Purpose’s Double-Edged Sword

Best-selling author Dan Goleman explains why purpose can make an organization healthier only if it’s done credibly. 

Daniel Goleman is author of the international best-seller Emotional Intelligence and of the forthcoming Optimal: How to Sustain Personal and Organizational Excellence Every Day. He is a regular contributor to Korn Ferry. 

When companies started taking purpose more seriously, social and environmental impact was a focus. This was before sustainability was on the consumer radar and before there was much of a marketing incentive to call oneself an eco-conscious company.

Fast forward, and purpose is moving toward becoming a hallmark of “good business.” But as purpose has risen in popularity, so have corporate practices like greenwashing, the act of conveying false or misleading information about a company’s environmental footprint. In 2021, a review of online sustainability claims in the EU revealed that 42% involved greenwashing in the form of false, deceptive, or exaggerated claims – claims that could potentially qualify as unfair commercial practices under EU rules. When EU authorities looked at the claims in more detail, they found they often had one thing in common: vague language or general statements using buzzwords such as “conscious,” “eco-friendly,” or “sustainable,” all of which aimed to convince consumers that a product had no negative impact on the environment.

Of course, such deception has been a long-standing issue in marketing. The beneficial question isn’t “Why would a brand make claims that aren’t true?” but “What is in the way of purpose becoming an essential part of how companies do business?”

One answer could be organizational health – a term used to describe a company's ability to work productively and positively toward a shared goal or mission. According to new research, organizational health is both the strongest predictor of value creation and a company’s ability to be competitive over time. In one evaluation, looking at 1,500 companies in 100 countries, firms that had improved their organizational health saw their EBITDA (earnings before interest, taxes, depreciation, and amortization) increase 18% after one year.

As many seasoned leaders know, embracing purpose goes well beyond marketing– it’s a fundamentally different way of making decisions. The same things that go under the definition of organizational health are what make for success in any kind of company: decisive leadership, clear goals, a well-articulated mission, and engaged employees who are willing to innovate and embrace change.

Late last year the CEO of a prominent firm caught people’s attention when he said that purpose in the marketplace wasn’t going to be helped by force-fitting it into every brand. That statement was a marked shift from the philosophy with his predecessor, who wanted to emphasize the sustainability efforts of all of the company’s products.

While the CEO agrees with his predecessor that brand purpose can be highly effective when done well and with credibility, he believes the firm might be better served if it stopped trying to make every product line in their portfolio so rife with meaning.

This shift in focus may be a useful model for leaders looking to be purpose centered. If leaders can focus less on marketing and more on organizational health, then their mission might actually be more achievable.

Experts in organizational health say leaders should ask themselves, “How do I run the place each and every day—in each and every meeting—in ways that are both healthy and conducive to creating high performance?”

Were experts in corporate purpose to advise leaders, their mandate might be similar: “How do I run the place each and every day—in each and every meeting—in ways that are conducive to bettering the world?”

Co-written by Elizabeth Solomon


Click here to learn more about Daniel Goleman's Building Blocks of Emotional Intelligence.