Purpose, not profit, inspires companies to outperform

How do you know if purpose is working effectively in your culture.  And if it isn’t, why not?

The single-minded purpose of business for the last 50 years has been simple; as exemplified in Milton Friedman’s maxim, it has been to generate profits for its shareholders. And it has been a spectacular success.

82% of wealth goes to just 1% of the population

Spectacular that is if you are an asset owner or senior corporate executive. Wealth has undoubtedly been created. But its concentration has been extraordinary. According to Oxfam, 82% of all the wealth generated in 2017 went to just 1% of the global population. It’s equally extraordinary that the consequences of that inequality were not foreseen.

As Paul Polman asks, “why should the citizens of this world keep companies around whose sole purpose is the enrichment of a few people?”

The tumbril or the mob?

Polman may not be threatening the tumbril or the mob but something just as terminal, if not as abrupt. And that is the creeping disillusionment and disengagement from businesses and brands by the societies they serve and the people they employ. In terms of disillusionment, according to Edelman, just 52% of people globally now trust business to do what is right. And as for disengagement, only 13% of people feel their work is meaningful (Gallup).

Just 52% of people globally now trust business to do what is right

Far-sighted business leaders see the threats and are responding; seeking to build businesses that hold to a purpose beyond shareholder return. A purpose that seeks to also create value for employees, consumers, communities and planet. This is not CSR. Nor is it reputation management. It is bringing a social purpose to the heart of business strategy. Surprisingly, this is nothing new but simply a return to the principles of business as a servant of society and the common good first articulated by Adam Smith.

 

A new model for capitalism?

According to Andrew Edgecliffe-Johnson, writing in the Financial Times (Jan 2019), this shift to a more holistic view of the purpose of business is “starting to converge into something that looks like a new worldview, shared by leading executives and investors and shaped by an unlikely alliance of consumers, employees, campaigners, academics and regulators”. In Edgecliffe-Johnson’s view, this could “break a consensus that has governed business for two generations and offer a new model for capitalism based on the watchwords of purpose, inclusion and sustainability”.

Society is demanding that companies, both public and private, serve a social purpose.

That is quite a claim. Certainly, it is the moral duty of business to serve society and not just the narrow interests of shareholders. Even Larry Fink, at the head of the bastion of capitalism that is Blackrock says “society is demanding that companies, both public and private, serve a social purpose.”  But is this just a moral argument? Could doing the right thing actually be more than that? What if pursuing a pro-social purpose not only benefits society and planet, not only supports the wellbeing and fulfilment of employees, but actually enhances business performance and value creation?

Where’s the beef?

Larry Fink goes on to say “to prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.” This idea – that purpose creates performance – is rapidly becoming mainstream. But hold on. Is there really any evidence that this is the case? And, more importantly, can it be shown precisely how this process works in real businesses?

There is scepticism that the full impact of something as nuanced as purpose can be measured. Metrics are “the soft underbelly of the ESG movement,” warns Martin Whittaker, chief executive of JUST Capital.

Yet, the need exists if this is genuinely to be ‘a new world view’, as envisaged by the FT. EY’s Chief Executive, Mark Weinberger, predicts that the metrics around social and people performance will someday be as important to the Big Four as financial audits are today. But “nobody has yet devised a way to measure purpose that is as simple as the bottom line of a profit and loss account”.

Metrics around social and people performance will someday be as important as financial audits are today.

Yes, it is possible to measure purpose

It was to address this deficit that a global group of entrepreneurial practitioners and leading academics, led by Cambridge and Plymouth universities, has been working over the last three years.  Specifically, this team aimed to answer two key questions: Is it possible to measure purpose; to create robust metrics of purpose impact? And, if so, can an empirical model show exactly how purpose works to trigger human and organisational performance and reveal where that impact is blocked?

At Contexis, we’ve always been fascinated with what drives human motivation and productive culture in organisations.  Specifically, in the differences between agile, entrepreneurial businesses and scaled, legacy corporate ones. All of our careful observation of the differences fundamentally come down to one word – ‘purpose’. But not in the way you may think.  It’s not about having a purpose. But what you do with it.

Yes, the best agile, entrepreneurial businesses are obsessively clear about why they do what they do. But that’s not the whole story. They also exhibit a set of specific cultural attributes that activate purpose to drive startling levels of human motivation and performance.  And exactly those same cultural attributes are often suppressed in most scaled businesses – stunted by time, complexity and legacy.

It is these insights that form the basis of a new Model devised by the Universities with robust metrics that seek to establish reliable correlation and causality to show exactly how purpose is driving organisational cultures.

This is not a subjective, external view of purpose, nor is it based on proxy measures. It seeks to provide a clear metric of purpose performance that can be benchmarked internally, over time and against peer comparators. In other words, an Index of purpose effectiveness. It also provides an uncompromisingly accurate view of how purpose is working and where it is blocked in the real business, in real time.

It’s not purpose but its activation that matters

So, what does the Index reveal?  It seems clear that an activated purpose galvanises specific positive human beliefs and behaviours. And it is this that results in enhanced business performance. Purpose has the power to maximise both human and business potential. It’s no longer a choice.

Employees who consider their employer to be purposeful are between 25% and 100% more positive than the median employee across a broad range of performance attributes. Think about that for a second; those people who believe you stand for something more than short term profit are up to twice as effective as the average employee. These people are, of course, more engaged. But they are also more autonomous, more open to ideas, more compassionate and more joyful. They are far clearer on strategy and make decisions faster. They are also around 50% less likely to quit their job. These are the people you really want in your business.

What triggers purpose is principally trust.

The key question is what characteristics in the organisational culture activate purpose to allow for these performance gains – and what is missing when purpose is suppressed.  The answer is a combination of powerful human motivators, most particularly trust and emotional ownership. In other words, what triggers purpose is principally trust.

