How Merging Purpose With Profit Redefines Product Roadmaps And Product Success
“Purpose is not the sole pursuit of profits but the animating force for achieving them. Profits are in no way inconsistent with purpose — in fact, profits and purpose are inextricably linked.” — Larry Fink, CEO BlackRock
If you asked why, the answer is I don’t know. I’m unsure why I haven’t thought to make purpose and value part of joint conversation more often or why I haven’t thought about this until recently.
Perhaps it’s that realizations aren’t instant and instead part of a process that can take years of real-life experience to ‘pop’ into existence.
So why this topic and why now?
I was catching up with an old colleague and friend the other day, and we talked about purpose — more in life than in product. But since we both had similar roles in similar industries, it eventually changed to work. I know, it shouldn’t be business all the time. And I swear it’s not. However, at times, I can’t help myself.
So we got to talking about a software product we had collaborated on in the past. It was a successful product but not a smashing success. Since it was long past, we could talk more objectively about what might have improved the product.
We both agreed it had more potential, but it never took hold. It had a solid purpose — rooting out fraud in healthcare to make healthcare more affordable. And it delivered significant business value, at times 4–6% of our client’s total healthcare expenditure, which could be tens if not hundreds of millions of dollars.
We eventually wandered to a point on why purpose and value aren’t discussed or linked together. And at least in this case, we decided it resulted from two different audiences. The purpose captured the hearts and minds of our team and our customer’s executives. The business value delivered hard numbers to the finance and actuarial teams. Two different groups. Two different audiences.
Or so we thought.
What if we combined them? Share both together with stakeholders. The visionary and meaningful purpose backed by hard evidence in a unified statement. Hmm.
“Rooting out fraud in healthcare to put up to 6% back in patient’s pockets. We’ve been working hard to ensure you only pay for the care you’ve received.”
Alright, alright, alright. Now, we are getting somewhere. While not the strongest possible purpose and value statement, it was a start.
Purpose and value. Purposeful value. Worth a shot, I thought.
TOMS — A case where purposeful value was lost
Purpose without value creation leads to product and company failure. Value creation without purpose leads to a demotivated team and metrics over user culture.
Although I have seen both throughout my career, a well-known example is best to highlight the dilemma — an example where purpose did not sync with business value and the business model.
Many know TOMS, the socially driven shoe company. But did you know they came very close to bankruptcy?
I’ll admit, I was unaware until recently.
However, TOMS also faded from my mind years ago.
Founded in 2006 with a unique social mission: for every pair of shoes sold, they would donate a pair to a child in need, an initiative they called “One for One.” However, despite a strong, socially motivated purpose, TOMS struggled due to a lack of focus on business value and product differentiation.
While TOMS initially gained popularity and was lauded for its social responsibility, the company eventually faced several challenges:
- Market Saturation and Brand Differentiation: As the concept of socially responsible businesses grew, TOMS faced increased competition. Other companies started offering similar products with social benefits, making it harder for TOMS to stand out. The strength of their purpose faded.
- Questioning of Impact: Critics started questioning TOMS’s donation model’s long-term impact and value. Critics raised concerns about the model’s effectiveness and potential to undermine local economies in the areas where TOMS donated the shoes. This critique affected the brand’s image and made consumers skeptical about the actual social impact of their purchases.
- Product Diversification and Innovation: TOMS initially focused heavily on its classic canvas slip-on shoes. As consumer preferences evolved, the company was slow to diversify its product offerings and innovate in design and functionality. This lack of innovation made retaining customers and attracting new ones challenging. The company overlooked the product’s value and the utility it offered to customers.
- Economic Sustainability: While noble in intention, the business model faced challenges in sustaining profitability and growth, compounded by market challenges. As the novelty of the social mission wore off, TOMS struggled to maintain its market share and growth trajectory. Essentially, they did not plan to generate sustainable business and product value.
TOMS’ experience highlights the importance of balancing purpose with solid business fundamentals. While their socially oriented purpose was commendable, the company faced hurdles in value delivery across their business model, product offering, and brand differentiation in a rapidly changing market.
TOMS failed to align purpose, business value, and product — all contributors to its downfall.
Now for examples where purpose, value, and product aligned perfectly
While TOMS provides a cautionary tale, it’s also important to recognize that there are many companies where the link between purpose, business value, and products is strong and reinforces each other.
Thankfully, there are many examples of success — Tesla, Google, Amazon, Apple, and more.
However, rather than discuss the popular examples, I’ll pick a few lesser-known companies to show success is possible for all, not just a select few at the top.
Let’s look first at Expensify, a business software company.
