
Put purpose at the core of strategy

Competition for new growth and opportunity is fierce and relentless. In this fight, business leaders are often left puzzled as to why their strategies, the result of arduous planning and painstaking research, struggle to beat expectations and differentiate their company in the marketplace.
Most corporate strategy today suffers from three faults. It is too internally focused – we are obsessed with how we operate on a day-to-day basis. It is incremental – let’s take last year’s results and see if we can improve on that by 2-3% next year. And, finally, it is reactive – when we see a problem or an opportunity, we react with knee-jerk initiatives. It is easy to see why this approach leads to unfulfilled visions, sluggish performance and uninspired teams.
How can companies become more focused on the outside world and its opportunities? How can we take big leaps rather than small steps? How do we become proactive and ready to lead our industries?
Our research has found that the answer is – Purpose.
Putting purpose at the core of corporate strategy is a critical driver of growth, profitability and organizational relevance. To achieve this, purpose must play two distinct roles to: (1) redefine the playing field – beyond traditional boundaries to grow and transform the ecosystem, and (2) redesign the value proposition – beyond transactions to foster deep and wide customer relationships that endure.
Redefining the playing field enables companies to avoid market share battles and pursue growth with the logic, “we grow by growing the ecosystem.”
Consider the case of US-based Mars Petcare. Its purpose of creating “A Better World for Pets” provided impetus for it to extend its ecosystem from pet food to pet health and pet care. It invested in systematic acquisitions of several veterinary hospital chains in the US to become the largest American veterinary operator. Significant synergies soon emerged between the food and pet health businesses. The company now seeks to grow by enabling wider pet ownership, making it a seamless, convenient and fun experience. All these moves have contributed to Mars Petcare becoming Mars Inc.’s largest as well as fastest-growing business segment.

Reshaping the value proposition – the second role of purpose – requires building compelling relationships, which complements the strategy of growing the ecosystem. Purpose driven organizations re-evaluate their value proposition and keep evolving it to remain relevant as customers’ expectations change in line with industry trends or as different explicit and implicit needs emerge.
India’s Mahindra Finance, which provides vehicle finance for tractors and utility vehicles to rural customers, leveraged its purpose of “RISE” to repeatedly broaden its value proposition. It mapped customers’ pain points across their lifetime and launched new value propositions such as insurance broking services (for vehicles, life and health), housing finance, SME finance and asset management. Notwithstanding the many challenges of serving the rural market, the company not only strengthened its customer relationships but also secured new revenue streams and profits, to become India’s largest rural non-banking financial company catering to over 50 percent of the market and 6 million customers.

Our take on the role of purpose counters the typical perspective of most organizations and managers, i.e. purpose is peripheral to strategy used only to drive corporate social responsibility, philanthropy and sustainability initiatives or purpose is just one component of the total strategy where it is used to create shared value and inclusive growth.
We argue that the role of purpose must shift from the periphery to the core of strategy. Articulating a compelling purpose and following it through with leadership commitment and financial investment, can be used to shape a sustainable profitable growth strategy. Beyond that, purpose becomes an exceptionally powerful tool that brings three specific benefits – it unifies the organization, motivates stakeholders and creates wide ranging impact.
You must ask why does your company exist? What is its impact on society? Why should people want to work for you? In today’s world, the answers to these questions cannot just be money. Companies must recognize they have a bigger role to play, and that they can transform the world around them.
Read more about IMD’s research into unlocking corporate purpose published in the latest HBR edition here.
Thomas W. Malnight is Professor of Strategy and General Management at IMD.
Research Information & Knowledge Hub for additional information on IMD publications

#post_excerptHannele Jakosuo-Jansson of Neste and Finnair shared key insights on board roles in CEO transitions and culture shifts with IMD’s High Performance Boards program.

An intelligent organizational sensory system detects, processes, and acts on change signals, giving your company a strong competitive edge.

Three Ways to Deal with Your Boss when they act against civility, empathy, and ethics. Discover strategies to handle difficult workplace dynamics effectively.

Six ways leaders can shape corporate reputation building strategies within their organizations, drawing on key insights from a Bloomberg Media study.

To navigate a turbulent business environment, CEOs must understand their landscape and align leadership thinking priorities, advises IMD’s Michael Watkins.
Case B describes the unprecedented challenges faced by CO-RO in 2020. The implementation of the sugar tax in its largest Middle Eastern market led to a near 50% volume drop in CO-RO’s sales, and Covid-19 lockdowns impacted the Asia-Pacific (APAC) ...
The CO-RO Group is a manufacturer of fruit-based still drinks, concentrates and ambient ice (home-freeze popsicles) headquartered in Denmark. Although production takes place in Denmark, most of its products are sold internationally, with the compa...
The case explores TBC Bank Group’s remarkable journey from a small Georgian bank to a regional leader in digital financial services across Central Asia. Founded in 1992 with just US$500 in initial capital, TBC evolved into Georgia’s largest financ...
The board of Nestlé S.A. announced that Anna Mohl would become the CEO of Nestlé Health Science (NHSc) — a global leader in nutritional science — on 1 January 2024. She was delighted to hear about her new position but knew there was little time to...

Gone are the days of the loyal company man or woman. Today’s workforce often includes a mix of freelancers, agency temps, and outside contractors. Here are four work models to keep these disparate elements happy and motivated.
Research Information & Knowledge Hub for additional information on IMD publications
Research Information & Knowledge Hub for additional information on IMD publications
Research Information & Knowledge Hub for additional information on IMD publications
in I by IMD
Research Information & Knowledge Hub for additional information on IMD publications
Research Information & Knowledge Hub for additional information on IMD publications
Research Information & Knowledge Hub for additional information on IMD publications
Research Information & Knowledge Hub for additional information on IMD publications
Research Information & Knowledge Hub for additional information on IMD publications
Case reference: IMD-7-2636 ©2025
Research Information & Knowledge Hub for additional information on IMD publications
in I by IMD 5 February 2025
Research Information & Knowledge Hub for additional information on IMD publications