Steve Fuller’s latest article for Management Today makes the case for corporate purpose and links up nicely with our latest Round Table debate – Purpose: Revolution or bandwagon
[pullquote]Ignore these three truths and yes, your ‘purpose’ will just be corporate jargon.[/pullquote]
Click here to read the full article or there is a summary below.
PURPOSE SHOULD BE TRANSFORMATIONAL
Senior managers must recognise that purpose is supposed to transform your business from top to bottom. Think of it as something akin to a capital investment. It should be scary and create ‘perpetual stretch through constant innovation and business transformation.
PURPOSE HAS TO BE GROUNDED IN REALITY
To be credible, your purpose must be mapped against clear and measurable goals. If your purpose to promote healthy eating, how much sugar will you cut from your products and by when?
PURPOSE NEEDS THE WHOLE SENIOR LEADERSHIP TEAM BEHIND IT
Without the full backing of the entire leadership team, it is very difficult for purpose to take root. This is why purpose can’t ‘belong’ to just the PR or sustainability team.
But if your purpose is audacious and transformational, securely tethered to the realities of your business and backed by an ‘all-in’ commitment from your senior management team, then you will be able to reap the commercial benefits.
The latest in our House of St Barnabas debates was a scorcher.
We thought we’d try and put people who run global corporations, banks and consultancies round a table with charity heads and some feisty entrepreneurs, suggest that Purpose is just another bandwagon and see what would happen.
The result was a fascinating and impassioned debate. Some incredible people were there and I am so grateful for their candour and their insight.
I thought you might be interested in the outcome which you can read here; it’s a short Slideshare and well worth 3 minutes of your time.
At Contexis we love Salt magazine, and this article by Steve Fuller, summarising a new report linking corporate purpose with commercial performance, is a recent favourite.
To read the whole article click here, or there is a short summary below.
The taskforce behind the research, brought together by the Big Innovation Centre, includes FTSE CEOs, investment houses, leading business schools and consultancy firms, supported by the Bank of England. It is unequivocal about the link between purpose and economic success, concluding that if purpose is put at the heart of British business, it could increase the value of British firms to the tune of £130 billion a year..
[pullquote]the key to corporate greatness is ‘the pursuit of a clearly defined visionary corporate purpose, which sets out how the company will better peoples’ lives’.[/pullquote]
Our current British business ecosystem works against the creation of purposeful companies. Systemic barriers include fragmented, diversified shareholder base, and a legal and regulatory system that promotes short-term profit maximisation. Another blocker identified by the report is the persistent undervaluing of ‘intangibles’. It’s in the nature of purposeful companies to invest in know-how, R&D and skills, yet these assets are consistently and systematically underestimated by financial markets.
It is hoped that the report will act as a stepping stone to change, and that a new, progressive culture of business is possible. The task force is currently gathering feedback on 20 different policy options – ranging from changes to corporate law and governance, to shareholder engagement and taxation – and the results will inform their Final Report, scheduled to be released in autumn 2016.
Fingers crossed that with big players like the Bank of England and London Business School backing purposeful business visionary corporate purpose has well and truly entered the mainstream.
There is always something interesting to read on the MindGym site, and we really enjoyed this article on business purpose, entrepreneurship and Elon Musk.
Entrepreneurial leaders like Musk tend to have a sense of purpose that works on three levels: by seeing the outcome of their work (in this case Tesla’s first electric car for a mainstream audience), by contributing towards something they couldn’t achieve alone (Musk is a tech entrepreneur, not an automotive engineer) and by making the world a better place (Musk’s ambition for a sustainable global energy future).
58% of US workers would take a 15% pay cut to do work which is aligned with their personal values, but only 24% of US workers think their work is meaningful, and a further 17% aren’t sure. If people don’t think their work makes a difference to themselves or anyone else, how can we expect them to be motivated to lean in and to always give their best? One way to help people find meaning in what they do is to connect them with the person, initiative or community they positively impact:
Task purpose: I can see the fruits of my labor. My efforts lead to progress, and no work is futile.
Collective purpose: I’m contributing towards something I couldn’t achieve alone. Having a strong sense of contributing to a team effort motivates me to dig deeper and perform better.
Social purpose: My work has a wider impact and it matters beyond my immediate workplace.
The opportunity to have a meaningful job is open to us all. For our thoughts on purpose in business you might want to read our latest article on how purpose can help boost productivity.
You can read the full article here.
