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Published November 13, 2019 at 07:30 PM

Define Your Core Purpose: Why Does Your Company Exist?

5 min read
5 min read

Key Takeaways

  • A Core Purpose should last at least 100 years, unlike specific goals or business strategies, which should change many times in that span; you can achieve a goal or complete a strategy, but you can never fully fulfill a purpose.
  • Because a Core Purpose can never be fully realized, it works like a guiding star on the horizon, forever pursued but never reached, and that is exactly why it never stops stimulating change and progress in the organization.
  • Do not confuse your Core Purpose with your BHAG; a Big Hairy Audacious Goal is a goal that can be achieved within 10-25 years, while your purpose is never completed.
  • To identify your Core Purpose, use the 5 Whys: start with what you do ("We make X products or deliver Y services"), then ask "Why is that important?" five times, charting the answers until you get down to the fundamental purpose of the organization.
  • A Core Purpose captures the soul of the organization, not just its output or target customers, and reviewing it at every Annual Planning Session keeps the team aligned to a common reason for being.

Your Core Purpose Statement

The right Core Purpose is essential for the purpose-driven organization.

Your Core Purpose (which should last at least 100 years) should not be confused with specific goals or business strategies (which should change many times in 100 years). Whereas you might achieve a goal or complete a strategy, you cannot fulfill a purpose; it is like a guiding star on the horizon—forever pursued but never reached. Yet, although purpose itself does not change, it does inspire change. The very fact that purpose can never be fully realized means that an organization can never stop stimulating change and progress. Don’t confuse your Core Purpose with your BHAG. Your Big Hairy Audacious Goal (BHAG) is a goal that can be achieved within 10-25 years.

 

Why Core Purpose Matters

Your Core Purpose will keep you on track as you make strategic moves, ensuring your team is aligned to a common reason for being.  Review your Core Purpose at every Annual Planning Session to keep it front of mind as you plan another successful year.

Knowing your Core Purpose will enable you to hire and retain the RIGHT people to execute for growth in your business and help you achieve the goals of your 3-year strategic plan (examples).

It doesn’t just describe the organization’s output or target customers; it captures the soul of the organization.  This is literally the company's purpose to be in existence.

 

How to Identify Core Purpose: 5 Whys

  1. Start with WHAT you do. Write the statement on a flip chart or white board: "We make X products or deliver Y services”
  2. Next, ask "WHY is that important?" Write the answer on the flip chart or white board.
  3. Ask the WHY question again and again (5 times - Don’t cheat and stop with 3 whys!), each time brainstorming and charting your answers. 
  4. After a few whys, you’ll find that you’re getting down to the fundamental purpose of the organization.
  5. Review all the different answers to the WHY question with your team, searching for the answer that resonates most, generates some passion, and gets to the heart of your organization's Core Purpose.

Seven Questions to Test & Refine Your Core Purpose

  1. Do you find this purpose personally inspiring, and does it make you feel proud of your company? (yes!)
  2. Can you envision this purpose being as valid 100 years from now as it is today? (yes!)
  3. Does this purpose help you decide which opportunities and activities to say YES to and which ones to say NO to? (yes!)
  4. Is this purpose authentic (not merely words on paper that “sound nice”), and would it be greeted with enthusiasm rather than cynicism by your people? (yes!)
  5. Does it describe your products, services, or customer segment? (no – that’s Brand Promise!)
  6. Is it only about making money? (no – those are targets!)
  7. Is it about achieving specific long-term business goals? (no– that’s a BHAG!)

Learn More About Core Purpose & Defining Your Strategy

Talk to one of our experts today.

Frequently Asked Questions

What is a Core Purpose?

A Core Purpose is your company's fundamental reason for being in existence. It does not just describe the organization's output or target customers; it captures the soul of the organization. It should be valid for at least 100 years, and like a guiding star on the horizon, it is forever pursued but never fully reached.

What is the difference between a Core Purpose and a BHAG?

A BHAG (Big Hairy Audacious Goal) is a goal that can be achieved within 10-25 years. A Core Purpose can never be fulfilled or completed; whereas you might achieve a goal or complete a strategy, purpose is pursued forever. That permanence is a feature: because purpose can never be fully realized, it never stops stimulating change and progress.

How do you identify your company's Core Purpose?

Use the 5 Whys exercise. Start by writing what you do on a flip chart: "We make X products or deliver Y services." Then ask "Why is that important?" and chart the answers. Ask the why question again and again, five times in total, and after a few whys you will find yourself getting down to the fundamental purpose of the organization. Finally, review all the answers with your team and search for the one that resonates most, generates passion, and gets to the heart of your organization's Core Purpose.

How do you know if your Core Purpose is a good one?

Test it with a set of yes and no questions. You should be able to answer yes to these: Is it personally inspiring, and does it make you proud of your company? Can you envision it being as valid 100 years from now? Does it help you decide which opportunities to say yes to and which to say no to? Is it authentic and greeted with enthusiasm rather than cynicism by your people? You should answer no to these: Does it describe your products, services, or customer segment (that is Brand Promise)? Is it only about making money (those are targets)? Is it about achieving specific long-term business goals (that is a BHAG)?

Why does a Core Purpose matter?

Your Core Purpose keeps you on track as you make strategic moves and ensures your team is aligned to a common reason for being. Knowing it enables you to hire and retain the right people to execute for growth and achieve your 3-year strategic plan goals. Review it at every Annual Planning Session to keep it front of mind as you plan the year.
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Patrick Thean
Patrick is an award-winning serial entrepreneur, a WSJ and USA Today bestselling author, CEO Coach, and Co-founder of Rhythm Systems.
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