The honest conversation that transformed the humanity of a global Bank; and grew revenue by 15%

An example of this is provided by a major European Bank. The Bank had made purpose a top priority for its 150,000 people, and its stated purpose was well received in internal surveys. Yet it made little difference to engagement scores.

What had long been thought of as an engagement problem that could be resolved through driving purpose was actually an issue of fundamental distrust.

The leadership team couldn’t understand why purpose was not ‘working’ and decided to use the Index to find out. They were shocked with what it revealed. What had long been thought of as an engagement problem that could be resolved through driving purpose was actually an issue of fundamental distrust. The Bank’s Purpose was quite well understood. It just wasn’t believed or trusted.

The Index showed that less than 25% of employees really believed the purpose the Bank served. And, whether in terms of engagement, innovation, strategic clarity or happiness, those with a strong sense of the Bank’s purpose dramatically outperformed their peers. On the other hand, a sizeable minority of employees felt negatively about the Bank’s purpose. These individuals, concentrated in middle management, underperformed dramatically, particularly in terms of whether they trusted the Bank and its culture, whether they felt a sense of responsibility for its success, or understood and believed in its strategy.

The analysis was clear. There was nothing wrong with the Bank’s purpose. It just needed to be activated through a fundamental focus specifically on rebuilding trust, particularly amongst middle managers. The Bank took up the challenge, embarking on a structured programme of open conversations led by each team leader or Director.

Positive beliefs and behaviours jumped by an average 33%

The results were extraordinary. In teams taking part in the programme, positive beliefs and behaviours jumped by an average 33% after only 6 months of participation. In particular, the critical measures of trust, openness and compassion increased by 40%. Purpose was now working because it had been activated by trust; the negative purpose group had shrunk to less than 10%, whilst the high purpose group now represented over 50% of employees.

Most extraordinary of all, in a wholly surprising and unintentional consequence, revenues in the pilot teams had increased by an average of 15% in just six months. As the Director in charge of the pilot commented,

“we read these days that Purpose drives performance. In our case, this simply wasn’t true. What drove performance was actually trust in the purpose we serve. And that allowed our teams to take real responsibility for performance. In 30 years in the Bank, I cannot remember an initiative that has had anything like this impact. The commercial return has been extraordinary. But, more importantly, the well-being and sheer joyfulness of our people have been transformed.”

It’s not purpose but what you do with it that counts

What the Cambridge work and the Index results shows is pursuing a social purpose is more than a moral duty. Larry Fink is right to say purpose leads to performance. But pursuing ‘purpose’ without understanding the cultural attributes that activate it is at best a waste of time and at worst fundamentally damaging to the cultural fabric of the business.

The Contexis Index, for the first time, picks up the gauntlet thrown down by the FT to ‘measures purpose in as simple a way as the bottom line of a profit and loss account’. It shows that the key activator of purpose is not a set of words but the creation of a culture of trust and emotional ownership.  And it allows organisations to identify accurately and with extraordinary granularity specific communities where the impact of purpose is blocked and to track the impact of interventions or communication on these individuals and to adapt these in real time to maximise the change and build cultures that are meaningful and productive.

As the director of a FTSE Pharma / Healthcare found

“this has fundamentally changed how we think about our people and their motivation. The clarity it’s brought has been extraordinary.”

By undertaking this analysis, companies also join others around the world in supporting important research into how purpose drives organisational performance by contributing wholly anonymised date to the University of Cambridge.

To find out more about how the Contexis Index can transform the impact of purpose in your business, and how you can help this important research please get in touch.

To find out more about the thinking behind the methodology you might enjoy this short EthWord film

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The Neuroscience of Trust

How one of the world’s largest financial institutions got more than it bargained for in implementing purpose

John Rosling is a writer and lecturer on entrepreneurship, CEO of Contexis and Head of Thought at the Contexis Index; ever curious as to how entrepreneurial thinking is the key to activating purpose, stimulating agility and velocity and fulfilling human and commercial potential in global organisations.

‘Most big companies won’t have the velocity to see out the decade’. Survival tips from the ones wearing the running shoes.

90% of CEOs don’t believe their business is moving fast enough to adapt to the changing world.  And that raises a mass of questions. How do I create an agile, high performance culture? How do I engage and align our people?  How do I drive productivity? Land strategy? Create trust in our business?

There’s an old story about two hikers who are confronted by a large bear in the woods. One calmly sits down, removes his boots and puts on a pair of running shoes. “What are you doing!” his panicked friend asks, “you’ll never outrun a bear.” “I don’t have to” he replies” I only have to outrun you”.

 

The life expectancy of a S&P 500 company is down to 15 years!

Whilst CEOs may be right that their business is not moving fast enough, it may not be as bad as they fear. In most cases they only need to go faster than the other guy.  It’s therefore worth asking who is wearing the running shoes in your industry. Which are the agile businesses you face, and what are they doing that you are not?

The answer tends to be the businesses that are smaller, newer, less encumbered with legacy; in other words, the entrepreneurial ones.

 

Entrepreneurial thinking; a mindset not a legal entity

Yet, entrepreneurial thinking actually has very little to do with scale or age. It’s a mindset. It’s therefore worth taking a really close look at what entrepreneurially-minded businesses, of whatever size, actually do. How is that they create that agility of culture, productivity of people and performance of management. And can this be replicated?

 

Entrepreneurial thinking actually has very little to do with scale or age

A big part of what drives agile business is a compelling and engaging purpose which is authentically and consistently held in the organisation.  For purpose to have any impact, it must not only be credible and congruent to the activities of the business. It must also be absolutely authentic. Most large organisations know this and have spent a great deal of time, trouble and money creating and communicating a clear purpose. They believe it’s the key to driving the agility in their people, their leadership and their cultures that they need to survive in the fast-paced and ambiguous world they face. They believe that a clear purpose will engender behaviours of alignment and engagement in their people, clarity and velocity in their management, and openness and creativity in their cultures. These are the hallmarks of the agile, entrepreneurial business they seek to create.

