In recent years, the idea of organizational purpose has captured the imagination of leaders worldwide. CEOs increasingly prioritize purpose as a driver of long-term value, often ranking it above traditional factors like product excellence or technological prowess (Allen, Kerr, Sachs 2023). Amid this evolution, purpose has emerged as a powerful tool for strategic positioning and organizational resilience. Yet, navigating the sea of concepts such as ESG, net-zero, and conscious capitalism often leads to confusion, skepticism, and even backlash. Leaders grapple with questions like: How can purpose drive impact while improving performance? How do organizations embed purpose into their DNA and avoid pitfalls such as greenwashing?

Our recent research published in the Journal of the Academy of Marketing Science (Blocker, Cannon, and Zhang 2024) illuminates these challenges. Through extensive interviews with 33 senior executives across various industries and regions, we developed a comprehensive framework for understanding and implementing purpose. This framework identifies key components and stages that enable organizations to align purpose with societal impact, energize their culture, and drive performance.

This article distills our findings into actionable insights for senior managers and boards. We integrate these novel insights with existing frameworks in this area, such as corporate political responsibility (Lyon et al., 2018) and materiality assessments for ESG initiatives (Garst, Maas, and Suijs 2022). Together, these perspectives create a roadmap for leaders aiming to drive transformational impact through purpose.

The Three Essentials of Purpose

Our research identified three foundational components that underpin a purpose-driven organization: purpose logic, purpose identity, and purpose strategy. Together, these elements form the core of what we refer to as “purpose orientation,” enabling organizations to create transcendent value for stakeholders. Without a solid foundation in these three essentials, purpose initiatives risk stalling, losing credibility, or devolving into empty gestures.

Purpose Logic: The ‘Why’ Behind the Organization

At its core, purpose logic is an enduring ideology that defines the organization’s reason for existence beyond profit. It is the foundation that reconciles tensions between economic goals and societal impact, providing a coherent framework for decision-making. For example, Interface, a global flooring company, achieved success by embedding an environmentally focused ideology into its strategy, making ambitious commitments to sustainability decades before these practices became mainstream.

Purpose logic must transcend short-term pressures to deliver long-term strategic clarity. As Lyon et al. (2018) argue, an expanded approach to corporate political responsibility (CPR) can reinforce this logic, ensuring alignment between public commitments and political actions. Firms that overlook this alignment risk undermining their credibility, both internally and externally.

Purpose Identity: The ‘Who’ of the Organization

Purpose identity highlights the human-centric, relational, and emotional aspects of purpose. This identity fosters deep authenticity, ensuring that purpose resonates with employees, customers, and other stakeholders. Leaders in our study consistently emphasized that purpose initiatives succeed only when employees view them as genuine and aligned with organizational values. For example, Wild Planet Foods has cultivated an identity centered on sustainable fishing practices, which is reflected in both their corporate culture and their public messaging.

Authenticity is crucial in this domain, as highlighted by Garst et al. (2022). Their research on materiality assessments highlights the importance of focusing on “tensioned topics”—issues with significant societal impact that may lack immediate business cases. By addressing such topics, firms showcase an identity committed to meaningful change rather than superficial gains.

Purpose Strategy: The ‘What’ of the Organization

Purpose strategy operationalizes purpose logic and identity into actionable plans. It involves aligning business processes, metrics, and incentives with purpose-driven goals. Unlike traditional CSR efforts, purpose strategy integrates societal considerations into the core of the business model. For instance, Microsoft pursues this approach by embedding sustainability metrics into its operational and financial decision-making processes.

The successful implementation of a purpose strategy requires a careful balance between impact substance (strategic and operational changes aligned with societal goals) and impact signal (communication that shapes stakeholder impressions). Companies that overemphasize signal without substance risk accusations of greenwashing, while those that prioritize substance without signal may fail to garner stakeholder support.

Harmonizing the Essentials

These three components—logic, identity, and strategy—are mutually reinforcing. Leaders must harmonize their development, ensuring that purpose is not relegated to peripheral initiatives but embedded across the organization.

The Four Stages of the Purpose Journey

Leaders who successfully embed purpose into their organizations navigate a progression of stages, each presenting unique challenges and opportunities. Our research identifies four prevalent mental models that firms adopt as they balance impact substance and impact signal: profit-centric, profit-masking, transitional purpose, and deep purpose (See Figure 1). These models reflect differing levels of commitment to societal impact and provide insights into the stages and pathways organizations take toward purpose orientation.

