The Uncomfortable Truth About Corporate Purpose


Many businesses now claim to be purpose-led. Far fewer are aligned with purpose, and some may never be capable of it.

The image accompanying this article is a striking metaphor for the state of corporate purpose today. Two opposing forces pull in opposite directions, with the word ‘purpose’ stretched between them like a rope in a tug of war. That tension captures something many leaders instinctively recognise but rarely articulate. In most organisations, purpose is not absent; it is contested. It exists in a constant struggle between competing priorities, competing incentives and, ultimately, competing beliefs about what business is for.

Over the past decade, purpose has moved from the periphery of corporate conversation to its centre. Boardrooms discuss it. Leadership teams workshop it. Annual reports promote it. Recruitment campaigns lean heavily on it. Almost every major organisation now seems keen to demonstrate that it exists for something more meaningful than the pursuit of profit alone.

This shift is not imaginary, nor is it insignificant. The best available data suggests that the move toward purpose-led business has been underway for several years. In 2020, McKinsey found that 62% of organisations claimed to have a formal purpose statement, yet only 42% believed that purpose meaningfully influenced decisions or outcomes. Given the acceleration in ESG, stakeholder capitalism and governance reform since then, the number of organisations articulating purpose has almost certainly increased. What is far less clear, and far more doubtful, is whether the number genuinely governed by purpose has grown at anything like the same pace.

My own sense, based on more than two decades of working with organisations around the world, is that genuinely purpose-driven organisations remain relatively rare. If the benchmark is not simply having a purpose statement, or even claiming that purpose influences decisions, but being truly aligned and governed by purpose, then the proportion of organisations that currently qualify is probably closer to five to ten percent.

And yet the direction of travel is clear.

Why now? Partly because the world is changing. Trust in institutions has declined. Public frustration with inequality, short-termism and extractive capitalism has grown. Climate risk has moved from abstract concern to lived reality. Populism, polarisation and corporate greed have created a growing sense that something fundamental in the relationship between business and society is broken. Against this backdrop, purpose has emerged as both response and remedy — a recognition that business cannot sustainably prosper in a failing society.

But this is precisely where the first uncomfortable truth appears. Most organisations that adopt purpose never truly align themselves with it.

The reason is simple, though often overlooked: there is a profound difference between ‘having a purpose statement’ and ‘being organised around purpose’.

The former is relatively easy. With sufficient time, budget and facilitation, almost any executive team can craft a purpose statement that sounds inspiring, socially aware and commercially sensible. The latter is considerably harder because it demands change — not in language, but in behaviour.

Purpose only becomes real when it influences difficult decisions. It becomes real when leadership teams must navigate trade-offs between short-term financial performance and long-term value creation. It becomes real when revenue opportunities conflict with stated values. It becomes real when incentive structures need redesigning, governance models need rethinking, and leaders must accept that some profitable activities may no longer be compatible with who they claim to be.

This is why purpose, by itself, changes nothing. What matters is alignment.

Strategy must align with purpose. Culture must align with purpose. Incentives, behaviours, systems, governance and measurement must all align with purpose. Without this alignment, purpose remains little more than carefully managed theatre. Cosmetically attractive to customers, employees and investors perhaps, but largely disconnected from the way the organisation actually functions.

This is the problem with so much corporate purpose today. It often sits above the organisation rather than within it. It inspires presentations while leaving power structures untouched.

A business may declare that it exists to improve customer wellbeing while rewarding employees almost entirely on quarterly sales targets. It may commit to sustainability while continuing to allocate capital toward environmentally destructive activities. It may champion human flourishing while promoting internal cultures built on fear, burnout and aggressive competition. In such circumstances, purpose is not acting as an organising principle. It is acting as decoration.

This brings us to the second, and more uncomfortable truth.

Perhaps the challenge is not always one of execution. Perhaps some businesses are structurally incapable of becoming genuinely purpose-driven.

This is where the debate becomes particularly interesting. A common counterargument is that every organisation has a purpose because every organisation exists to do something. By this logic, purpose is universal. Even criminal enterprises have objectives, intent and direction.

At one level, that argument is correct. But it also renders the concept almost meaningless.

A cartel has purpose. A scam operation has purpose. A weapons trafficker has purpose. If purpose simply means intent, then the word loses all useful distinction. It becomes nothing more than a synonym for objective.

This is precisely why the International Organization for Standardization ISO 37011 – Guidance for the Governance of Organizations by Purpose, due for publication later this year, matters so much. It helps clarify what purpose actually means in a governance context.