 

For purpose to have any impact, it must be credible and congruent to the activities of the business. It must also be absolutely authentic.

And most are finding it’s making not a jot of difference to the behaviours in the organisation; “we’re just not getting any traction from our purpose” as one C-Suite said to me recently. There is a big gap between the purpose at Board level and the experience of employees and customers. Just why is this?

 

Entrepreneurially-minded organisations achieve agility not by having a purpose but what they do with it.

Agile, entrepreneurial businesses just use purpose in an entirely different way. A way we find can be replicated in almost any organisation to bridge the gap and actually harness all the power of legacy (that currently burns itself up in internal nonsense) and point it outwards to create velocity for the company.

Our experience of these agile and entrepreneurially-minded businesses reveals a clearly defined set of drivers within their cultures that are the secret to bridging the Purpose Gap.

Inspiring leadership helps.  Purpose should be inspiringly and credibly led.  But what the business believes about itself and how it behaves are more important.

The first major difference in these organisations is a strong cultural assumption of TRUST. These cultures tend to be open, compassionate and creative rather than inward looking, fearful and controlling. In more traditional cultures based on control, people are instinctively distrustful of the purpose and hence it has no power to change things for the better.

 

What drives trust is a marked difference in the organisation’s approach to people.

What drives trust, allows purpose to thrive and transforms cultures is the organisation’s approach to people.  There is no mystery to this; as Jeff Weiner of LinkedIn says, it can be taught. There is also nothing soft or altruistic about it; creating trust is a major driver of exceptional productivity and efficiency.  And, as LinkedIn has discovered, the rewards of creating Cultural Agility in terms of building cultures that are innovative, open and always learning can be extraordinary. To find out more about creating agility through building a trust culture read here.

 

There is nothing soft or altruistic about creating trust; is a major driver of productivity.

The second major driver of entrepreneurially-minded businesses is a company-wide feeling of, and desire for, OWNERSHIP.  Unless everyone in the organisation feels – and feels allowed to feel – a powerful sense of ownership of the business it will not flow through into agile employee behaviours. Organisations in which everyone feels an emotional investment demonstrate employee behaviours of alignment, engagement and autonomy. And the simplest and most compelling route to creating a culture of ownership is to create a feeling of ownership of the purpose the organisation serves.

 

Organisations need to reframe the relationship between the company and the employees from one of control to one of self responsibility

This is about a critical shift in how management at every level of the organisation thinks and behaves and about shifting the relationship between the company and the employees from control to self responsibility.  To find out more about creating agility through developing ownership and responsibility read here.

The final driver of entrepreneurially-minded businesses is the ability to manage in CONTEXT.  Whilst trust drives cultural agility, and ownership drives engagement and autonomy, the ability to manage in context defines how effectively and efficiently management behaves.

 

Contextual Management creates clarity, adaptability and, above all, velocity in management decision-making.

An increasingly volatile, uncertain, complex and ambiguous world requires a significant amount of adaptability; and that is something that entrepreneurial management is all too familiar with. Whether because of the speed of development, newness of the market or paucity of resources, entrepreneurial management has long been adept at navigating an ambiguous world.  The key skill entrepreneurial management demonstrates is the ability to make decisions contextually to create clarity and direction rather than getting bogged down in the content. And this is a skill that can be taught.

Where management uses a clearly articulated purpose as the context for key decisions, within an environment of trust and where the whole team is willing to take responsibility, it creates enormous velocity. It also ensures the purpose links the business up from top to bottom.  To find out more about creating agility through managing in context read here.

 

Is there any proof to support these observations?

Actually, yes. So convinced are we that purpose drives performance we wanted to prove it. So, we’ve spent two years creating a measurement methodology with Cambridge University and others that provides the metrics to definitively prove that purpose drives performance. But that’s not enough. We also need to show how this effect works and measure the correlations and causalities between the cultural attributes described above. We need to show how these cultural factors activate and unlock purpose. So that any company can replicate the cultural systems of the best entrepreneurial businesses and start to develop a more dynamic and agile culture. You can find out more about that work, and how you can benefit from it today, here.

It’s easy to agree that purpose is a good thing.  With the life expectancy of a S&P 500 company down to 15 years, it’s easy to identify that the behaviours of aligned engaged staff, open innovative cultures and agile clear-headed management are the key to survival.  The problem is the gap between purpose and behaviour. Without the entrepreneurial drivers of trust, ownership and context muddle, distrust and cynicism will persevere in middle management and purpose will not take root. Without these entrepreneurial ways of thinking no business can hope to be agile. It will always be outrun.  And in a volatile, uncertain, complex and ambiguous world the bear is very large and very real.

 

You might also enjoy these articles:

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How one of the world’s largest financial institutions got more than it bargained for in implementing purpose

 

John Rosling is a writer and lecturer on entrepreneurship, CEO of Contexis and Head of Thought at the Contexis Index; ever curious as to how entrepreneurial thinking is the key to activating purpose, stimulating agility and velocity and fulfilling human and commercial potential in global organisations.

Turn pressure, stress and conflict in business into productivity, innovation and trust

“The ability to deal with people is as purchasable a commodity as coffee. And I will pay more for that ability than for any other under the sun.”

J D Rockerfeller

 

There’s a simple technique to turn pressure, stress and conflict in business into productivity, innovation and trust.

Here’s some good news. It is perfectly possible to make yourself and your people dramatically more productive. To turn conflict into creation, pressure into progress, breakdown into breakthrough. And make everyone a great deal more joyful in the process.

But first you have to accept a fact that is deeply shocking to most highly educated and skilled executives and professionals.  A fact that it took me about 5 years to digest.

 

What you know has surprisingly little impact on how good you are

The fact is that very little of our commercial success has anything to do with technical knowledge, skills and expertise.  It may suit us to believe that our value to our organisations and our clients lies is in our expertise. But it’s not wholly true. In fact our brilliance may be damaging to our effectiveness. And that could be costing us a lot of money.

