Many companies are investing in digital transformation to raise performance and keep pace with competitors. But often the initial changes they hope to see, such as productivity gains and increased market share, don’t happen as expected. Implementing a tech overhaul alone misses an important factor—meeting the changing priorities of both customers and employees. Today’s customers are more discerning, sophisticated, and diverse. Employees are less responsive and committed. People are seeking more personal value in what they buy, where they work, and how they live their lives.

To achieve the desired business gains, a business must define and activate its purpose—the reason why a company exists beyond making money. Purpose is becoming more important to the people who drive an organization’s success and should be placed at the heart of digital transformation.

In this article, we explore a differentiating path for companies to succeed in digital transformation, with a focus on people at the core. There are three elements to a business purpose: authenticity, appeal to customers, and meaning for employees. Cultivating them will add a human dimension to your technological and organizational changes, increasing the likelihood of achieving the results you want.

The Meaning and Value of Purpose

From a business perspective, purpose is a matter of practical importance. It doesn’t mean adding a new philanthropy or social cause to a company’s checklist. It means thinking freshly about the value the company offers customers and employees. Internally, a company’s purpose serves as its North Star. It communicates the rationale for other changes, like digital transformation or a brand refresh. A well-defined purpose inspires employees to find meaning in their work. This gives them reason to engage more on behalf of customers and the company, and to work more efficiently, reducing operational costs. Externally, when customers resonate with a company’s purpose, their loyalty to its products and services has proven to be exceptionally resilient.

For example, Southwest Airlines is a beloved brand, known for its purpose of low-cost, no-frills travel and warm, friendly customer service. That position allowed the company to bounce back from an IT meltdown at the peak of the holiday travel season in 2022, when more than half of its flights were cancelled. The airline’s customer-centric sense of purpose inspired top management to redesign its outmoded systems and employees to help it rebound. The company recovered quickly, posting record revenues just four months later.

The rising importance of purpose represents a shift in the way businesses compete as they respond to today’s technological advances and social and demographic trends. In the past, organizational technology had limited ability to solve issues such as inefficiency or slow growth. Digital transformation was focused on choosing vendors, implementing stage gates, managing costs, and other technical and logistic factors. Now, more powerful and flexible technology makes it easier to create products and services that deliver value.

With technology handling more complex business problems, leaders can put more attention into the underlying human issues that are coming to the fore. In this time of seemingly nonstop change and disruption, employees are demanding more meaning and fulfillment in their working life. And customers are looking for brands that align with their values and aspirations.

This is especially true for Generation Z, born between 1997 and 2012 and considered to be the first digitally native generation, growing up in a world with smartphones and social media. Most are currently in secondary school, college, or young adulthood. Many are entering the workforce now. They are inured to traditional advertising and skeptical about large institutions. They tend to stand up for their beliefs and value authenticity and positive social impact. For example, according to a survey by TalentLMS, 77% of Gen Zers find it important to work for a company that cares about diversity, equity, and inclusion.

During the next few years, as more members of Gen Z graduate from secondary school and college, they will become a majority of the workforce. If current trends hold, they will continue to expect more than just a paycheck from their employers. And as customers, they will gravitate to the companies they see as most consistently authentic.

Define Authenticity Clearly and Consistently

Your organization’s purpose must be grounded in authenticity; people will sense when it is not. This requires having a clear view of your company and the value it creates, beyond simply making a profit and staying in business. Often, it means going back to the reasons why you went into a particular industry or profession in the first place. Once defined, purpose will set the tone for everything you do—and don’t do—and it will be visible. When you stray from your purpose, your stakeholders will notice.

Look closely at the things your company does distinctively and that others respond to. What are your capabilities? Aside from financial factors, what have been your goals from the beginning? What professional functions—such as marketing, innovation, finance, or supply chain operations—are influential in your culture, and what values do they hold as important?

Companies sometimes lose track of their authentic purpose because they must comply with other requirements, their leadership changes, or the world shifts around them. Articulating your purpose is the chance to look freshly at the organization’s aspirations. This process might take several months, incorporating input from many people and perspectives within the company. In the end, the goal is to distill a crisp statement of purpose that gets to the heart of why your company does what it does. If you can say it in a sentence, everyone else will understand it.