Figure 1: Four types of purpose

Stage 1: Profit-Centric

In this initial stage, organizations operate with a singular focus on maximizing shareholder returns. Societal efforts, when pursued, are limited to compliance or philanthropic activities that do not challenge the firm’s profit-driven orientation. Marketing functions as a profit ally, focusing on driving financial performance and customer acquisition.

For example, one executive in our study considered it foolish for leaders to “regardless of profit, to go after some climate targets,” saying “I’m much more of a capitalist.” This statement is rooted in profit-centric logic. Many firms continue to operate with this mindset, focusing on the shareholder as the primary, if not only, relevant stakeholder.

Stage 2: Profit-Masking

As external pressures mount—whether from consumers, investors, employees, or policymakers—some organizations adopt a profit-masking approach. Here, firms signal their commitment to societal goals through marketing and branding efforts but invest minimally in operational or strategic changes. Purpose becomes a brand ingredient, used to enhance reputation without substantive organizational transformation.

Leaders in our study described this stage as fraught with risks of “purpose-washing.” As one participant noted: “There’s a lot more storytelling. How can we spin this [to]… create the illusion that we are being extraordinarily responsible, and that we are checking all the right boxes?” While such tactics may yield short-term reputational benefits, they risk long-term backlash from increasingly skeptical stakeholders.

After the murder of George Floyd, many companies reacted by creating new programs that highlighted DEI initiatives. However, when pressures arose from other sources, they withdrew from such programs, exposing a lack of authentic impact and substance.

Stage 3: Transitional Purpose

Organizations in this stage start to make meaningful investments in societal impact yet they are cautious about signaling their efforts externally. Leaders recognize the importance of authenticity and focus on internal alignment before promoting their purpose initiatives. Marketing evolves into a change agent, facilitating the cultural and operational shifts needed to integrate purpose into the organization.

For example, Seattle Fish Company undertook a multi-year transformation to align its operations with sustainability goals. Leaders were intentional in avoiding premature communication, recognizing that credibility would come from actions, not promises. This cautious approach allows firms to build trust over time and navigate potential resistance from employees and investors.

Stage 4: Deep Purpose

The final stage, deep purpose, represents the pinnacle of purpose orientation. Organizations at this stage demonstrate high levels of both impact substance and signal, integrating purpose into their logic, identity, and strategy. Marketing functions as a value facilitator, aligning purpose with business impact and societal leadership.

Wild Planet Foods exemplifies deep purpose by embedding sustainability into every aspect of its operations, from sourcing practices to employee engagement. These organizations view purpose not as an ancillary effort but as their core raison d’être. Leaders at this stage often speak openly about their desire to transform their industries, recognizing that purpose-driven strategies yield enduring competitive advantages.

Navigating the Journey

The transition between stages is rarely linear. Organizations encounter barriers like accusations of purpose-washing, cultural inertia, and investor resistance. For instance, firms that try to jump directly from profit-masking to deep purpose often struggle to overcome internal misalignment or external skepticism.

To succeed, leaders must evaluate their organization’s readiness and choose pathways that align with their culture, history, and strategic priorities. Firms like Zappos have demonstrated the importance of cautious yet authentic progression, embedding purpose gradually while maintaining alignment with stakeholder expectations.

How to Achieve Purpose Orientation and Its Rewards

Purpose orientation requires a deliberate, multi-faceted approach that integrates a clear purpose into every aspect of the organization. The focus is on how companies can align purpose with their operations, culture, and strategy to create sustainable impact and competitive advantage.

Purpose Activation: Inside-Out, Top-Down, and Bottom-Up

Organizations that effectively activate purpose do so through a comprehensive alignment of internal and external elements.

1. Inside-out alignment

   Purpose starts from within the organization by aligning internal culture and strategic focus with broader societal goals. Leaders emphasized that authentic purpose must resonate internally before it can be effectively communicated externally. Without internal alignment, purpose-driven initiatives risk appearing superficial. For example, one global manufacturing firm redesigned its onboarding process to emphasize sustainability, ensuring new hires understood their role in contributing to environmental goals. Industries under scrutiny, such as energy and consumer goods, often used workshops and employee-driven initiatives to foster ownership and accountability.

