How do companies define and develop an authentic purpose? We ask George Serafeim, Jakurski family associate professor of business administration at Harvard Business School.

You have argued that a crucial aspect of purpose is its inherent intangibility – it's not something to be found in a formal announcement. How, then, should a company go about defining its purpose?
For me it is about developing a shared understanding in an organization about the meaning of work. It needs to answer the questions: Why do people in this organization come to work? What characteristics bond them together?

How do you avoid overstretching or being too narrow?
Mission statements can all tend to sound the same. A sense of purpose needs to be specific to a particular organization. It must also explain the organization's competitive positioning in this respect – what it is that it adds over and above the others.

What kind of internal structures are required to do that?
It helps to align the purpose with the type of people the company hires. Many organizations have learned that it's one thing to develop a sense of purpose, another to execute it. This can be supported through the recruitment and retainment processes.

What does it take to maintain a sense of purpose in an organization?
You need clarity about how employees will be enabled to achieve their purpose. It has to be supported by senior leadership and there have to be credible incentives that are aligned to the purpose, not against it.

Is there a danger that defined values could become a straightjacket?
Purpose should not be a straightjacket. It needs to be adaptive and respond to the environment, but not change too often – it's a question of getting the balance right.

How important is it to measure success?
There has to be a way of measuring success, of knowing if the company is moving in the right direction. This is extremely important – otherwise it is just cheap talk.

What are the costs and benefits?
The benefits are a workforce that is more likely to be productive, innovative and support efforts for change and adopting new practices. But there are costs too. It requires hard work and management attention to maintain the culture. It also means saying "no" to business that does not fit your purpose and sometimes investing where others won't.

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