One company well-known for its statement of purpose is Patagonia, the outdoor gear manufacturer and retailer. As an organization, it is deeply committed to environmental sustainability and ethical practices. Founder Yves Chouinard and many employees are avid mountaineers and conservationists. “We’re in business to save our home planet,” says its core purpose statement, adopted in 2018. To fulfill that goal, the company has instituted a variety of governance structures and practices. Their statement of core values spells them out, from product design and continuous improvement to accountability: “Every decision we make is in the context of the environmental crisis challenging humanity.” In 2023, Axios and Harris Poll ranked Patagonia as the top brand for reputation, surpassing brands like Apple and Costco.

Little Red Book (Xiaohongshu), a Chinese lifestyle social platform with 450 million members, is another compelling example. This company stands out in the competitive social media landscape with its focus on being a community-driven platform, helping Chinese shoppers advise each other on purchasing goods abroad. While many social media platforms emphasize content about celebrities and entertainment, Little Red Book features user-generated information on health, beauty, and travel. Founding partners Miranda Qu and Charlwin Mao reportedly met in a shopping mall, and the company’s purpose reflects their interest in fostering a better life.

Once you’ve articulated your purpose, it must be applied consistently. Are you prepared to make this your priority going forward, with most or all of your company’s activities aligned? Every key performance indicator or measurement should be connected back to the purpose. Little Red Book, for example, has consistently focused on its core audience, females born after 1990, who value it because they trust one another’s advice and its community-oriented style. This enables the platform to hold its own against competitors, including those launched by larger social media companies like TikTok.

Authenticity and consistency of purpose can be difficult to maintain. Companies sometimes struggle to balance these purpose-oriented attributes with their profit targets or with leaders’ individual priorities. To stay consistent, companies must embed their values into practices and governance structures throughout the organization. This is compelling to many stakeholders. For example, a clear purpose that resonates with consumers’ priorities and concerns keeps the company’s customer base more stable and permits more upselling, assuring investors of consistent, year-after-year returns.

Create a Purposeful Customer Journey

Once your company’s purpose is clearly defined, the customer experience should be restructured accordingly. Their experience—online and offline encounters with the brand and its products—is the primary medium through which customers understand a company’s purpose.

The first step is to identify and prioritize the most critical, “wow” moments in the customer journey. Humans tend to remember only the extremes: the most unpleasant and most exciting encounters with a company.

Many companies overhaul the customer journey by eliminating pain points, friction, imperfections, and other sources of negative reviews. This can work well in the short run, reducing dissatisfaction and complaints. However, once you have eliminated the worst elements of the customer journey, you have merely shifted their attitude from irritated to neutral.

It is more effective to look at the customer journey as an expression of the new purpose, in both the message (what customers see and purchase) and the medium (how the message is delivered). Create exciting moments related to that purpose and offered authentically.
 
Here are four of the many ways to accomplish this, with examples from leading companies:

• Empower employees to deliver better customer service. A prominent Chinese automotive company implemented an artificial intelligence SaaS solution that gave sales advisors and dealer partners more flexibility in making deals. These interactions explicitly reflected the company’s stated purpose: to deliver quality cars at affordable cost. The solution led to a 10% increase in lead invitation rates.
• Design consistent interactions tuned to positive human response. The Chinese electric vehicle manufacturer Nio offers a consistent in-car experience with Nomi, its voice-activated AI assistant. It is carefully designed, tested, and continually retested to provide a well-crafted, human-like interaction—in line with the company’s stated mission “to shape a joyful lifestyle.”
• Foster emotional connection. The German car-maker Porsche states its purpose as: “We want to help our customers realize their lifelong dreams.” This is reflected in its continual efforts to upgrade the elegance and responsiveness of its automobiles as well as its sales and service practices. For instance, a recent customer experience innovation makes it easy to configure new and used vehicles online before a purchase.
• Deploy distinctive formats that speak to customer aspirations. The Duolingo app designs short, engaging, gamified lessons for people learning a new language, tailored with AI to students’ individual learning styles. It keeps prices low with advertising, but strategically places ads only at the end of lessons for free users. Format choices like this symbolize Duolingo’s stated goal—“to give everyone access to a private tutor experience through technology.”

Case Study: Kroger

US-based Kroger had a strong presence based on a rational value proposition (coming from the head), but it didn’t consistently make an emotional connection with its customers or its more than 430,000 employees. Kroger has a big heart, which was not always communicated to its customers. From its origins as a small-town grocer, it understood communities are physically and emotionally hungry. Company leaders talked of creating “uplift”— not only feeding the body but nourishing the spirit as well. This people-centric purpose is expressed in Kroger’s purpose statement: Feed the Human Spirit.