The transformative effects of digitisation have disrupted entire industries and leaders need to move faster or face oblivion.
Traditional, linear organisations arose in response to scarcity; acquiring rare things (land, materials and other resources) and protecting them with hierarchies, rules and structure such as protective barriers. Today, information based “Exponential Organizations” (ExOs) use data for free. And even if leaders in a traditional, linear company spot an opportunity, company size, bureaucracy and legacy can prevent them from capitalising on it before faster moving rivals.
There is a lot in this book, with ten attributes of ExOs, the nine dynamics of the ExO ecosystem, and the twelve steps to building an ExO in order to disrupt and dominate your industry. Hopefully, the ten points below will provide a useful summary. [pullquote] An Exponential Organization (ExO) is one whose impact (or output) is disproportionally large – at least 10x larger – compared to its peers because of the use of new organizational techniques that leverage accelerating technologies.[/pullquote]
- Countless industries will digitize; the digital revolution so far is just the tip of the iceberg.
- Every company is or will evolve into an information-based entity.
- Unlike their traditional predecessors, “Exponential Organizations” (ExOs) thrive on abundance, not scarcity.
- ExOs grow quickly because they have little restrictive infrastructure.
- The technology risk for information-based start-ups is minimal.
- Rather than owning assets, ExOs borrow or lease them at little or no cost – like Uber, Airbnb and Google.
- ExOs remain agile, rent employees and use cloud computing.
- Every organization needs a “Massive Transformative Purpose” (MTP) to engage the necessary talent and communities of committed fans.
- Small and midsize organizations should implement many of the principles of good ExOs.
- Executives must take responsibility for transforming their firms into ExOs.
If you want to know more click here
This is a question that really bothers me. It’s great that so many organisations are working on purpose, talking about purpose and publishing statements about purpose. But why is so little of this making meaningful change? And how do we stop this just becoming the latest management and consultancy bandwagon?
We wondered what the people on the front line of the Purpose movement thought. So, we brought together people who run huge global corporations and the big strategic consultancies who advise them, with the Heads of international Charities deeply involved with purpose in society, and some top entrepreneurs to whom purpose is the founding principle of their business to spice up the mix.[pullquote]”The cult of efficiency can dehumanise people, create silos and lead companies to do some really stupid things”[/pullquote]
The debate was fascinating.
What we are doing now is just not working
In a couple of hours of honest and quite powerful conversation a number of things became incredibly clear:
- What we are doing now is just not working. The Friedmanian idea that the purpose of business is simply to maximise profit has created organisations that ignore the human and so are inherently unsustainable. There has been a fundamental breakdown of trust between business and society; less than a third of people think business is even ethical.
- Equally flawed is the idea that people are fundamentally self-serving and performance can be best enhanced through control, fear and intrinsic reward. This notion has been comprehensively debunked and yet is still the founding principle driving how most large organisations manage their people.[pullquote]”We need to put human beings back at the heart of business. Human beings we are relationship orientated and hard-wired to seek a bigger purpose”[/pullquote]It has created a situation in which 92% of people feel their job is actually a detriment to their welfare. We need to find a different way to manage organisations. A way that considers the whole person – and that means our people, our customers and the broader society we live in.
Happiness is the new productivity
[pullquote]”Happiness is the new productivity and what creates happiness is meaning-making (purpose) ” – Rich Fernadez[/pullquote]At the same time there is plenty of evidence that organisations with aligned and happy staff and with honest and adult relationship with their customers and communities are more productive, more profitable and more valuable to their shareholders. And what fundamentally underpins all of this is a clearly articulated and motivating sense of purpose. To quote Rich Fernadez “Happiness is the new productivity and what creates happiness is meaning-making (purpose)”
And this is just not an option anymore. Businesses without clear purpose are just not agile and responsive enough in a world of rapidly accelerating innovation velocity and exponentially increasing information. Without the clarity and agility that clear purpose brings to every level in an organisation the business will suffocate.
And there’s another problem. In a fully connected and increasingly transparent world, the citizen and not the brand holds the power. And more and more people are as interested in our beliefs and the purpose we serve as in our products.
An inauthentic purpose is worse than no purpose at all
[pullquote]”Many corporates historically have used purpose simply as a PR exercise. There’s a SAY-DO gap – a lack of integrity around purpose”[/pullquote]
If this is so clear to those who run global organisations, then why is purpose not working in most global businesses? Two things became very clear.