2. Top-down leadership

   Leadership commitment is essential to embedding purpose into the organization’s DNA. Senior executives play a crucial role by setting the tone and integrating purpose into decision-making. For example, one technology firm that we interacted with restructured executive incentives to tie bonuses to sustainability and diversity goals. Leaders stressed the importance of transparency and consistency, noting that steadfast commitment to purpose, even while under financial pressure, boosts credibility.

3. Bottom-up engagement

   While leadership sets the vision, employees bring purpose to life through their daily decisions. Engaging employees ensures that purpose permeates the organization. For example, a food and beverage company encouraged employees to propose sustainability initiatives, creating shared ownership. Another firm highlighted purpose through employee storytelling, showcasing how individuals contribute to societal impact.

Turning Purpose Into Action

To shift from intention to impact, organizations must translate purpose into concrete actions and measurable outcomes. This involves changes to metrics, processes, and stakeholder engagement.

1. Redefining metrics and incentives

   Traditional metrics often fail to capture purpose-driven impact. Many firms have developed frameworks that track economic, social, and environmental dimensions. For instance, some tie executive compensation to purpose outcomes, ensuring alignment with organizational goals.

2. Aligning business processes

   Purpose-driven impact requires embedding purpose into core processes. For example, one firm redesigned its product lifecycle around circular economy principles, while another tailored financial services to underserved populations, aligning operations with their societal goals.

3. Building external partnerships

   Collaboration with stakeholders amplifies purpose-driven initiatives. For example, partnerships with local farmers and NGOs can promote sustainable practices and reinforced shared value creation.

Evolving Marketing’s Role

Our research indicates that marketing in purpose-oriented firms becomes a facilitator of purpose – it shifts from brand communication to strategic alignment, ensuring alignment among stakeholders and driving both internal and external engagement:

• Educating employees about the organization’s purpose through internal campaigns.
• Building external trust by openly sharing progress and success stories.
• Driving innovation by aligning products and services with customer values.

Rewards of Purpose Orientation

Organizations that successfully achieve purpose orientation benefit in multiple ways:

1. Enhanced employee engagement and retention

   Purpose-driven companies cultivate stronger connections with their employees, leading to greater satisfaction, retention, and productivity. Our study revealed that employees in purpose-oriented firms often feel a greater sense of pride and belonging, which contributes to improved morale and productivity.

2. Increased customer loyalty and brand reputation

   Authentic purpose resonates with customers, building trust and loyalty. Firms that consistently deliver on their purpose-driven promises differentiate themselves in competitive markets and enhance their brand equity.

3. Long-term profitability and competitive differentiation

   Purpose-driven strategies align societal impact with financial performance, creating sustainable competitive advantages. Companies that integrate purpose into their core strategy often achieve higher profitability and market share over time.

4. Leadership in addressing global challenges

   Purpose-oriented firms position themselves as leaders in tackling pressing societal issues, from climate change to social inequality. This leadership not only enhances their reputation but also contributes to broader systemic change.

Developing a Purpose-Oriented Strategy: Overcoming Challenges and Building Momentum

Creating a purpose-oriented strategy requires organizations to move beyond isolated initiatives toward embedding purpose into their core strategic frameworks. This section explores the typical challenges firms face in their purpose journeys and provides actionable guidance for generating momentum

Overcoming Common Challenges

Organizations pursuing purpose often encounter significant internal and external barriers. These challenges can derail progress if not addressed strategically.

1. Resistance from internal stakeholders

   A recurring theme in our study was the hesitation or skepticism among employees and middle managers when leadership introduced purpose-driven changes. These individuals may perceive purpose initiatives as distractions from core business priorities or as misaligned with traditional performance metrics.

   Solution: Addressing this resistance involves clear communication and alignment. Firms in our study successfully overcame internal skepticism by involving employees early in the purpose development process. For example, one organization conducted workshops to co-create purpose statements, ensuring that employees felt a sense of ownership and alignment.

2. Investor skepticism

   Purpose-driven initiatives often require investments with long-term payoffs, which can lead to pushback from investors who prioritize short-term returns. This tension was highlighted by participants who faced challenges justifying purpose-aligned expenditures to financially driven stakeholders.

