Inspiring Principles

The purpose between relationship and innovation: rediscovering the deeper meaning of doing business

An ethical and motivational guide for companies, which can generate tangible and intangible benefits for the company

by Luca Brambilla* and Federico Frattini**.

4' min read

4' min read

In the world of management the concept of purpose is hardly new. First appearing in 1957, it fell into oblivion in the late 1960s and early 1970s when management theory was heavily influenced by Milton Friedman's Shareholder Theory.

A vision, the latter, according to which 'the only social responsibility of a company is to maximise profits for its shareholders, within the rules of the game'.

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Various factors, including the Covid-19, have contributed to renewed interest in dimensions of business activity that go beyond mere profit, bringing purpose back to the centre of the debate.

So much so that all major consulting firms have developed tools and practices to support their corporate clients in identifying and realising their own purpose.

Take for instance BCG, which a few years ago acquired BrightHouse, a company founded by J. Reiman among the first with a strong specialisation on the subject.

Academic research has also dedicated itself to studying this phenomenon and its impact on organisational performance, as evidenced by the numerous scientific articles published in recent years in leading management journals.

As is often the case, when a topic becomes overblown, one risks losing sight of its original meaning. So much so, for example, that the equation purpose = sustainability has become widespread: a reduction that trivialises its powerful content.

What, then, is the true meaning of purpose in the organisational context?

It can be defined as ashared understanding of the ultimate meaning of the actions undertaken by the company, which goes beyond the technical and economic results inherent in its economic nature (turnover, profits, shareholder value). It therefore has to do with the ultimate reason why the organisation exists.

The most appropriate translation of this term is probably 'purpose', in the Latin sense proposĭtum, meaning 'that which is placed before'. Purpose is what is deliberately placed before everything, a compass that orients actions, even on a moral level, and creates a shared meaning between people. An emblematic example is Disney, whose purpose - 'to spread happiness' - represents an extremely expansive ideal, capable of inspiring a process of continuous innovation.

A noble principle that risks remaining in an abstract dimension if not declined operationally. It is 'purpose-washing', an empty slogan on the company website decrying a raison d'être that is as enlightening as it is devoid of real impact. True purpose-driven companies do not simply define their purpose, but construct a congruence between what, how and why.

The what is about what the company offers to customers. Sometimes recognising and discovering a new purpose can lead to innovation in the products or services offered. This is the case ofMoleskine, which has long identified itself not as a company that produces notebooks, but as an organisation that contributes to the dissemination of culture, knowledge and creativity. A purpose that has led it to innovate its offer in the fields of digital apps, cafés, and travel accessories. Similarly, if the purpose ofMicrosoft had not evolved into the ambition to 'help every individual and every organisation achieve their best', it would hardly have innovated its business model by creating a platform capable of democratising access to AI.

The how refers to the way an organisation operates: from leadership models to performance evaluation criteria to the internal organisation of processes. If the why refers to the ethical dimension - the morals on which actions are based - the how approaches aesthetics, i.e. the way in which actions are managed and thus perceived externally.

Gary Lubner, former CEO of Belron (present in Italy under the Carglass brand), has been able to transform a seemingly simple service - the repair of car windows - into a gesture of care towards the customer in a stressful situation. This attention to aesthetics has led to a doubling of turnover in the space of a decade.

Only companies that are able to build a truly expansive, ambitious, long-term purpose, aligned with the how and the what, succeed in generating concrete benefits for their shareholders as well. Numerous studies report that purpose-driven organisations have in the medium to long term better financial performance, increase customer loyalty and talent attraction, develop a stronger corporate culture and generate greater employee well-being. In other words, they know how to create a positive impact both for shareholders and for the entire social, economic and environmental ecosystem. Purpose is a powerful motivational lever, especially for the younger generations who are looking not so much for a place to work but for a platform of meaning that allows them to care about what they believe in.

For purpose to be effective, it must be co-designed. The participatory nature of the process leading to its creation is inherent in the very concept of purpose: if imposed it is limiting, and however inspiring in form, it risks remaining inapplicable in substance. This is why the connection between personal relationships and purpose is foundational.

Reflecting on the deeper meaning of one's actions not only steers the direction in which the company is heading, but also helps to build a fertile environment for authentic relationships. Relationships that, in turn, are the ideal breeding ground forinnovation to flourish. An idea, this one, well expressed in the book Innovationship (B. Buono, F. Frattini), in which it is highlighted how innovative processes can become more effective if nourished by the relational capital of the organisation and of the professionals who guide innovative projects.

Within companies, people are used to communicating in terms of what and how, but it is only through sharing the why that a deep connection is created capable of generating meaning, inspiration and belonging. And it is precisely from this connection that a new vision of work is born, no longer understood as a mere activity, but as participation in a greater design. These are the most intangible and at the same time most concrete impacts of purpose in organisations.

*Director of the Academy of Strategic Communication .

**Dean POLIMI Graduate School of Management

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