In complex, dynamic organisations it requires an enormous amount of sustained focus to create a unified sense of purpose. Making a statement of purpose is just not enough; in fact without a complete transformation of how people are treated (trust, autonomy) at every level in the organization it can be actively damaging.
“Many corporates historically have used purpose simply as a PR exercise. There’s a SAY-DO gap – a lack of integrity around purpose”. That can be very damaging
[pullquote]”The greatest mistake is not being authentic. An inauthentic purpose is worse than no purpose at all”[/pullquote]
And purpose must be completely authentic. The purpose needs to fully congruent with the values of the business and encompass how everyone operates.
Five principles for survival
Remarkably, at the conclusion of the debate, what almost all of these business and third sector leaders agreed upon was that an organisation is at its maximum potential when everyone is working to the common good.
And to achieve that, and to maximise business potential and even survival in today’s changing environment, businesses need five clear things:
- The imagination and integrity to see the whole person
- A clear purpose that is authentic and congruent
- The courage of conviction to drive that purpose throughout the business
- Inspiring leadership committed to sustaining the purpose
- Effective communication channels
To see the full output from the debate click here
A great article from Steve Fuller, creative head and co-founder of The House, that shows how purpose can help you grow any business, not just the Unilevers of this world. You can read the full article here or there is a summary of the main points below.
Purpose is a powerful lens for innovation
[pullquote]purpose lets you widen your horizons while still keeping your focus[/pullquote]
Purpose doesn’t just open up more possibilities, it also narrows your innovation strategy into a laser-like focus, giving you permission to ask: is this new opportunity really in line with what our business is ultimately about?
Purpose drives investment (and makes you more investible)
The evidence* shows that having a clearly communicated sense of purpose builds business confidence, drives business investment and can attract new investors.
Purpose puts the wind behind your sails (and sales)
[pullquote]72% of global consumers would recommend a company with purpose to others, a 39% increase from 2008 (Edelman 2012[/pullquote]
Purpose is a purchase trigger. A 2012 Edelman survey revealed that over half of consumers will pick the purposeful brand when price and quality are the same. And, customers don’t just buy from purposeful companies: they become advocates.
In the previous article (Too good to be true?) I articulated our belief that the shift from profit-led to purpose-led thinking has the potential to change the world. We believe it has the power to shift the business paradigm from one in which 60% of employees actively hate their jobs to one in which it’s the norm for people to be proud and energised by their workplace; where young talent seeks out big companies instead of actively shunning them.
[pullquote]”Only 20% of young people today wanting to work for a big company”
It’s fantastically exciting to see so many huge organisations actively focussed on Purpose. Yet in most corporate organisations, purpose is just not working. There is a gaping chasm between the purpose articulated by the Board and the reality experienced by the people in the organisation. And if that gap is not bridged, purpose will die, the nay-sayers and cynics will win and a once in a generation opportunity will be lost.
Yet there are organisations where this gap does not exist. It’s easy to see in small, agile, exponentially-growing entrepreneurial companies where the purpose runs through the company like a stick of rock. It’s easy to say this is because they are small or new or exciting (and there is much in that argument) but ‘purpose-led, entrepreneurial thinking’ is not driven by scale or chronology but by an attitude of mind. Would it not be more intelligent to try and identify the beliefs and behaviours that these companies exemplify and see what can be copied?
There are a small but growing list of global organisations that have done just that. These global businesses share a lot of these entrepreneurial attitudes to purpose-engagement. Yet, Apple is not small, REI is not new and Unilever is hardly exciting.
Our experience of these agile and purpose-led businesses reveals a clearly defined list of cultural beliefs and behaviours that are the secret to bridging the gap.
Inspiring leadership helps. Purpose must be inspiringly and credibly led. But what the business believes about itself and how it behaves are more important.
[pullquote]Without the beliefs of trust, ownership and context to bridge that gap, muddle, distrust and cynicism will persevere and Purpose will not take root[/pullquote]
The first belief we observe in all organisations that genuinely engage purpose at every level is an absolute commitment to TRUST. Without trust in every vertical and lateral relationship, purpose will not flow through into an agile culture of openness, empathy and innovation. Cultural Competence will not exist.
The second belief pattern is around OWNERSHIP. Unless all the players in the organisation feel – and feel allowed to feel – a powerful sense of ownership of the business and its purpose, it will not flow through into staff behaviours of alignment, engagement and autonomy. Without ownership Staff Competence is weak and customer value compromised.