   Solution: Firms can alleviate investor concerns by tying purpose to measurable business outcomes, such as customer loyalty, brand equity, employee and risk mitigation. For instance, a consumer goods executive mentioned how their investments in sustainable sourcing reduced supply chain risks, enhancing investor confidence in the strategy.

3. Accusations of purpose-washing Companies that fail to align their actions with their stated purpose risk accusations of greenwashing or purpose-washing. This challenge is particularly acute for firms in highly visible industries, where stakeholders scrutinize their every move.

   Solution: Transparency and consistency are key. Participants in our study emphasized the importance of demonstrating impact through tangible actions, such as publishing detailed progress reports and engaging independent third-party auditors to validate claims.

Building momentum

1. Assessing organizational readiness Before embarking on a purpose journey, firms must evaluate their existing culture, structure, and history to identify potential enablers and barriers. This step helps organizations choose the right starting point and set realistic goals. For example, consumer goods firm we interviewed conducted a purpose audit, assessing its readiness across dimensions such as employee engagement, stakeholder expectations, and current capabilities. This assessment informed the development of a tailored purpose strategy.
2. Reconciling paradoxical tensions Purpose often requires balancing conflicting priorities, such as profit maximization versus long-term societal impact. Companies navigated these tensions by embedding purpose into their decision-making frameworks, ensuring that trade-offs were managed strategically.
3. Leveraging quick wins Firms can build momentum by identifying and pursuing quick wins—small, impactful initiatives that demonstrate the value of purpose to stakeholders. For instance, a technology company launched a sustainability initiative focused on reducing energy consumption in its offices, yielding immediate cost savings and reinforcing its commitment to environmental goals.
4. Aligning purpose with financial performance Purpose-driven firms align their strategic goals with measurable outcomes, ensuring that purpose contributes directly to business performance. This alignment requires integrating purpose into key metrics, operational plans, and performance evaluations. For instance, firms can develop purpose-driven scorecards that include metrics like employee well-being, customer satisfaction, and environmental impact alongside financial performance.
5. Integrating purpose into leadership development Leadership buy-in is critical to maintaining momentum in purpose-driven strategies. Several organizations in our study incorporated purpose into their leadership development programs, ensuring that a pipeline of purpose-oriented leaders would sustain momentum across the organization.

Conclusion

Purpose orientation represents a transformative shift in how organizations define their role in society, moving beyond profit-centric models to create enduring value for stakeholders. It is not just an initiative or trend—it is a strategic imperative that demands commitment, alignment, and action across every level of the organization. Companies that successfully embed purpose into core operations not only enhance their societal impact but also position themselves for sustainable growth and competitive differentiation in an increasingly values-driven market.

The path to purpose is not without challenges, from internal resistance to external scrutiny. However, organizations that approach this journey with authenticity, transparency, and strategic intent can overcome these hurdles. By aligning purpose with organizational logic, identity, and strategy, firms can unlock the potential of their people, foster stronger relationships with stakeholders, and drive meaningful change in their industries. The key is for leaders to approach purpose as a long-term commitment, integrating it into their business models and decision-making processes to benefit both societal and financial outcomes.

Ultimately, purpose orientation redefines leadership in the modern era. By embracing purpose as a guiding principle, organizations can transcend traditional boundaries, tackle global challenges, and create a legacy of impact and innovation. For leaders, the question is not whether to pursue purpose but how to chart a path that aligns their unique strengths with the needs of a rapidly evolving world.

References

David Allen, Joanne Kerr, MaryLee Sachs, CEO purpose report 2023, Brandpie (2023) Accessed 11/4/2023.

Christopher P. Blocker, Joseph P. Cannon, and Jonathan Z. Zhang, “Purpose orientation: An emerging theory transforming business for a better world,” Journal of the Academy of Marketing Science (2024): 1-27.

Jilde Garst, Karen Maas, and Jeroen Suijs, “Materiality assessment is an art, not a science: Selecting ESG topics for sustainability reports,” California Management Review 65/1 (2022): 64-90.

Thomas P. Lyon, Magali A. Delmas, John W. Maxwell, Pratima Bansal, Mireille Chiroleu-Assouline, Patricia Crifo, Rodolphe Durand et al, “CSR needs CPR: Corporate sustainability and politics,” California Management Review 60/4 (2018): 5-24.