Research by the Carnegie Institute of Technology shows that only 15% of financial success is due to technical knowledge. 85% is due personality and our ability to communicate, negotiate, and lead (what they call “human engineering”).

 

Our brilliance may be damaging to our effectiveness

Consider this, Nobel Prize winning Israeli-American psychologist, Daniel Kahneman, found almost everyone would rather do business with a person they like and trust rather than someone they don’t, even if the likeable person is offering a lower quality product or service at a higher price.

 

Could all that investment in skills training be a waste of time and money?

There are broadly three areas of skill in a business: technical, commercial and human. We invest incalculable amounts of time and money in training our people, at school and in business, in technical and commercial skills and almost no time at all in developing their abilities in human engineering. And yet that is what accounts for 85% of our success. Skills training is valuable. But we’re missing a trick if we focus on technical expertise to the exclusion of the human.

And there’s another problem. Even where we do spend time and money on helping our people understand themselves and other people, most of the tools we use actually get in the way of taking any practical action.  We are told that the first step in understanding others is to understand yourself. The problem is that the personality tools we use are so complex that people spend even less time thinking about others because they have so much more complex ‘insight’ into themselves.

The difficulty in applying the tools that are supposed to help in this area result in little change in people’s behaviour. And this is particularly so in the way they are experienced – very often away from, and not directly related to, real business environments. Which means that, when the pressure comes on, any learnings are swiftly overwhelmed and made irrelevant.

 

We’re missing a trick if we focus on technical expertise to the exclusion of the human

After all, when did you last apply the learnings from that latest psychometric analysis when the proverbial hits the fan and you and your team are up against crisis, pressure and the clock?

Surely, the key to true dynamic skills is the ability to apply techniques in real time and under pressure.

 

People’s response to pressure is key to understanding how to improve human dynamic skills

That is, after all, what happens in elite sport.  This is how the ‘process of coaching’ works. Firstly, you help a person learn a new technique, then you put them under pressure and see if they can still execute the technique. Then it is called a skill. In a game, if they can execute this skill for the benefit of another team member then they are called a player.

In business we give people lots of techniques but most of those techniques are lost when pressure is applied. No execution. No real players. 15% of the potential value.

The learning is that people’s response to pressure is key in understanding how to improve human dynamic skills, reduce friction and increase productivity. This may sounds like a whole new layer of complexity, on top of ‘personality types’ etc.  But it isn’t. And nor is it new.

J D Rockerfeller said ‘the ability to deal with people is as purchasable a commodity as coffee. And I will pay more for that ability than for any other under the sun’. Perhaps he knew instinctively what the Carnegie Institute of Technology proved many years later.

 

Our response to pressure is predictable. And that unlocks the puzzle.

And we have an ally. Our own psychoanatomy. People’s response to pressure is entirely predictable. And that means there’s no requirement to learn complex psychometric types which are hard to remember and apply. Some simple tools can be applied in the moment, in real times of business stress, to understand and engage with others under pressure. And that really is understanding human engineering.

Modern neuroscience has shown how our brain has developed over time. Most interestingly, how the neocortex (thinking and language brain) has developed.  But there’s one area of our brain that has seen no upgrade in millennia. And that’s the amygdala. The purpose and the functionality of this part of our brain has not changed. It is functionality we share with all our evolutionary antecedents.  And that function is to protect. It kicks into action when there is a threat. When we are under pressure.

New research applies this neuroscience to find out what happens when a person is under stress or pressure in real business environments. Using this, the researchers can codify and predict how people will react. This is rather hard to do in the theoretical ‘observational’ approach of most organisational modelling from Jung onwards.

 

Of tigers and tight deadlines – the unthinking tyrant within

So, what does the amygdala do when we are under pressure?  Firstly, our brain receives a shot of adrenaline to help us respond quickly. It also receives a shot of dopamine to reduce inhibitions that might prevent action. Then the neo-cortex receives a shot of serotonin, basically to help it calm down and thus stop you thinking too much which can be debilitatingly slow. It’s sometimes referred to as ‘the amygdala hijack’.

 

Our amygdala simply doesn’t distinguish between a real threat and a perceived threat

All of this is fantastic when you’re being chased by a sabre-toothed tiger. But not so good at work when we are dealing with complex pressures – and, most critically, other people. Because what the neural research suggests is that the amygdala simply doesn’t distinguish between a real threat and a perceived threat. Our response to stress, at a physiological level, is the same.

We may be the only species that does not suffer from daily threats to our existence. But instead we have invented the game of business. And in that game an amygdala response can be triggered by anything that is a threat to our reputation or our identity. This perceived threat results in exactly the same neurological drug-fest that occurred when the tiger was getting closer. And unlike in our evolution, when amygdala hijack was an infrequent occurrence, today, in the office, it is happening on a daily basis. And that creates unprecedented stress, friction and dramatically decreases productivity.

 

Conflict as a spark to leap forward not dig in and stop

So, if there is a neurological cause, is there a neurological answer? The answer is yes. There are four survival strategies triggered in response to an amygdala hijack.  These are biological responses and hard coded into our DNA. They are therefore entirely predictable.

When under pressure, some people have a need for certainty and so take charge and tend to dictate. They can come across as arrogant and perhaps uncaring. They love ideas.

Some have a need for a sense of freedom. They need to feel they are not boxed in. They can often come across as impatient and restless. They love relationships.

Under pressure a third group have a need for stability, get their heads down, tolerate things and plough on. They love getting things done.

And finally, there’s the group that have a need for security and tend to hibernate in their office. They do not like to make decisions but do they love getting things right.

Since a person’s response to pressure is relatively consistent and therefore predictable, how to deal with that person is equally predictable. There are simple things can be done differently for each style.

 

“With only 15 minutes of planning, we got a whole new approach to a Group Board member that we had struggled with for two years.”