Expensify aims to enable professionals to focus on what they were born to do by easing the task of managing expense reports. This purpose was rooted in the founder’s disdain for manual expense reporting and his desire to give people their time back for higher-order pursuits. By positioning its product as a solution to a common problem, Expensify resonated with many companies and has become the expense solution for over 60,000 companies worldwide. This alignment of product purpose with a real-world problem created business value through significant customer acquisition and solving a genuine problem for users.
Patagonia is another example, with its core value of creating durable products to minimize environmental impact. This purpose aligns with broader societal concerns about sustainability, and by adhering to this purpose, Patagonia not only creates products that resonate with a segment of consumers but also contributes to broader discussions about sustainability and corporate responsibility, thereby enhancing its brand reputation and business value.
A framework for aligning purpose, value, products, and the roadmap
The link between purpose and value is crucial for success. You need both.
Despite that, I am often asked — “How do I link the day-to-day work of the product team to business value and purpose?”
I like to think about the answer in terms of a pyramid with purpose at the top, business value second, and then cascading down to features at the bottom.
Without the top-to-bottom link, product teams question the value they create silently or amongst their squad. But then trust that the leaders have it covered. What they don’t know — product leaders often wonder about the link, too — simply following the direction of the VP of product, senior executives, or stakeholders.
When that happens, no one questions the purpose or value. Then, the product dies.
The bottom line is that you must ask if you don’t see the purpose, value, and product in alignment. Pull the proverbial Toyota red cord that stops the production line. Pause everything if you do not directly see how the product or capability you manage leads to business value and supports the company or product’s purpose.
Tell your teams you expect this, and it is their responsibility.
It is essential for each member of the product team — design, engineering, marketing, product, and everyone in between — to feel empowered to ask this question and expect an answer.
The visual below can help you imagine the flow from the top to the bottom of the pyramid.
Now, let’s build that link
For leaders in a product company, effectively linking purpose and business value to their products is crucial for long-term success and sustainability. Here are a few strategies you can follow to do so:
- Alignment of Purpose and Business Strategy: The company’s purpose should be deeply integrated into its business strategy. This means that the products must embody the company’s purpose while addressing a real market need that leads to value creation. Purpose and its link to value cannot be an afterthought; it must be a core driver of business decisions.
- Authenticity and Credibility: Buyers and employees today are more discerning and value authenticity. If a company claims a purpose, it must reflect it in its products, operations, and culture. Any disconnect between stated purpose and how the business executes will lead to a loss of credibility and trust — especially if there is a misalignment in how value is created and measured.
- Balancing Purpose and Profit: While purpose is important, it cannot overshadow the fundamental need for profitability and financial sustainability. Leaders must find a balance where the business and its products can be profitable while staying true to its purpose. This is, unfortunately, an issue of many socially oriented companies like TOMS. They over-emphasize purpose while missing value, leading to failure.
- Measurement and Accountability: It is essential to establish metrics to measure the impact of the company’s purpose on its business performance, value creation and goals.
- Transparent Communication: Companies must communicate their purpose, how it’s creating value, and how it’s being achieved clearly and transparently.
- Long-term Perspective: Aligning purpose with business value often requires a long-term perspective. Leaders must prepare to invest in their purpose-driven products over time, understanding that the benefits may not be immediate but will lead to sustainable growth and success in the long run.
- Market Relevance and Adaptability: The purpose must be relevant to the target market — those who will pay for your product. A purpose that resonates with the company’s audience can drive customer loyalty and brand differentiation. I can’t emphasize this point enough — companies must be adaptable and ready to evolve their purpose, value creation, and product strategy in response to changing market dynamics and consumer behaviors, another failure of TOMS.
By executing on these strategies, leaders can more effectively navigate the complexities of integrating purpose with business value, ensuring their products remain competitive and sustainable.
Bringing it home
Ultimately, your roadmap needs to represent a story aligned with the purpose and value of the product and company. The story it tells must be in every feature, line of code, and user story — charting a course toward sustainable profitability.
From the lessons of TOMS to the countless unnamed products that missed their mark, history serves as our guide, reminding us that purpose without profit is a dream unfulfilled, and profit without purpose is a victory hollow at its core. The true measure of success lies not in choosing one over the other but in integrating both.
Product teams that understand the link between purpose, value, and the products they build, build better products. A link that needs to feel important and authentic, painting the picture of a future they want to work towards.
So, as you lay down the tracks for your product’s journey, remember that the roadmap you create is more than a plan — it is a declaration of your commitment to a world where business thrives on purpose, and profits are a testament to the value created.
