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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

‘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….

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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

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

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

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

Photo by Smart on Unsplash

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

What powers the performance of the most successful companies on the planet? What do they know that is lost on so many slow-moving traditional organisations?

It’s a question that we have 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 have answered.

The purpose gap

That answer, of course, is rooted in the cultures of these organisations. Culture is unique to a particular organisation and takes years to build. But what if the key elements of how agile entrepreneurially-minded organisations behave could be codified and therefore replicated? What if it could be understood ‘at source’?

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

Yes, it’s about clarity of purpose and that’s nothing new – 90% of CEOs now claim to be actively engaged in implementing or exploring 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.

By studying the very best entrepreneurial thinking, combined with cutting-edge academic research, we believe we’ve identified why that is. It’s not about having a social purpose – it’s what you do with it.

Our research identifies 9 key attitudinal behaviours which drive business productivity and performance. And, in entrepreneurial businesses, these behaviours appear to be the outcomes of an actively engaged purpose. The key question is what is the source of these productive behaviours – and what is the missing link in more hierarchical, corporate organisations?

It’s not about having a social purpose – it’s what you do with it.

It’s clear that these ‘entrepreneurial’ behaviours are, to some degree, suppressed in most corporate organisations. And the source of this appears to lie in a weakness in three key cultural markers; ownership, trust and contextual clarity. Research suggests that Purpose in the absence of these is unable support the positive performance behaviours typical in an agile culture.

A lack of ownership, trust and clarity creates a gap between purpose and people in the business.

And that’s where the Contexis Index® comes in. By understanding the cultural relationship between purpose and performance and codifying this, our research creates a tool that any business can use to transform its human capital and organisational performance.

The Index is a measurement tool that provides robust metrics that reveal how Purpose is working and where its effect is blocked. It employs rigorous 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.

Data for the Index is gathered via a simple on-line Survey. Results are provided in a detailed Report with data presented graphically together with detailed analysis and recommendations. This will enable you to design highly targeted interventions to bridge the gap with a great deal of confidence since they are based on reliable empirical data.

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% 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 how to bridge the gap between stating a purpose and bringing it alive in the business.

And this is where you come in..

By undertaking this analysis, you will develop remarkable insights into how purpose is working in your organisation and to what extent the key markers of ownership, trust and contextual clarity are activating purpose across the business.

You will also be supporting important research 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 contact me at jrosling@contexis.com.

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

Photo by David Iskander on Unsplash

Why are corporates so hopeless at innovation (and entrepreneurs so good at it?)

Here’s a story we all tell ourselves. Big companies are slow, risk-averse and shackled by process. That means they can’t innovate which strangles growth and value. Entrepreneurs are fast, open to opportunity and free of corporate baggage. That means they innovate and create huge value. QED.

Neither story is necessarily true, of course. But we see evidence to support our beliefs everywhere. The fact behind the myth is that there is a major problem in all but exceptional corporates in making entrepreneurship work.

Actually most corporates are stuffed full of entrepreneurial brilliance

Big companies have so little confidence in their ability to innovate that they spend huge amounts of their shareholders funds in attempting to bring entrepreneurship in from outside. Most have tried buying thrusting businesses and found it is almost always a disaster. Some have attempted Entrepreneurs in Residence but this is usually the route to a padded cell for the appointee. Increasingly we see big companies attempting to insulate the entrepreneur from their atrophic culture by forming arms-length partnerships and sponsorship programmes which can work but often result in hilarious clashes in culture between the corporate and the start-up (once described as the bland leading the blind).

The question that exercises me is WHY?

Why, given the absolute imperative to change, are most (not all) corporates so hopeless at creating innovation, drive and creativity? In a word entrepreneurship?’

How a team reacts under pressure is critical to determine how they behave in real situations and is quite new as a way of looking at team dynamics.

It’s a question I believe has now, at least in part, been answered by some quite brilliant research conducted in the US to describe how teams of people work in different organisations. There are two stand-out reasons why this research is brilliant:

It’s new and is based on real neuroscience (what is actually going on in the head of your people), rather than the ‘observational’ approach of most organisational modelling from Jung onwards.
It’s based on what happens when the Team is under stress or pressure. And that is critical to determine how they behave in real situations and is quite new as a way of looking at team dynamics.

So, how does this address the problem of entrepreneurship in organisations? Not surprisingly, those you would think of as entrepreneurs behave very differently to those you would pigeonhole as ‘corporate’. In fact, under pressure, they work in a diametrically opposed way. Hence the frustrations of entrepreneurship in large organisations. Hence the tendency for entrepreneurially minded people to quit. Yet it turns out that by showing people exactly how they are behaving you can enable them to choose a different path. You can re-programme the behaviour of individuals and teams and make it OK to be more entrepreneurial, faster, more innovative – but stay feeling safe. We call it Agile Teams. The impact can be extraordinary.

It turns out that by showing people exactly how they are behaving you can enable them to choose a different path.

How can a team be helped to chose a different path?

To begin to understand this you have to imagine how teams behave under stress by visualising a circle or clock-face. Corporate teams typically move defensively, in an anti-clockwise direction, moving from concept or idea into evidence-based research in order to validate that idea, then to test it out in a controlled environment to prove it works, and only then to roll it out expecting users to adopt it when they’re actually being forced to comply. This creates little to no buy-in and often results in failed adoption. This is the classic command-and-control, micro-management process. It is a fear-based approach that reduces personal risk but removes choice and attempts to force participation.