Under ISO 37011, purpose is not simply about having an objective or ambition. It is about an organisation’s ‘reason for being’, expressed through the value it creates for stakeholders and society. That distinction is critical because it moves purpose beyond intent and into the realm of legitimacy.

In other words, purpose is not merely about what an organisation seeks to achieve. It is about whether the organisation’s existence creates genuine value beyond shareholder returns. Once viewed through this lens, another uncomfortable truth becomes hard to ignore.

Not every business model is inherently compatible with purpose as a force for societal value creation.

That sentence may unsettle those who believe purpose is universally available to all businesses, but it deserves serious consideration.

Consider industries whose economic models depend heavily on addiction, deception, exploitation or engineered dependency. Tobacco remains the clearest example. A tobacco company can improve governance, reduce emissions, invest in harm reduction products and articulate a sophisticated purpose statement. But if its core economic engine remains dependent on selling addictive products known to damage human health, there is an unavoidable contradiction at the heart of the business model.

The same question increasingly applies to certain parts of the gambling sector, exploitative payday lending, and even aspects of social media whose economics depend on monetising attention through outrage, addiction and division. Likewise, parts of the fossil fuel industry now face a difficult tension. Major oil companies frequently speak of powering a sustainable future, yet in many cases continue allocating the vast majority of capital expenditure toward hydrocarbon extraction. That does not automatically invalidate their intentions, but it does raise a legitimate question — when capital allocation tells a different story from corporate rhetoric, which should we believe?

Usually, the money.

That is not to say such businesses cannot improve. Many can and should become more responsible. Harm can be reduced. Practices can evolve. But becoming more responsible is not necessarily the same as becoming purpose-driven. Unless the underlying economics change, the contradiction often remains.

By contrast, genuinely purpose-driven organisations tend to exhibit something quite different: coherence.

Take Patagonia for example. Whatever one thinks of the brand, there is a clear alignment between what it says and what it does. Its environmental purpose is not confined to marketing language. It is reflected in product design, supply chain choices, activism and governance. When Yvon Chouinard transferred ownership of the company so future profits would support environmental causes, he did something few leaders are willing to do. He aligned governance with purpose. That is the real test that Patagonia can credibly claim to have passed. The company is not perfect—no business is—but it demonstrates something rare: coherence.

Critically, this is also why profit should never be framed as the enemy of purpose. Profit matters enormously. Without profit, businesses cannot survive, invest or create value at scale. But profit is an outcome, not a purpose. Profit is to business what oxygen is to life; essential, but not the reason for living.

The best organisations understand this instinctively. They recognise that enduring commercial success increasingly depends on creating genuine value for society, not extracting value from it.

Ultimately, purpose reveals itself not in language but in trade-offs. It becomes visible when leadership must choose between short-term gain and long-term legitimacy; between what is easy and what is right; between what can be justified financially and what can be defended ethically.

This, perhaps, is the deepest reason purpose remains elusive for so many organisations.
Genuine purpose is demanding precisely because it exposes contradiction. It forces organisations to confront the uncomfortable gap between what they say and what they are structurally designed to do. It requires courage, discipline and, above all, honesty.

And that leads to the question every organisation should periodically ask itself.
If this organisation disappeared tomorrow, would the world lose something of genuine value? Or would there simply be one less mechanism for extracting profit?

That final question cuts through branding with brutal efficiency. Because in the end, purpose is not about sounding good. It’s about being worthy of existence.

Neil Gaught On Purpose: In Conversation is a monthly interview series featuring leaders, thinkers and practitioners at the forefront of purpose-driven business.

Each conversation goes beyond the rhetoric to explore how purpose is being applied in practice, across strategy, governance, culture and performance.

At a time of growing complexity and uncertainty, the series brings together diverse perspectives to examine a simple but increasingly urgent question: What does it take to build a business that creates enduring value for both shareholders and society?

Qiulae Wong is a business leader, sustainability advocate and politician. Before becoming leader of Opportunity, she held senior roles in ethical business, climate action and systems change, including serving as Country Director of B Lab Aotearoa New Zealand and working in sustainability consulting at KPMG. A passionate advocate for a more inclusive, sustainable and opportunity-rich future, she brings a distinctive blend of business, environmental and social perspectives to New Zealand politics.

NG: You have spent much of your career in human rights, ethical business, B Corp, climate transition and the wellbeing economy. What made politics feel like the next necessary step?

