The power of purpose

These were exciting days, when I joined Michael Lohscheller, President of Nikola Motor, during IAA Transportation in Hanover – also, because I got a theory of mine once more confirmed: a purpose-driven company evolves faster than others.

Lohscheller was often asked by people what the most significant differences are between his jobs in the “old economy” and now at Nikola – a start-up company.  People are curious why Nikola Motor is faster to market with their BEV and FCEV trucks than established manufacturers and what Nikola Motor has more or does different than other companies. I noticed that purpose was mentioned every time. That sets Nikola Motor apart: Everyone at Nikola Motor works with a meaningful and relevant purpose.

So why is purpose so important? Why having vision and mission statements? Why should the company articulate core values?

By creating these statements, a company is letting the world know what its business is about. This is important for employees, partners, and consumers as they make decisions that align with their values. Having a clear “why” most likely is increasing brand loyalty and improving employee engagement. Employees who know they are working on more than generating profits and who are committed to the company’s desired impact, tend to be more engaged and fulfilled by their work. In addition, these statements provide clear parameters for making better long-term decisions for a company.

The difference between each of these terms might feel subtle and they often are used interchangeably. However, each statement serves a distinct purpose. When looked at it as an entity, purpose, mission, vision, and core values statements tell a clear story about an organization and its impact.

Purpose is what guides a company. The organization’s purpose statement shares why a company exist; why a company does what it does. It charts the course for a company’s mission, vision, and core values. It provides a lens for making decisions, designing company culture, and presenting to the outside world.

Lohscheller’s words hit the nail on the head:  his address at the IAA Transportation reaped applause from the audience, but also cheers and ‘yes’ shouts from the Nikola team; everyone could notice, they are standing behind their company and they are fully committed to their company’s purpose –

Pioneering Solutions for a Zero-Emissions World

Nikola is globally transforming the transportation industry. As a designer and manufacturer of zero-emission battery-electric and hydrogen-electric vehicles, electric vehicle drivetrains, vehicle components, energy storage systems, and hydrogen station infrastructure, Nikola is driven to revolutionize the economic and environmental impact of commerce as we know it today.“

Why do companies need a corporate purpose?

The corporate purpose is primarily about inspiring all stakeholders – investors, employees, customers, etc. – with lasting enthusiasm for the company. It forms the core of the brand. It is not only the reason and motivation for every step the company takes, but also, as a direct consequence, the reason and motivation for becoming or remaining a stakeholder.

In relation to labour and personnel, the importance of purpose of a company is much debated, i.e. in the context of Millennials and Gen Z. They now make up an essential part of the (potential) workforce. They are said to be constantly searching for the meaning and purpose of their work and want to do good. People don’t go to work just to get a paycheck; they want to feel that what they are doing matters to the world and that they are growing in the job.

This is exactly where the corporate purpose comes in. It gives a brand or company a meaning and a raison d’être and thus tries to create meaningful work for employees. It gives the company and its employees a common, unifying idea. Overall, it is always about the contribution a company makes to the wider community and what makes it a valuable member of society.

Creating a purpose, mission, vision, and value statements for a company is not done overnight, it will take time, but it is an valuable strategic investment. These statements help to imbed meaning and purpose into a business, and they ensure that brand identity is not reinvented every time the company is asked what it stands for. Strong statements align and inspire a company’s stakeholders. It should be clear that authenticity is the key, and the best way to be authentic is to practice living them every day. It’s not just a branding exercise, it is what sets a company apart, gives clarity, and describes its competitive advantage.