In every office environment there is conflict, and that conflict is made worse under pressure. Breakdown between individuals and within teams is common. It’s both incredibly damaging to productivity and  not great for mental health. Either way it costs a lot of money.

Yet, now we understand the neuroscience behind the problem, there is a simple solution to breakdown. A clear set of strategies people can learn to apply to unblock relationships, build trust and unleash the power of collaboration. These strategies take less than a day to learn and can be applied to real situations immediately.

Find out more about how Agile Styles can be applied in your own business here.

 

“Of all the courses in our core curriculum, this has shown the highest correlation with accelerated revenue growth and improved performance. Individuals and teams in every service line have dramatically transformed their results with these tools.”

Katherine Steen, Colliers University Global Director

 

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John Rosling is a writer and lecturer on entrepreneurship, CEO of Contexis and Head of Thought at the Contexis Index; ever curious as to how entrepreneurial thinking is the key to activating purpose, stimulating agility and velocity and fulfilling human and commercial potential in global organisations.

 

Photo by NeONBRAND on Unsplash

‘90% of corporate strategies fail’. Not if you think like an entrepreneur

How can you get people aligned round your strategy? How can you speed up strategic implementation?

61% of C-Suite acknowledge that they fail between strategy formulation and its day-to-day implementation. We can learn a lot from entrepreneurial business. And it’s not hard to replicate their play-book.

In his 2015 book Thirteeners Daniel Prosser claims that 87% of businesses fail to execute or implement their strategy each year. The colossal waste in money, energy and simple human joy behind that statistic is shocking. And it reflects the much-quoted earlier work by Kaplan and Norton (The Execution Premium) that 90% of strategies fail to deliver all their goals.

 

It’s not the formulation of strategy that’s at fault. It’s the inability to execute.

If this is true, just what is going on? How can this be commercially sustainable? How can highly skilled and highly paid executive teams in leading global companies be getting their basic strategy wrong 9 times out of every 10?

The truth, of course, is that they don’t. Both Prosser and Kaplan/Norton are regularly misquoted.  It’s easy to overlook the important little words “execute” and “all of their goals”. But we still have a problem. And, in an increasingly volatile and ambiguous business world, it’s a fatal handicap to future business performance. It’s not the formulation of strategy that’s at fault. It’s the inability to execute.

 

How can we bridge the gap between strategy and implementation?

According to the Economist Intelligence Unit, 87% of CE Suite say executing strategic initiatives successfully will be essential for their organisations’ competitiveness over the next three years.  Yet 61% acknowledge that they struggle to bridge the gap between strategy formulation and its day-to-day implementation.

 

“Having lost sight of our objectives, we redoubled our efforts”

Walt Kelly

In most organisations, a huge amount of energy and investment goes into strategy design and formulation. But that’s not where the problem lies. In almost all cases, it’s in an inability to execute that kills the strategy.

It’s a problem of clarity and prioritisation, with a multiplicity of competing objectives, paralysing management’s ability to act decisively and strategically.

A problem of engagement, with management, overwhelmed and unclear of priorities, disengaged and unwilling to take responsibility for fear of sanction

And a problem of communication, with line management unable to articulate strategy and align staff behind it.

 

“Fewer than 10% of employees report that they understood their company’s strategy”

Kaplan & Norton The Execution Premium

 

It’s not a problem you find in the best entrepreneurially-minded businesses.

Over 20 years of working on strategy with both the best entrepreneurial businesses and the biggest corporate businesses, I have observed a fundamental difference in the cultural approach to strategy between the two.  And I believe that difference is at the heart of the costly execution problem in corporate business.

That difference is as simple as this: fast-moving, entrepreneurially-minded businesses actively engage their people at every level so that they not only clearly understand strategy but take ownership of it.

Of course, that’s easily done in a small or flat structure. But this is not just a matter of structure and scale. It’s a matter of human beliefs and behaviours.  It can and does work in organisations of any size. But it requires a complete change of attitude.

Key to this approach is having management first identify and emotionally engage with the purpose that exists behind the strategy. This starts at the top but ultimately needs to happen at every level required to execute the strategy. It’s a radically different approach to the imposed top-down, ‘strategic launch’ approach of most large companies.

 

“High performance people do better work if they understand the context…the best managers figure out how to get great outcomes by setting the appropriate context, rather than by trying to control their people”.

Reed Hastings, Netflix

 

First, understand the ‘Why?’

By first understanding the context (the ‘why’), it’s far easier to take ownership and responsibility for the strategy (‘what’ needs to be done).  By then working through a structured process of prioritisation it’s possible to see with clarity how this can be achieved.

That resolves the first execution problem of a lack of clarity, with competing objectives paralysing management’s ability to act decisively and with velocity – and that can be critical. As Baum and Wally conclude in their work “Decision Speed and Financial Performance ‘there is a particularly clear association between strategic decision-making speed and subsequent commercial performance’.

 

Build a culture of trust

And there’s a second feature of entrepreneurial management teams that has been lost in traditional corporate hierarchies; trust.   A lack of trust leaves middle management unwilling to take responsibility for fear of sanction. It creates the familiar sclerotic cultures of endless meetings and analysis which are the hallmark of a culture fundamentally unable to take responsibility. After any time spent in a typical UK corporate it will become abundantly clear why high-trust cultures are 50% more productive (Paul Zak).

 

Communicate to inspire

Clarity of context and a culture of trust also resolve the third problem of strategic execution; communication. If management are confused as to the purpose the strategy serves and unwilling to take responsibility for it, they can hardly be effective in communicating it to, and inspiring, their teams. It’s hardly surprising that, in most organisations, the vast majority of employees haven’t the first idea of what the strategy is – and that’s a major disincentive to effort and commitment.

Entrepreneurial management has long been adept at navigating the kind of volatile, uncertain and ambiguous business world corporate organisations are increasingly having to face. In this new world companies with a desire to survive need to learn the lessons of contextual clarity and trust that allow entrepreneurial businesses of any size to be strategically agile, adaptable and fast.