Entrepreneurial teams typically move more offensively, in the clockwise direction. A new idea or challenge is shared with the team, which engages to provide feedback and input which refines direction and contributes missing considerations. Once a team of people who share the same ambition join together, put the concepts into action they then evaluate the outcomes against the team’s original intentions and then iteratively work together to make adjustments to the assumptions until the full value of the original concept gets realized. This is a trust and choice-based approach that enrols people’s participation based on their excitement for the project.

Corporates tend to put great value on planning and analysis prior to committing, which means they often move slowly and can get left behind. Entrepreneurs tend to move quickly based on minimal information. They are willing to make mistakes and learn from them, they’re agile and adjust course often, working in a state of continual improvement.

This new way of understanding how teams respond to daily business challenges has already had a dramatic impact on team performance in the few UK companies so far exposed to it.

What this shows is that in order to adopt the best of entrepreneurial thinking and application may not be as hard as the myths would suggest. That actually most corporates are stuffed full of entrepreneurial brilliance. It’s just the way teams have been taught to work that is suppressing it. And if that is true, companies like Google, Lockheed Martin and Spotify that have learnt to release the entrepreneur within may quickly become the rule and not the exception. And that really would be a revolutionary thought.

If you’re interested in learning more then get in touch. We’d love to hear from you. And you might be interested in these articles:

The secret behind Collier International’s global revenue performance

Is being entrepreneurially minded the only survival strategy?

How to reverse the productivity slide, end world poverty and reverse climate change. In ten years.

Here’s a shocking fact for employers. Most people who work in our companies hate their jobs. According to Gallup, just 13% of people in the world are actively engaged at work and this has a massive impact on productivity.

And 1 in 5 hate us. 19% of people admit to actively sabotaging their employer.

This is not just a tragic waste of human joy and potential but a shocking loss to our businesses and the economy.

19% of people admit to actively sabotaging their employer

We read constantly about declining productivity in western economies. 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”.

Gallup estimates lack of engagement at work is costing the US economy $450bn a year. If you factor that globally, that’s $1.7trillion.

Let’s just to put that into perspective for a moment. Let’s pretend we could choose to reinvest that money in solving the world’s problems. We’d eliminate extreme global poverty, end moderate poverty and then go on to reverse climate change all in ten years. (Ending poverty: $3.5tr Jeffrey Sachs ‘The End of Poverty’. Stabilising greenhouse emissions $13tr, UN Intergovernmental Panel on Climate Change).

So just what is going on? Is this wholesale disengagement from the idea of work truly an existential threat to free market capitalism?

It very well might be. But it’s a problem with a strikingly obvious solution.

Only 40% of people have the first idea what their company even stands for. Since a fundamental human need is a sense of meaning and belonging, this gives a fairly strong clue to the cause of all that disengagement and anger.

A sense of meaning is a fundamental human need

And there’s evidence to back that up; 62% of millennials want to work for a company that benefits society and 50% would sacrifice salary for meaningful work (Global Tolerance). And 77% of recruits report they joined their employer partly because of the company’s purpose (Deloitte).

The evidence that offering people something to believe in has a huge impact on their happiness and performance is compelling. Staff in purpose-led companies are 12% more productive, 40% more engaged, 70% more satisfied and 300% more likely to stay (Warwick University, Energy Project).

IMD concluded purpose-led companies showed a 17% increased return over 5 years

It’s axiomatic that human performance leads to business performance. And human performance appears to be strongly influenced by what the company believes in. In a review of 56 academic research papers conducted by Deutsche Bank, 89% showed companies with strong Environmental, Social and Governance factors “outperformed competitors on a market basis, while 85% exhibited accounting-based outperformance”. And the numbers are arresting. According to Havas, purpose-led brands are worth 20% more than their peers and IMD concluded purpose-led companies showed a 17% increased return over 5 years.

The prize is therefore huge. And the solution sounds incredibly simple. To re-engage with our people, to create fulfilment and wellbeing and to build high-performing companies we just need to rediscover and re-communicate what we stand for.

It’s therefore no coincidence that purpose is now driving so many Board conversations, so much internal comms, and even leaking out into consumer advertising (just take a look at some recent banking commercials).

Regrettably, it’s not that simple. As so many are now discovering, meaningful organisational purpose doesn’t just happen. The bad news is that it requires two things that big corporate companies forgot how to do a long time ago.

The first is ownership (see previous article). Without a sense of emotional ownership it’s hard to engage or find the motivation to strive. Without ownership, why bother? Those who feel ownership care. They also act autonomously to serve the good of the company. In research by Cornell University, businesses that offered autonomy grew at 4x the rate of control-orientated firms, with a third the turnover of staff.

Without trust and ownership, purpose is just a set of words

Yet ownership will only exist in an environment of trust (see previous article). According to academic W Edwards-Deming “Trust is mandatory for optimisation of a system. Without trust, each component will protect its own immediate interests to the detriment of the entire system”. Without trust, why take the risk? High trust cultures are effective and productive because they are open, compassionate and creative not inward, fearful and controlling. Energy is directed to the good of the firm, not the protection of the individual’s position. In research by Paul Zak high trust companies were fully 50% more productive.

The lesson is clear. Before investing in purpose, companies need to take a long, hard look at how they are treating their people. Are they creating cultures of ownership and, most fundamentally, creating environments of genuine trust and true compassion? Without these things, purpose is just a set of words. Devoid of human meaning.

As employers, even if we’re not moved by a sense of our moral duty to make our places of work fulfilling and purposeful, compassionate and meaningful; even if we can live with being hated by 20% of our staff; we should be swayed by the compelling commercial case for purpose. $17tr over 10 years is a pretty good return for doing the right thing.