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A few years ago, business and marketing gurus like Simon Sinek challenged companies to understand their “why” of doing business. But Violina Rindova, Merage School of Business, UCI, and Luis L. Martins, McCombs School of Business, UT Austin, push this idea even further in their paper “Moral Imagination, the Collective Desirable, and Strategic Purpose,” published in Strategy Science earlier this year.

“Sinek was spot-on about the importance of the ‘why’ question,” Rindova says. “Having a deeply articulated corporate purpose answers this question deliberately and strategically. Sinek works backward from something that’s observable—the ‘what’—to something that may or may not be explicit. Our argument is that purpose makes the ‘why’ explicit and communicable. Importantly, purpose is not just customer-focused. It should be the company’s approach to thinking about creating value that considers everybody in its stakeholder ecosystem. It’s not just the ‘why’ of the product; it’s the ‘why’ of how we engage with our stakeholders.”

Just Imagine

Their article is part of Rindova’s larger research agenda, which is focused on firm strategy under uncertainty, as well as the role of stakeholder relations in how companies imagine and create the future. “This particular article is focused on moral imagination,” says Rindova. “It is about a different way of thinking about how we imagine the future—through moral imagination and stakeholders’ engagement in a way that the firm’s strategy might actually build positive—and ultimately collaborative—relationships with stakeholders. It’s not just the creation of a statement; it’s a set of practices and blueprints people have to learn.”

Rindova and Martins contribute to the literature on corporate purpose in management research from a very different strategic perspective. “Corporate purpose nowadays is largely defined as the reason why a firm exists,” Rindova says. “We felt this static definition is closer to a mission statement. To be strategic, purpose has to be dynamic.”

New Philosophy

The question, then, is how do firms develop purpose—if it’s not simply the reason why they exist? Their answer is firms’ strategists need what pragmatist philosopher John Dewey termed moral imagination and described as the ability to look at a situation and see how it could be different from what it is today. To this idea Rindova and Martins add that moral imagination is cultivated from value ideas, empathetic understanding, and pragmatic problem-solving.

The paper emphasizes that the mind of the strategist is imaginative and empathetic. “These are new central ideas we introduce, as to articulate an approach to strategy that is different from the calculative, instrumentally rational, economics-based view of strategy that is seen as the foundation of business success,” Rindova says. “This paper suggests that developing strategy that is imaginative and morally informed through purpose enables firms to co-create value with stakeholders by discovering more win-wins.”

Conceptual Proof

Rindova and Martins use Unilever as an example of the kind of innovative approach to purpose and strategy they want to inspire. “When the new CEO at Unilever came on board, he basically said, ‘We’re not just going to have stakeholder strategies; we’re going to make stakeholders integral to the competitive strategy.’ Usually firms have stakeholder strategies and competitive strategies that are more about how to stay out of trouble and appease stakeholders,” says Rindova, “but when Unilever decided to actually work with their stakeholders to build our competitive advantage by understanding how they can create value for stakeholders as their purpose, it was very well formulated and communicated. As a result, Unilever reached the highest levels of growth in their industry.”

This innovative approach may be relatively new, but several companies like PepsiCo, Lego, and Microsoft have started to venture into this uncharted territory of tying purpose to their strategy. “Our paper doesn’t necessarily describe what is, but it articulates what could be,” says Rindova. “I have written other papers about the difference between analytical theories—which are like natural sciences that analyze the realities that exist—and theories that are generative and incorporate imagining the way things could be. Our paper provides a solid theoretical foundation based on causal explanatory mechanisms that may not have been implemented in practice.”

Thinking Differently

As far as Rindova and Martins are concerned, a company’s purpose should be dynamic if it is to be strategic. “Strategy should always be dynamic,” Rindova says. “So, if that is the case, why don’t strategists make something as essential as purpose more dynamic? We developed the concept of ‘collective desirable’ to explain how strategists can update their own frameworks about how to create value. Our argument is that by engaging stakeholders in a collaborative dialogue, strategists could actually develop a completely different understanding of what future-oriented actions might create value. They will end up having a more dynamic theory of how their firm could create value in different stakeholder contexts, with all of their complexity and variety.”