The final belief drives how effectively decisions are made and strategies implemented. This organisational language we call Context allows for the organisational Purpose to flow through into creating Management Competencies of agility, clarity and velocity.
It’s easy to agree that Purpose is a good thing for organisations big and small. It’s easy to identify the behaviours of aligned and engaged staff, open and innovative cultures and agile and clear-headed management that we would all love to see in our organisations. The problem is the gap between the two. Without the beliefs of trust, ownership and context to bridge that gap, muddle, distrust and cynicism will persevere and Purpose will not take root. And that really will be a tragedy.
It is wonderful to see leading corporate advisors like Deloitte, KPMG and EY embrace the power of purpose and compassionate business, and it makes it more important for us to get a clear idea of what purpose actually is and what it isn’t. Graham Massey’s article for SALT magazine is a great illustration of some of the differences. We particularly like the fact that he has highlighted how purpose links with commercial performance.
You can read the whole article here and a summary is below.
Purpose is more than ambition or mission
Doubling the size of your business is an ambition. “Making sustainable living commonplace” is a purpose. Firms like Patagonia and Tesla have all shown that having a purpose that connects to a greater good goes hand-in-hand with growth and commercial success.
Purpose is more than CSR
CSR is great for establishing “basic hygiene, but purpose goes further. With CSR, companies do good as an add-on to their usual activities. Purpose means putting positive change at the heart of your products, services and strategy.
Purpose is more than environmental sustainability
Purpose gives us permission to think even bigger. Recent events in Paris – negative and positive – offer us a moment to step back and think about all of the major global challenges we face.
[pullquote]Purpose comes from the sweet spot where your love and passion, your skill and the zeitgeist overlap.
David Hieatt – Do Purpose [/pullquote]
Purpose IS a growth strategy
A clear sense of purpose will guide you into new markets, new products and towards new customers and partners. The evidence from brands such as Ben & Jerry’s and Dove shows that purpose-led brands outperform.
Purpose IS a purchase trigger
Purpose inspires customers. As the business thinker Simon Sinek says, “people don’t buy what you do, they buy why you do it”.
[pullquote]A 2012 Edelman survey revealed that over half of consumers will pick the purposeful brand when price and quality are the same.[/pullquote]
Purpose IS an investment driver
The evidence shows that having a clearly communicated sense of purpose driving your business at its core will build confidence, drive business investment and attract new investors, and purpose can also help you find new sources of investment.
Get your purpose clear, and it will act as both your engine and your compass. Can you afford not to build your business on purpose?
Graham Massey is the business head of The House, a consultancy that believes valuable businesses are born out of purpose.
“why your organization exists and transforming through your purpose is the key to success in business in the 21st century”
An extraordinary thing has just happened. A strange and new belief has suddenly become mainstream; the belief that the pursuit of purpose before profit is the primary function of business.
Quite suddenly, ‘purpose-led’ has moved from the preserve of social enterprise to being the new business orthodoxy. This has the power to irrevocably change how we think about business – and how business is done.
Consider this comment: “why your organization exists and transforming through your purpose is the key to success in business in the 21st century”. This isn’t the view of some Palo Alto futurist. This is the settled view of Ernst & Young.
There are, inevitably, a host of reasons behind the new orthodoxy.
The march of the Millennial generation with their purpose-driven agenda into the labour market is certainly starting to have an impact. Within the next 8 years 75% of the working population is predicted to be from this generation. And business leadership is adapting rapidly to that challenge.
Yet, this is by no means the only factor at play here. The breakdown of trust between big business and wider society in the recent recession, particularly in western economies, has had a big impact. And even more compelling to forward-thinking Boards is the erosion of trust between many companies and their own employees.
And there’s one more factor that is sometimes overlooked. Companies where purpose is fully engaged at every level of the business are just better than profit-led ones: better to work for; better to buy from; faster growing and more profitable.
Here are just some of the facts. Employees in genuinely purpose-led companies are 12% more productive, 40% more engaged, 70% more satisfied and 300% more likely to stay in the company (Warwick University and The Energy Project). 87% of business leaders believe their company performs better if their purpose truly goes beyond profit and 89% of customers think purpose-led companies deliver better products & services. And in 2014, businesses with meaningful brands connected to purpose outperformed their stock-market peers by 120% (Havas Meaningful Brand Index 2014).
