The purpose of “purpose”

It’s the buzzword of the year, but discussions about purpose require rigor to make them meaningful.

If 2020 was all about crises—the pandemic and the outrage in the wake of George Floyd’s murder, to name two—and companies’ resilience and ability to navigate disruption, 2021 feels like it has been the year of “purpose.” Companies are issuing purpose statements with great fanfare, and the phrase purpose-driven company is so ubiquitous that it risks joining the ranks of strategic and going forward—words and phrases that are added almost reflexively to every sentence of corporate-speak.

There are plenty of reasons for the big push for purpose. As part of the shift from shareholder to stakeholder capitalism, employees are demanding that their work, and their employers, stand for something. The pandemic made many people reflect more on the “why” of their jobs, and their unsatisfying answers have led in part to the “great resignation.” To win the war for talent, companies are focusing their recruiting pitches on goals and ambitions that are loftier than simply making money for investors.

Recent comments from General Electric CEO Larry Culp about the company’s historic decision to break up the conglomerate into three separate companies echoed this emphasis on purpose. Increasingly, recruiting and retaining talent relies more on the power of a company’s brand, Culp told Fortune. “It’s about position and purpose,” he said. “There was a point in time when people said, ‘I want to work for GE.’ Today, people are more focused on addressing climate, or being in healthcare, or in aviation.”

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The ExCo Group’s Adam Bryant wrote this article for his column in Strategy + Business.