So far, these ideas are largely still theoretical, meaning no data support their arguments. “We understand most companies do not do things this way,” Rindova says, “and there may not be a large number of examples of companies that have implemented everything we’re suggesting to the fullest extent. But we know enough to theorize that if companies could reimagine new ways to approach purpose—and strategy, as we’re suggesting—they might find new opportunities to create growth in categories where the status quo is already well established and find better alignment with their stakeholders.”

Expanded Horizons

Successful firms always look to innovate, but they don’t necessarily look to innovate beyond product development. “Clearly we can see that when companies get closer to their customers, they gain new insights,” Rindova says. “What we’re asking is, ‘What if a company could cast a broader net, understanding the variety of perspectives across stakeholders, and synthesize all of this through their own unique resources and capabilities?’ Not just to innovate one product but to create a whole different system of innovative exchanges. That’s our thinking.”

Rindova and Martins also believe purpose statements are something companies should consider expanding beyond the HR department. “Companies that emphasize purpose tend to see that as something that helps employees see their jobs as more meaningful and motivating, but our argument is this is actually something that could be motivating for suppliers and customers as well. Could that purpose be motivating for cities and communities? Could this be something we could not only create but lead in some ways? Would that purpose offer you some opportunities you’re not aware of yet?”

Innovative Pioneers

One barrier Rindova sees to her innovative ideas being embraced and implemented on a wider scale stems from the fact that, so far, only a few companies have taken this novel approach. Simply put, many leaders are waiting for someone else to blaze the trail and prove the concept so they can copy the formula. “I think a lot of business practices can become settled if not inertial,” Rindova says. “It’s easier to copy something than it is to create and implement something new. Innovation comes with a lot more uncertainty. However, it’s also the case that when firms do innovate strategically, they can experience disproportionate gains. So, in principle, firms have incentives to do things differently. The only question is how differently, and in what way differently? This is what we want to explore.”

Inspiring Ideas

Most companies see stakeholders as something they need to manage, but what if engaging them on a deeper level could lead to greater innovation? “We argue that purpose is a coordinating mechanism,” Rindova says. “It’s direction-giving. It tells everyone this is where we’re going, which helps with evaluation and selection from investors, from employees who want to be part of this kind of organization. By making the statement, you’ve already moved away from pure economic reasoning. You’re saying that where you’re going matters—the ‘why’—and it’s also coordinating because other like-minded people who see the value of that direction are attracted to this focal point.”

Rethinking how to engage stakeholders and how to expand the company’s purpose is only the beginning. Rindova and Martins want companies to rethink their approach to strategy as well. “The reason this is different from the way we normally talk about strategy is that this is about what you will do in the future,” she says. “It’s not a competitive analysis of how we will win market share. It is a statement about how we will create value differently, which brings more uncertainty. They go hand-in-hand: the notion that you will do something different and manage more uncertainty. Having processes like the one we propose in the paper is a way to manage that uncertainty.”

Looking Forward

What’s needed, as Rindova sees it, is a whole new way of thinking about the future. “It’s not just about how to develop your purpose but how to think with a new set of concepts,” she says. “I teach a course on strategic innovation, and when I first started teaching it to executives, many of them said, ‘I didn’t know I was creative or that I’m allowed to be creative.’ There is a whole ideology about business being rational and calculative, which always operates on the past and the present. This is a bit of a blind spot, I think. Executives should ask themselves if they think about the future as an extrapolation of the present or as something that could be different. That’s where the creative part begins.”

Final Thoughts

“This is not a paper about how firms develop strategies,” Rindova says. “It’s about how firms operate in a world that is increasingly disrupted by multiple uncertainties. This means executives cannot continue to rely on their old playbooks. Our paper offers one perspective on what a new playbook for strategy could look like. I believe one of the key chapters in that new playbook is about moral imagination and purpose.”