But for that to happen someone in the organisation needs to take some self-responsibility for changing how things are done. And that will never happen….

 

 

If you enjoyed this article you may enjoy these too:

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How to make your people 30% more engaged, 29% more joyful and 26% more productive. Easily.

How one word helped an ambitious new CEO reinvent his strategy, transform his team and set his business on a path to a €1bn target

 

John Rosling is a writer and lecturer on entrepreneurship, CEO of Contexis and Head of Thought at the Contexis Index; ever curious as to how entrepreneurial thinking is the key to activating purpose, stimulating agility and velocity and fulfilling human and commercial potential in global organisations.

 

Photo by Steven Lelham on Unsplash

How thinking like an entrepreneur could make corporate organisations 26% more productive

What drives agile, highly productive businesses?

It’s a question that leads directly from the current debate about culture and organisational ‘Purpose.’  It’s a question that has made us determined to understand and measure the impact purpose. And to show definitively whether purposeful companies are really better – both ethically and commercially.

But in doing that research, what we have found suggests that, done right, Purpose might offer even more than that.  It make a significant contribution to addressing the current productivity crisis.

Evidence has existed for years, of course, that ethical, purposeful businesses can outperform profit-led peers. The problem is that no-one has been able to consistently prove why or to empirically measure this effect. And that’s a problem in trying to design strategies for large organisations.

Purpose might offer a significant contribution to addressing the current productivity crisis

We have a 20-year interest in entrepreneurial thinking – as practitioners, lecturers and writers.  This led us to exhaustively examine the key positive attitudinal and behavioural differences of people working in an entrepreneurial business environment as compared to a corporate environment, and the impact these may have on business agility and productivity.  That lengthy research has resulted in a distillation into 9 key attitudinal behaviours which drive business productivity and performance in entrepreneurially-minded business.

The critical question, though, is what drives these high-performance behaviours?

For example, a key attitudinal behaviour of an entrepreneurially-minded culture is a self-identified belief in personal autonomy. And autonomy is known to drive business performance. In a study of 320 businesses by Cornell University, those that encouraged autonomy grew at four times the rate of more traditional control-oriented firms, and experienced one third the turnover of staff.

According to economist Francis Green “the lack of individual discretion at work is the main explanation for the declining productivity and job satisfaction in the UK”. But what fosters autonomy? Our analysis suggests the key source of autonomous behaviour is a feeling of emotional ownership.  And the strongest ownership response in most (particularly larger and more complex businesses) is for the purpose the business serves.

But autonomy is just one of the key attitudinal behaviours of an agile, entrepreneurial culture.

The curse of legacy-thinking

The problem is that these ‘entrepreneurial’ behaviours are, to some degree, suppressed in most corporate organisations.  Scale, complexity and legacy thinking dominate.

There is a ‘gap’ between purpose and people

In our work, we identified a disconnect between the purpose the organisation purported to serve and the beliefs and behaviours of employees. There was a ‘gap’ between purpose and people. And the source of this gap lay in a weakness in three key cultural markers; ownership (as above), trust and contextual clarity.

To further our research, we engaged with leading purpose researchers and academics at Cambridge Judge Business School, Cambridge Psychometrics and Plymouth University. Together we developed and modified the Model with the aim of empirically measuring each behaviour, its source and the relationship to purpose. The academics identified robust academic studies from around the world measuring the performance impact of each of the identified behaviours and drivers.

What did we create?

The outcome to all of this work is a robust, academically rigorous Model that measures the efficacy of purpose in organisations, tracks the degree to which it is driving agile behaviours that we identify as entrepreneurial, and the degree to which, and in which demographic, a gap exists.

Data for the Model is gathered through an on-line survey or smartphone app. The App can ‘pulse’ survey population groups to ‘dip stick’ changes in attitudes, for example following an intervention.  Results and analysis are presented to participating companies in a detailed Report and, shortly, via an interactive dashboard.

And what does it prove..?

The results of the initial companies to take the Index have been remarkable. Put simply, Purpose drives productivity and performance. Activating purpose in an employee group leads to an average increase over the median employee of 30% in engagement, 36% in openness to new ideas, 42% in feelings of ownership and self responsibility, 44% in trust, 29% in joy – and 26% in productivity. And the methodology is usefully demonstrating how these impacts are achieved.

As Rupert Lee-Browne CEO of FX group Caxton observes “Without Purpose, a company can only flipflop around without truly consolidated, effective effort. What Contexis has developed with its Index is a very clever way to measure the impact of Purpose on Performance, enabling companies to really motivate their teams. Contexis Index did it for Caxton!”.

And this is where you come in..

The results have been remarkable. Put simply, Purpose drives productivity and performance.

We are now ready to open the analysis to the next tranche of companies. We have the research funding to conduct a pro bono analysis of a limited number of organisations and we are looking for some specific types and scales of organisations. I’d love to hear from you if you would like to know more.

By undertaking this analysis, you will be joining companies around the world in supporting important research into how ethics drives commercial performance by contributing wholly anonymised date to the University of Cambridge. You will also develop remarkable insights into how purpose is working in your organisation and where it is not.

To find out more about how the Contexis Index can transform the impact of Purpose in your business and how you can help in this important research please get in touch.

To find out more about the thinking behind the methodology you might enjoy this short EthWord film

You  might also enjoy these articles:

‘90% of corporate strategies fail’. Not if you think like an entrepreneur

Purpose transforms performance. But if you can’t measure it how can you implement it?

How one company discovered the source of a 20% increase in people performance

John Rosling is a writer and lecturer on entrepreneurship, CEO of Contexis and Head of Thought at the Contexis Index.  Ever curious as to how entrepreneurial thinking can activating purpose, stimulating agility and velocity and fulfilling human and commercial potential in global organisations.