QW: I feel like I’ve spent my career unravelling a big ball of yarn. Getting closer and closer to the root cause of some of our gnarly social and environmental problems. Politics feels like the next step here; it is the system change lever that we need to transition to a more sustainable, inclusive economy.

As a mum of two young girls, I am also so much more impatient for change than I’ve ever been before. I want the New Zealand they grow up in to be one that is more united and where we have a shared, aspirational vision for their futures.

NG: Political parties are often judged by their policies. But what role should purpose play in politics and how does that shape the way you think about and lead Opportunity?

QW: I think it’s a really interesting idea to bring the concept of purpose into politics. We know that in business it drives better performance and greater collaboration because everyone is working towards that North Star. For us, ‘Opportunity’ is literally our purpose; creating opportunity for every New Zealander to pursue their potential, in ways that are socially, environmentally and economically sustainable. I think that would be a great purpose for New Zealand as a whole!

NG: You have spent a lot of your career around purpose-led business. Do you think New Zealand businesses have a particular opportunity to lead differently, in a way that reflects who we are, what we value, and what New Zealand stands for?

QW: New Zealand has some awesome innate values; things like fairness, innovation, good work ethic, a quirky sense of humour. Many successful Kiwi businesses already demonstrate those values and I’d love for us to double-down on it even further. Particularly in a world where trust is being eroded in many places, our values-led — or purpose-led — approach could be a real competitive advantage.

NG: Political parties often talk about economic growth, housing fairness and environmental responsibility as if they are competing priorities. Do you think that tension is real, or are we still using the wrong frame?

QW: I think we’re starting to see clear evidence that that’s the wrong frame. Long term economic growth and prosperity is not possible if people can’t afford homes and nature is suffering. We’ve not been good at measuring those social and environmental things in the past but huge progress is being made on this. The challenge is that it requires a mindset shift for society to move to a model where we value our natural and human resources to the same degree as our financial resources. But we have to do that if we want a more stable and sustainable world.

NG: Politics is often framed through the lens of left, right and centre. But do those labels still help us solve the challenges New Zealand faces, or is there a case for a more purpose-driven approach to politics?

QW: The left-right framing of politics is extremely outdated and doesn’t capture the multitude of views one individual might hold. You could be a successful business person that believes in capitalism and also think that higher taxes are necessary. You could believe that governments should be small and also that we should devote more hours to community gardens. I think starting with either left or right ideology is dangerous and means we don’t look at all the possible solutions with an open mind.

Life was never black and white and it’s even less black and white today. We need an approach to politics that can respond to some big challenges like climate change, AI, and global instability and I do believe that a purpose-driven approach can achieve that. It means you can be nimble and responsive but also focused on the bigger picture of achieving your purpose.

NG: Opportunity has often been associated with detailed policy thinking. Under your leadership, how do you turn good policy into something people can feel, trust and belong to?

QW: People connect with people, not policy. We need to earn the trust of New Zealanders that we are the right people to represent them in Parliament so that’s our focus this year. If they want to validate that we are well-equipped to implement some very good policy, we’ve got lots of bedtime reading for them too!

NG: You have spoken about your daughters as one of your great sources of inspiration. When you think about the New Zealand they will inherit, what gives you hope, and what do you most want politics to make possible for their generation?

QW: I am filled with hope when I meet the countless New Zealanders who are innovating and contributing to a better future. Not because anyone asked them to, but just because they care about our country and their community, and because they love the challenge of solving these tricky problems. Solar aircrafts that help with natural disasters, plastic-free clothing, eateries focused on real community connection. I hope we can build a society where that is the norm and is celebrated as a part of everyday life.

In defence of purpose before policy

Why governments need an organising purpose before they can decide what to spend, what to prioritise and what kind of future they are trying to create.

The response to a recent LinkedIn post I made about defence spending surprised me. In just a few days, more than 27,000 people viewed the post and quite a few took the time to comment, react or share it. Many agreed. Some strongly disagreed. What interested me most, however, was not the level of support or opposition. It was the conversation itself.

The post was prompted by comments made by US Defence Secretary Pete Hegseth regarding New Zealand’s defence spending. As a former soldier, I questioned why smaller nations are being encouraged to spend more on defence while simultaneously facing growing pressures in areas such as healthcare, education, housing and environmental resilience.

What followed was a fascinating debate. Some argued that New Zealand benefits from a security umbrella largely funded by larger powers and therefore has an obligation to contribute more. Others questioned whether the actions of those same powers sometimes contribute to the instability being used to justify ever-increasing military expenditure. Many focused on the difficult trade-offs facing governments as they attempt to balance competing demands with finite resources.

