’s
larger purpose.

•••

Establishing a purpose-driven organization in today’s shareholder-

focused market requires a deliberate and thoughtful infusion of a

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purpose-centric culture. This involves clear communication of purpose

and requires leaders who actively exemplify the values inherent in
purpose. It’s important to develop both symbolic and monetary reward
systems that underscore and bolster purpose-oriented results.

Advocating for a purposeful approach is indeed a continual journey,

fraught with complexities. It calls for enduring commitment,
adaptability, and resilience. In essence, authentic and well-defined
corporate purpose can serve as a catalyst for enhanced market
positioning, robust and long-term stakeholder trust, effective
collaboration, and strategic resilience, all contributing to sustained
profitability as a powerful means to a higher end cause. Ultimately, the
reward is tangible societal and environmental benefits and substantial
long-term value for shareholders.

This article was originally published online on November 07, 2023.

Rodolphe Durand is the holder of the Joly Family Purposeful

RD Leadership Chair at HEC Paris and the founder and academic
director of the Society and Organizations Institute, which he
launched in 2009

Ioannis Ioannou is an associate professor of strategy and

II entrepreneurship at London Business School. His research focuses
on corporate sustainability and the strategic integration of ESG
issues by companies and capital markets.

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