 

Photo by Sean Patrick Murphy on Unsplash

It’s not about having Purpose, it’s what you do with it

What drives high-performing, agile businesses? What do they have that is missing in so many sluggish ‘corporate’ organisations?

It’s a question that we have become obsessed with – and spent the last couple of years researching with leading institutions including the Universities of Cambridge and Plymouth.

It’s a question we think we may just have answered.

The missing link

That answer is rooted in how agile, entrepreneurially-minded organisations behave. Yes, it’s about clarity of purpose. But it’s more nuanced than that. In large organisations, beset by complexity and legacy-thinking, there’s a missing link between Purpose at the top and how it is received in the real business. That gap doesn’t appear in the best entrepreneurial businesses.

There’s a missing link between Purpose at the top and how it is received in the real business

By studying entrepreneurial thinking, combined with cutting-edge academic research, we believe we’ve identified why that is – and codified it into a tool any business can use to transform organisational performance. Our research can show you where this gap exists in your company, however large or complex, and provide the data to support targeted programmes of change.

And in gaining this key insight you are also contributing to important global research.

It’s clear that Purpose-led companies are more attractive and empowering places to work. In some circumstances they can also commercially outperform their profit-led peers. As a result, 90% of CEOs now claim to be actively engaged in implementing or exploring Purpose. And many are finding it’s making not a jot of difference to the beliefs and behaviours of their people.

What has not previously been clear is why the gap between purpose and impact exists, how it can be bridged in the unique circumstances of a particular organisation, and the specific pathways that directly link Purpose to the performance of the business. Without this clarity, it is hard to fully activate Purpose in a business.

The entrepreneurially-minded businesses where this gap does not exist

The Contexis Index® provides this clarity, with robust metrics that reveal how Purpose is working and where its effect is blocked. The Index is the result of research into high performing businesses, and particularly entrepreneurially-minded businesses, by Contexis and researchers at the Universities of Cambridge and Plymouth. It employs rigorous measurement scales to assess a broad range of organisational performance metrics and links these back to Purpose through a defined set of cultural characteristics. The Index provides these metrics, in detail, by demographic (age, sex, seniority, time in business etc.) and location.

The Contexis Index® reveals how Purpose is working and where its effect is blocked.

Data for the Index is gathered via an on-line Survey or smartphone App. Results are provided in an interactive Dashboard that allows you to interrogate the data in real time and compare the performance between demographic groups across the business, or in a detailed Report with data presented graphically together with detailed analysis and recommendations.

And can the gap be bridged?

So far, the results of the initial companies to take the Index whether they are entrepreneurial businesses or complex corporates have been remarkable. Purpose does drive performance. But only where it is activated. Activated purpose leads to an average increase (over the median employee) of 30% in engagement, 36% in openness to new ideas, 29% in joy and 26% in performance. And the results are showing how this activation is achieved and the specific cultural markers that appear to bridge the gap between stating a purpose and bringing it alive in the business.

Purpose does drive performance. But only where it is activated.

As Rupert Lee-Browne, CEO of FX group Caxton, observes “Without Purpose, a company can only flipflop around without truly consolidated, effective effort. What Contexis has developed with its Index is a very clever way to measure the impact of Purpose on Performance, enabling companies to really motivate their teams. Contexis Index did it for Caxton”.

And this is where you come in..

We are now looking to work with a small number of additional companies. We have the research funding to conduct a pro bono analysis of a limited number of organisations and we are looking for specific types and scales of organisations. I’d love to hear from you if you would like to know more.

By undertaking this analysis, you will develop remarkable insights into how purpose is working in your organisation and where it is not. You will also be supporting important research into how ethics drives commercial performance by contributing wholly anonymised date to the University of Cambridge.

To find out more about how the Contexis Index® can transform the impact of Purpose in your business and how you can help in this important research please get in touch.

To find out more about the thinking behind the methodology you might enjoy these short films

John Rosling is a writer and lecturer on entrepreneurship, CEO of Contexis and Head of Thought at the Contexis Index®; ever curious as to how entrepreneurial thinking is the key to activating purpose, stimulating agility and velocity and fulfilling human and commercial potential in global organisations.

Photo by Shirly Niv Marton on Unsplash

Purpose drives performance. End of…

If you are occasionally frustrated by the sometimes woolly debate about Purpose, you are not alone.  It’s made us determined to definitively prove that Purpose-led businesses are better businesses – both ethically and commercially. And to do that we needed to measure exactly how Purpose is working to drive performance in real companies today.

We are determined to definitively prove that Purpose-led businesses are better businesses – both ethically and commercially.

After extensive work with Cambridge University, the University of Plymouth and others we think we’ve cracked it. We think we can now definitively measure the impact of Purpose and, in doing so, help companies to understand how it is working in their business – and where it is not.

We think that this could play a part in promoting a better way to do business. And if that sounds like a useful ambition you can help take this research to the next stage – and, as a bonus, find out how Purpose is really working in your own business.

 

We know Purpose inspires and engages employees. But, if Purpose is driving strategy it also creates clarity and velocity – critical in today’s ambiguous business world.

Employees who get your purpose perform, on average, 26% better than the median employee

The positive benefits of Purpose are clear in terms of employee engagement and wellbeing. But that tells only half the story. Circumstantial evidence has been around for years that Purpose-led businesses can commercially outperform their profit-led peers. But why? What has not previously been clear is why and how Purpose drives this commercial performance; and the specific pathways that directly link Purpose to the performance of the business.

Without this evidential clarity, it is hard for organisations to understand and fully implement and activate Purpose.

 

If you can’t measure it, what’s the incentive to change?

That’s why, working with leading researches and academics, we’ve developed an Index to provide robust metrics that reveal how Purpose is working and where its effect is blocked. The idea is to give companies the evidence that will enable them to run their business more compassionately for their people, more ethically for society and more sustainably for the planet. And to design highly targeted interventions and cultural change programmes with a great deal of confidence since they are based on reliable empirical data.