Kroger deployed a variety of approaches to activate its new purpose, modifying the associate and community experience in the store. Daily shift huddles were updated to inspire associates and celebrate those who uplifted a customer that day. Dialogue training changed the way associates engaged with customers. The company gave employees a voice in the process, empowering them with incentives to make customers feel at home and embrace their own passion for selling.

The new approach moved rapidly through the chain, buoyed by a company video with a story line that expressed the value of the purpose. Stores experienced an uptick in sales and a reduction in turnover. Employee engagement doubled. And customer feedback was consistently better.

Bring Purpose to the Employee Experience

A great customer experience often reflects a great employee experience. When your team understands and believes in your company’s purpose, they’re better equipped to convey this to your customers. They interact differently with customers and other stakeholders. Every employee is potentially a link between your company’s internal thinking and its external presence.

To truly bring the workforce to embrace the organization’s purpose, you must foster a company culture that recognizes and rewards them for it. Culture is often strongest below the surface, with assumptions so deeply ingrained that they are taken for granted. To align culture and purpose, these assumptions must be brought to light, questioned openly, and reconsidered by employees in discussions and daily work. You may need to introduce stories, day-to-day practices and guidelines, and symbolic elements to make the purpose clear. Your goal is to create an environment where employees feel like they can make a genuine commitment and see themselves as working not just for a paycheck but for other goals they care about.

Specific methods for advancing a purpose-driven employee experience include:

• Recruit and hire people who share your company values. As bridges between the organization and its customers, employees should be passionate about your mission. Screen applicants with questions that address the company’s culture and their attitudes toward it.
• Redesign performance reviews, recognition programs, and other HR activities. Assess how well manager and employee actions align with the company’s purpose, and reward those who do so successfully and can serve as role models.
• Establish safe environments for employees to raise questions. An organization’s purpose can sometimes represent a departure from past organizational practices. Allowing employees to express their feelings about the changes shows you value their perspective and can help strengthen buy-in.
• Make the purpose and related methods come alive for employees. Through leadership and staff development programs and mentorship and onboarding processes, emphasize how employees can embody the company’s purpose in their day-to-day interactions with customers.

Case Study: Optus

 
The Australian telecommunications company Optus, with more than 10 million wireless customers, generated an 11% uptick in employee engagement by focusing on purpose. To many Australians, the Optus brand already had a purpose: it had been introduced in the 1990s as “synonymous with yes,” a direct challenge to the prevailing Australian telecom company. In 2019, armed with a best-in-class mobile network, the Optus brand needed a new purpose that was less defined by its past.

The company’s new aspirational purpose was “to power optimism with options.” With this statement, the CEO of Optus sought to shift the company culture for its 8,000 employees. Many of them had experienced two previous purpose launches during the past two decades. This effort had to give employees a reason to believe it would also be credible and endure.

Optus went through a rigorous process to develop its purpose initiative. It commissioned interviews with more than 40 experts inside and outside the company. As a brand long synonymous with optimism, the company looked into the roots of the word and what it meant to people. They found that optimism is contagious, bringing people together around a vision of a positive, inclusive future. The initiative team then reviewed Optus’s distinctive strengths in more detail and linked them to needed changes in employee behavior. For example, the company brought about 2,500 employees through its internal university and capability training programs, focused on learning cloud-based technologies, safety measures, and innovative behavior. It also established employment opportunities for 150 disadvantaged youth, along with mentoring programs where employees gained confidence by participating in their onboarding and progress.

In 2020, the company launched the new initiative. The original roll-out plan called for road shows across the organization, but the pandemic forced Optus leaders to pivot to a remote launch. Nonetheless, the new purpose statement served as a rallying and unifying reminder of why the company exists. The uptick in employee engagement followed.

Driving an Authentically Purposeful Digital Transformation

In the current business climate, companies that create purposeful experiences for their stakeholders have an edge. Digital transformation is a powerful vehicle for focusing on purpose and bringing it to life. The three elements of purpose—authenticity, customer experience, and employee engagement—allow leaders to integrate transformation with differentiation, setting their company apart from competitors.

Although the specific articulation of purpose will vary from one enterprise to another, they share a common denominator: values. By explicitly standing up for values that stakeholders care about, a company can generate authentic personal connections with customers and employees. These transcend the traditional transactional dynamic—and lead to relationships of deep loyalty and trust. In these turbulent years, that is the most lasting source of competitive advantage.