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What is Purpose-Driven Leadership?

and Emily Herrington

March 5, 2021

Updated Dec. 20, 2021

What is Purpose-Driven Leadership?

Over the last few years, a new and meaningful trend has emerged in the business community: a move towards more impactful, purpose-driven leadership. It used to be that business leaders were relied on simply for the business' bottom line. Leaders were only considered good if the business they ran was making a profit. If it wasn't, then they weren't good leaders. However, all that is changing. 

Today, a good leader does more than lead their company to a profitable quarter. They are required to be exemplary and nothing short of the personification of a company's value system, morals and purpose. It is this last point, the purpose, that truly makes or breaks your organization.

What is purpose-driven leadership?

Before we define purpose-driven leadership, let’s take a few steps back and dig into brand purpose and purpose-driven brands. The brand’s purpose refers to its reason for existing, beyond monetary gain. As Simon Sinek famously described in his TED Talk, this is why you do what you do. 

For example, REI sells sporting goods, camping gear, equipment, clothing, and other outdoors-oriented products. Selling sports goods isn’t their mission or purpose, though. REI’s purpose is to “awaken a lifelong love of the outdoors, for all.” This is why they do what they do. 

Purpose-driven brands make conscious efforts throughout all of their actions and decisions to adhere to their core mission. Purpose-driven leadership is similar. 

Purpose-driven leadership is when a leader prioritizes their purpose and values over anything else when making decisions on behalf of the business. 

Purpose-driven leaders, be they CEOs or mid-level managers, are responsible for leading their organizations through decisions and innovations supportive of their core purposes, values and strengths. If you know your purpose as a leader and what you bring to the table, that becomes a guiding compass for your organization. 

Sharing your purpose with your team and the values that you uphold in pursuit of your purpose will materialize the organization's values in your employees. This would positively impact the organization's culture in the long term leading to more ethical and meaningful business and increased engagement from your employees. 

That being said, very few leaders today know what their purpose is in the organization. According to the Harvard Business Review, it’s only 20 percent.

Why so many leaders don’t know their purpose

Many professionals don’t possess enough self-awareness, that is, the ability for an individual to know what their inner world looks like. What are their drivers, and how do they respond to internal and external stimuli? Knowing this about yourself as a leader makes it much easier for others to follow you and to do what you ask of them, no matter how taxing it may be. 

Self-awareness is the difference between a reactive and a proactive leader. It is the difference between a leader who knows why they are there and what is required of them and one who thinks all they are there for is to marshal everyone into the black. 

For you to be a purpose-driven leader, you need to have some level of self-awareness. It is only through self-awareness that you may know your values and how they align with the company's values. Once you know your values and purpose, it is easy to communicate them with the rest of your team and lead by them. Not only will you make your team better employees, but you will make them better human beings, too. 

Why purposeful leaders and organizations thrive

It’s simply not enough to sell a great product or exist to be profitable. Today’s consumers and employees want to be connected to organizations that are making a positive impact on society. They want to represent and be represented by brands with which they have shared values. 

Being purpose-driven is good for business. On the internal end, purposeful organizations are motivating and fulfilling to work for. This helps with employee engagement, retention, and overall happiness. Externally, having a purpose leads to increased customer loyalty and word-of-mouth recommendations, as well as giving the organization a competitive edge. 

Today’s consumers care about how organizations treat their employees, environment, and communities, and will boycott brands that don’t adhere with their expectations.

How to be a purpose-driven leader

In addition to being self-aware, to be a purpose-driven leader, you must: 

  • Be able to zoom out and look at the big picture. A leader who is too caught up in the details will likely be hyper-focused on the day-to-day instead of working towards the bigger, motivating purpose, like how your actions make a difference in the world. 
  • Mentor and coach your team to help them grow and be the best they can be.
  • Motivate your team to rally around and embrace the organizational purpose while helping them connect that to their personal purpose.  
  • Have strong relational skills and be able to build meaningful interpersonal connections with employees, members, customers, vendors, and other parties. 
  • Be flexible and understand that acting with purpose isn’t always a clear-cut path. Be prepared to pivot and make adjustments along the way. 
  • Be prepared to make all decisions with the purpose in mind. For example, this might mean spending more money on conference swag from a sustainable brand because part of your association’s mission is to make the world a better place. Cheap trinkets wouldn’t align with that brand purpose. 

What is a good purpose-driven leadership example?

In 2014, CVS announced that they would stop selling cigarettes and other tobacco products across America as CVS CEO, Larry J. Merlo, did not believe that selling tobacco products aligned with the company's identity and purpose as a health partner to their clients. At the time, CVS was making over two billion dollars in annual revenue from tobacco sales across its seven thousand stores. 

While that decision was dismissed by many at the time, today, it is thought of as a significant turning point in CVS's journey towards understanding its purpose. Because how can a company claiming to be all about its clients' health sell them cigarettes? 

Today CVS enjoys a much better relationship with its clients, built on trust and a shared understanding of the business' values and purpose in its clients' lives. This has resulted in high customer loyalty and employee engagement for the company. 

A recent example of purpose-driven leadership is the cosmetic brand Lush’s decision to shut down its social media accounts after whistleblowers called out the harm caused by Facebook and Instagram. The CEO told The Guardian, “We’re talking about suicide here, not spots or whether someone should dye their hair blonde,” he says. “How could we possibly suggest we’re a caring business if we look at that and don’t care?”

This is what leading with purpose looks like — making difficult decisions to put the greater purpose above profits. 

Conclusion

As leaders, it is important to keep your core purpose close and only act in ways that will benefit and highlight your organization’s values. Learn from organizations like CVS and Lush and adopt your own purpose-driven strategies to lead your organizations into success.

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and Emily Herrington

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