[pullquote]‘we have developed an inspiring Purpose. We are really proud of it. The Leadership team has bought into it. And we are getting absolutely zero traction across the organisation. Just why is that?’[/pullquote]
Sounds too good to be true? Well, regrettably it is. And the reason for that is that, whilst it’s fairly easy for enlightened Boards to develop and adopt Purpose, it is incredibly hard for organisations culturally and structurally inured in ‘shareholder value’ and profit-centric thinking to adapt to it.
To quote the Global Head of People of a large and well known global company ‘we have developed an inspiring Purpose. We are really proud of it. The Leadership team has bought into it. And we are getting absolutely zero traction across the organisation. Just why is that?’
There is an answer to that question and it lies in understanding the yawning gap in most organisations between Purpose and the reality experienced by people who work there. It lies in understanding why this doesn’t exist in the rare, usually entrepreneurially-founded, organisations that have fully engaged purpose. And in understanding that the beliefs and codes of behaviour found in these companies are not some strange alchemy. They can be replicated. And our next article (The PURPOSE GAP) explains how.
With relief, we see Apple doesn’t not occupy the top spot, though it does make number two – and with good reason. Start up and tech friendly services Slack and WeWork both make the top 15. More interestingly, a click through on to any of the listed companies reveals genuinely helpful stories about their road to success plus visuals, videos and positioning statements. From cool facts about Tesla to Virgin America’s flight safety video that went viral on YouTube, this is great source of treasure for leaders seeking external inspiration.
Businesses have been transforming themselves for generations. When is this positive – rather than a negative cost-cutting exercise? And is ‘why’ the word that makes all the difference?
Valerie Keller, Executive Director, Strategy, and Global Leader of the EY Beacon Institute looks at the history of business transformation and argues that purpose-led transformation is unique and therefore more effective than the pursuit of profit, given that it establishes a clear reason for firms to exist.Profit-centric business models are primarily concerned with what companies do and how they do it. Contrast this with purpose-centric business models which start by defining why the company exists. They address the ‘why’ first – and the ‘what’ and ‘how’ afterwards.Unilever is a great example of a large corporate that has maintained its focus on purpose-led growth over the past 125 years. Today it has literally millions of people keen to join the organisation. These people want to improve others’ lives as opposed to simply adding to Unilever’s bottom line.
The employer/employee contract has changed. It’s on an equal footing. Employees are looking for far more than the ‘hard’ benefits of reward, recognition and career development. They want to work for a company which stands for something that matters to them – and where that is manifested across the entire customer and employee experience. Time for big companies to get serious about purpose. “The process is not hard, but it is deep and requires commitment. The journey is not arduous, but it is continuous.”
Purpose is increasingly being touted as the key to navigating the complex, volatile, ambiguous world we face today, where strategy is ever changing and few decisions are obviously right or wrong.
While leaders may be able to clearly articulate their organisation’s mission, fewer than 20% of them have a strong sense of their own individual purpose. Even fewer can distill their purpose into a concrete statement. Yet at the same time leaders say that understanding their purpose is the key to accelerating their growth and deepening their impact, in both their professional and personal lives.
The process of articulating your purpose and finding the courage to live it—what the authors call purpose to impact—is the single most important developmental task a leader can undertake and they share their step-by-step framework to help executives find and define their leadership purpose and put it to use.
This extensive Report sets out to explain what makes for truly successful innovation both through an examination of the theory and analysis of seven winning innovations of the year. In doing so the Repot seeks to address two key questions: how do I launch the next breakthrough success in my organization? And how can I improve our overall innovation performance from slow, expensive, and inconsistent to fast, resource-efficient, and consistently successful?
At 53 pages it’s quite a read but well worth dipping into for some challenging and interesting perspectives on how we can all transform the speed and success of innovation.
At the heart of Nielsen’s view of what makes for successful innovation is the Jobs Theory which essentially holds that what causes a person to consume a particular product in a given situation is not the intrinsic qualities of the product but rather the progress the person is trying to make in that particular circumstance.
People don’t so much buy products, as hire them to perform jobs in their lives. Consumers pull brands into their lives to address circumstances in which they need some help to resolve a struggle or fulfill an aspiration—to make progress.
Consequently, successful innovation should focus not on the consumer nor on the product, but rather on the circumstance. Successful innovations perform jobs that formerly had only inadequate or nonexistent solutions. Innovations that resolve well-defined yet poorly performed jobs succeed.
The report contends that most managers look at the world and see consumption, but innovators look out and see non-consumption and compromises. It challenges us to ask where we can find non-consumption and compensating behaviours in our own customers’ lives.