The new Index employs rigorous measurement scales to assess a broad range of organisational performance metrics and links these back to Purpose through a defined set of cultural characteristics. This provides, for the first time, a comprehensive analysis of the drivers of an activated Purpose on organisational performance. The Index provides these metrics, in detail, by demographic (age, sex, seniority, time in business etc.) and location.

Initial results have been remarkable; and remarkably consistent

In aggregating these metrics, the Index provides a single headline measure of business performance in three defined areas of activity; people, culture and management/leadership. Within each of these areas the Index provides a measure of the specific behavioural characteristics that are known to be primary influencers of performance. The Index then measures the critical moderating characteristics of ownership, trust and contextual clarity that are seen to act as pathways between Purpose and performance outputs.

Data for the Index is gathered via a simple on-line Survey or smartphone App taken by all or a sample of employees. The App also offers the ability to ‘pulse’ survey all or specific groups in real time to assess and test changes as the result of interventions or announcements in the business.

 

And what does it prove..?

It’s early days but initial results have been remarkable; and remarkably consistent whether a small private business or a complex corporate. Purpose drives performance. End of..

Put another way, employees who get your purpose are, on average 30% more engaged, 36% more open to new ideas, 42% stronger in feelings of ownership and self-responsibility and 44% in trust, 29% more joyful – and they perform fully 26% better than the median employee. And the methodology is starting to
show exactly how these impacts can be achieved.

As Rupert Lee-Browne, CEO of FX group Caxton, observes “Without Purpose, a company can only flipflop around without truly consolidated, effective effort. What Contexis has developed with its Index is a very clever way to measure the impact of Purpose on Performance, enabling companies to really motivate their teams. Contexis Index did it for Caxton!”.

 

And now we need your help

You can help take this research to the next stage – and, as a bonus, find out how Purpose is really working in your own business

We are now ready to open the analysis to the next tranche of companies. We have the research funding to conduct a pro bono analysis of a limited number of organisations and we are looking for some very specific types and scales of companies. I’d love to hear from you if you would like to know more.

By undertaking this analysis, you will develop remarkable insights into how purpose is working in your organisation and where it is not. You will also be supporting important research into how ethics drives commercial performance by contributing wholly anonymised data to the University of Cambridge.

To find out more about how the Contexis Index can transform the impact of Purpose in your business and how you can help in this important research please get in touch.

To find out more about the thinking behind the methodology you might enjoy this short EthWord film

 

John Rosling is a writer and lecturer on entrepreneurship, CEO of Contexis and Head of Thought at the Contexis Index; ever curious as to how entrepreneurial thinking is the key to activating purpose, stimulating agility and velocity and fulfilling human and commercial potential in global organisations.

 

Purpose: If you can’t measure it, what’s the incentive to change?

Our ambition is to measure the commercial impact of Purpose and show specifically how Purpose is acting to change human behaviours and drive business performance.

It’s widely accepted that Purpose-led companies are more attractive and empowering places to work. But can it be indisputably and empirically proved that ethical businesses also commercially outperform their profit-led peers? Is a robust measure of Purpose Efficacy possible?

Can it be indisputably and empirically proved that ethical businesses also commercially outperform their profit-led peers?

A clear set of purpose metrics

If it is, it could have a significant impact on promoting a better way to do business globally. It would enable organisations of all sizes to embed Purpose and ethics into their strategy, confident of the long-term benefits to commercial performance and value creation, based on a clear set of metrics and an understanding of exactly how Purpose can drive performance in their specific organisation. The Contexis Index® solves the measurement problem for the first time, providing credible metrics based on the latest academic thinking on the impact of Purpose on human performance in businesses today and showing how this is working so that you can activate Purpose right across the business to enhance staff and societal wellbeing whilst also supporting long-term value creation.

The Index is the result of research into high performing businesses by Contexis and researchers at the Universities of Cambridge and Plymouth.

The Index is the result of research into high performing businesses by Contexis and researchers at the Universities of Cambridge and Plymouth. It employs rigorous measurement scales to assess a broad range of organisational performance metrics and links these back to Purpose through a defined set of cultural characteristics. This provides, for the first time, a comprehensive analysis of where the gaps exist between Purpose and organisational performance. The Index provides these metrics, in detail, by demographic (age, sex, seniority, time in business etc.) and location.Data for the Index is gathered via an on-line Survey or smartphone App. Results are  provided in a detailed Report with data presented graphically together with detailed analysis and recommendations.

Are you clear as to how purpose is really working in your organisation?

Running the Index through your business will give you a clear understanding of how Purpose is working in your own organisation and where its effect is blocked. It will also enable you to design highly targeted interventions with a great deal of confidence since they are based on reliable empirical data and ‘pulse’ survey all or specific groups in the business to assess their impact in real time.

And in gaining this insight you are also contributing to important global research.

Running the Index through your business will give you a clear understanding of how Purpose is working in your own organisation and where its effect is blocked

We are now ready to open the analysis to the next tranche of companies. We have the research funding to conduct a pro bono analysis of a limited number of organisations and we are looking for some specific types and scales of organisations. I’d love to hear from you if you would like to know more.

By undertaking this analysis, you will be joining companies around the world in supporting important research into how ethics drives commercial performance by contributing wholly anonymised date to the University of Cambridge. You will also develop remarkable insights into how purpose is working in your organisation and where it is not.

To find out more about how the Contexis Index can transform the impact of Purpose in your business and how you can help in this important research please get in touch.

To find out more about the thinking behind the methodology you might enjoy this short EthWord film

 

John Rosling is a writer and lecturer on entrepreneurship, CEO of Contexis and Head of Thought at the Contexis Index; ever curious as to how entrepreneurial thinking is the key to activating purpose, stimulating agility and velocity and fulfilling human and commercial potential in global organisations.

 

Photo by Smart on Unsplash