As I worked my way through the comments, it became clear that defence spending was merely the catalyst for a much bigger conversation. Beneath the arguments about military budgets, alliances and geopolitics sat a more fundamental question about how governments should decide what to prioritise.
Which led me to a question that sits at the heart of almost every political debate, yet is surprisingly rarely asked: What is the purpose of government?

The question sounds deceptively simple.

Governments spend enormous amounts of time discussing policies. Defence spending. Healthcare funding. Housing affordability. Education reform. Infrastructure investment. Climate action. Taxation. Economic growth. Yet what often gets lost is the question that should come first: What is the purpose these policies are intended to serve?

Over the past two decades I have argued that organisations perform best when they are guided by a clear purpose. Purpose is not a slogan or a marketing statement, but as an organising idea that helps leaders make decisions, allocate resources, navigate competing priorities and maintain direction through uncertainty.

The same principle applies to governments. Government is not simply there to administer budgets, pass legislation or win elections. Its purpose should be to create and sustain the conditions in which citizens, communities and future generations can flourish.

Once purpose is understood in those terms, policy begins to look different. Purpose comes first. Policy follows.

Indeed, one of the great misunderstandings of modern politics is the tendency to treat policies as ends in themselves rather than as means of achieving a larger objective. The political left tends to favour certain solutions. The political right tends to favour others. The centre attempts to blend elements of both. Yet left, right and centre are not purposes. They are competing theories about how best to achieve a purpose.

Just as two business leaders may share a common objective while disagreeing about strategy, political parties may share a broad desire to improve the wellbeing of citizens while holding very different views about how to achieve it. The problem arises when ideology becomes more important than purpose.

When that happens, policies begin competing with one another for attention and resources without reference to a larger organising idea. Healthcare advocates argue for more healthcare spending. Education advocates argue for more education spending. Defence advocates argue for more defence spending. Environmental advocates argue for greater investment in climate resilience and ecological restoration. Each can make a compelling case. Yet viewed in isolation, politics risks becoming little more than a competition between worthy causes.

Purpose provides the context within which those trade-offs can be made. It shifts the conversation from what we are doing to why we are doing it.

Defence, education, infrastructure and environmental protection are not objectives in themselves. They are investments. The question is not whether each is important — they all clearly are — but how each contributes to the broader purpose a government is seeking to fulfil. Without that connection, policy risks becoming a collection of competing priorities rather than a coherent strategy for national wellbeing.

Viewed through this lens, the recent defence debate becomes particularly interesting.

As a former soldier, I understand the importance of national security, military capability and preparedness. Nations have a responsibility to protect their sovereignty, their interests and their people. The world is becoming increasingly uncertain and it would be naïve to pretend otherwise.

But if government exists to create the conditions in which citizens and communities can flourish, then the question is not simply whether defence matters. The question is how best to achieve security in service of that purpose.
For some nations, that answer may involve significant military expenditure if their purpose is to project power, preserve strategic dominance or shape the international order. For others, geography, relationships, diplomacy, trade, development assistance, international cooperation and regional influence may deliver greater security relative to the resources invested.

Defence capability remains important. But it becomes one tool among many. The objective is not military strength for its own sake. The objective is national flourishing. This distinction matters because nations must constantly decide where to allocate scarce resources. As I indicated in my LinkedIn post, every dollar spent in one area is unavailable elsewhere.

The challenge therefore is not deciding whether defence matters, but determining the appropriate contribution defence should make relative to healthcare, education, housing, infrastructure, environmental stewardship and economic resilience in pursuit of a common purpose.

There is, however, another dimension to the discussion. Purpose is not only useful for helping governments decide what to do; it also helps them decide whose objectives they are serving.

In an increasingly interconnected world, nations are constantly influenced by allies, trading partners, international institutions and geopolitical realities. That is entirely normal. Yet before committing scarce resources, governments have a responsibility to ask whether the policies they pursue primarily serve their own purpose or help advance the purpose of others.

This is not an argument against alliances or international cooperation. On the contrary, purpose becomes even more important when nations work together. Countries that understand their own objectives are far better placed to build effective partnerships while remaining true to their own interests, responsibilities and long-term aspirations.

This, too, is a question of governance because good governance requires clarity of purpose before commitment of resources.

In business, organisations often lose their way when purpose becomes unclear and strategy becomes disconnected from it. The same, it seems, happens to nations.

Without a coherent organising purpose that aligns decisions, priorities and resources in service of a shared vision, governments risk becoming collections of policies rather than architects of a future.