What is your why? The Purposeful Organisation

The ‘purpose-led organisation’: what is it, what are the realities behind such an operation, and what are the driving forces making it one of today’s hot business topics? These and other questions were posed at the latest Eton Bridge Partners Business Transformation and Technology roundtable, with the goal of exploring the real-world relevance of ‘purpose’ in a commercial setting – and the potential it has for ‘future proofing’ those organisations prepared to take it seriously.

But first however, we started with a definition of the role of purpose in a business setting. The general consensus from the day was that it acts as a ‘golden thread’ that serves to pull together the three core considerations of vision, mission, and strategy. Indeed, as one attendee neatly surmised (as an example): “the call to put a man on the moon, and agreeing to it, was the mission, the aspirational goal that NASA set itself. Formulating the plan, building the necessary capabilities, and training the astronauts – that was the strategy. As for the purpose, the underlying reason supporting this endeavour: that was to advance science and human understanding”.

Purpose was also described as something personal, internal and therefore more meaningful to all those involved, namely employees, investors, customers, and society at large; a value people naturally gravitate toward that’s more self-actuating than a strategy focused strictly on measurable results. Or as one attendee explained: “To me purpose is a vocabulary that binds all strategic goals and activities together. It’s a theme that permeates everything we do, which is why it has to be relevant with both the market and employees alike”.

Generational shift

But why the recent upsurge of interest in purpose? Is it because we live in an era of unprecedented change in the work environment? Are employee expectations changing, and forcing employers to reconsider where purpose sits within their brand’s future? Or is it just another passing fad?

As one attendee responded: “I think there’s a massive generational driver from the employee base that’s looking to experience more purpose in what they do. Yet equally there’s the driver from a commercial perspective, with regards to consumers who increasingly want to engage with businesses able to demonstrate a clear purpose, and one that ideally incorporates some form of societal impact”.

Such a generational shift is of course being inspired by the emergence of the millennial workforce (who are set to make up three quarters of all employees by 2025), that has grown up in a digital world complete with social media – which in turn provides a universal platform for establishing societal and behavioural zeitgeists.

This shift is in turn responsible for a growing number of employees now thinking beyond the profit motive, beyond salary, and even beyond thought of immediate wealth creation. Instead the focus is turning toward their role in society, their purpose, and finding institutions (both in and out of work) that demonstrate a similarity of outlook and philosophy.

The strategy of purpose

But does every business need, have, or want a purpose? “Yes” was the resounding answer from the roundtable. As one attendee stated: “ Every business already has a purpose, it just might not understand it or offer a shared understanding that articulates it consistently or eloquently – but they all have one or they wouldn’t exist.  The challenge comes in ensuring the leadership team is aligned as to what this purpose is, and being able to communicate it to employees so that they can generally get behind it”.

But it’s here that further problems emerge, because in many instances purpose has never evolved beyond a simple pursuit of shareholder value. As a result purpose is often described with words such as ‘accessing new markets’, ‘delivering efficiencies’, ‘leveraging technology’, and ‘delivering quarterly uplift’ etc. “This is what wins the hearts and minds at the leadership level”, stated one attendee, “which supports the view that strategy is still the first concern inside pretty much every boardroom”. KPIs drive output. It is therefore essential that leadership KPIs include delivering on purpose.

But what is the relationship between strategy and purpose? As already mentioned, strategy is heavily geared toward execution and delivery. It’s about shaping goals and objectives, and defining what the business wants to be in the future, where it wants to go, and how it’s going to get there. Purpose on the other hand is now being described as a ‘new’ requirement that sits on top of strategy: a view supported by a report from EY and the Harvard Business Review that detailed how 90% of executives said their company understood the importance of purpose – though only 46% said it currently informs their strategic decision-making.

Interpreting purpose

In other words purpose is on the agenda, and is becoming more formalised (or at least the thinking behind it now has a label), but progress remains limited. As for why this is, one of the biggest barriers to introducing greater purpose is a misalignment of objectives. Certainly this can be the case inside multinational corporations where different business units can pursue wildly different strategic outcomes in complete isolation from one another. “Which basically means,” said an attendee, “that the board is unequipped to have the ‘purpose discussion’. These different goals equate to different operating languages and different conversations being held each and every day. To talk purpose is to introduce a common narrative and model, but even then it’s no use if only two or three people get it and the rest just worry about what it means to their immediate future”.

Which is why businesses have to be careful in not trying to manufacture a purpose to fit their current operational reality. The obvious comparison here being culture, and the tendency at certain organisations to employ consultants to create an external brand story that bears little resemblance to the culture experienced by employees in the day-to-day. As with both culture and purpose, these values require substance, but equally they’re dependent upon interpretation, and on the way leaders, employees, and business partners make decisions and behave.

Or put another way, a purpose statement needs to be genuine, and it needs to be clearly sponsored top-down to inspire bottom-up results. That however can be easier said than done when the leadership team is focused on running a business and managing change at the same time. In fact time was seen as the most precious commodity of all, with its absence being the primary reason for a ‘paucity of reflection’ (particularly when you consider the average tenure of a CEO is just four years). Another was organisational maturity: the less this exists the greater the focus on immediate financial metrics; the more a business develops, the more purpose is called upon to guide actions and behaviour toward a sense of employee and social responsibility.  It was evident in our discussions that not all individuals are themselves accustomed with reflecting on purpose. It is therefore unsurprising that corporations are facing similar challenges.

Making a meaningful difference

But is purpose worth it? Yes, executives understand the importance of creating an appealing  working environment to attract the best talent (according to a recent survey from PwC, 88% of millennials said they want to work for a company whose values reflect their own). Also, the evidence suggests an organisation with a strong social purpose also enjoys a marked increase in employee engagement (and have also outperformed the stock market by a whopping 206% over the last ten years according to Havas’ Meaningful Brands Report).

In other words purpose can help future-proof a company. At a time of unprecedented change across all industries, purpose can infuse and inspire greater agility, responsiveness, and indeed relevance to the operating environment. In addition, it can provide the integrity, the aspiration, and the intention behind any business transformation (if expressed well enough and with a high level of abstraction). And it’s here that purpose becomes a call to action, a rallying cry for employees, customers, and even shareholders to get behind – based on delivering a meaningful difference to both local and global communities.

Purpose can also act as a sense-check for validating change initiatives. With agility being such a powerful business imperative these days, a shared sense of coordinated purpose offers a barometer for confirming the integrity of key decisions, aids proactive thinking, and instils the courage needed to move forward. By actively agreeing to live and breathe purpose, executives are offered a new lens by which they can examine market demand and other fundamental basics. Equally, it keeps the business current, and gives consumers and employees a louder voice for dictating future strategic direction – thereby fostering a gradual reverse away from top-down planning toward a more responsive bottom-up appreciation of what drives success.

As one attendee noted: “Transformation is a journey. It’s about defining and setting out for a future state that should include a new vision and, of equal importance, a new purpose that excites people, and makes them proud to get involved”. In this instance, purpose provides the wrap-around story that moves the narrative beyond the ‘how’, ‘when’, and ‘what’ toward the ‘why’.

Looking to the future

Equally, purpose is a story, and one that’s both actionable, and forward-looking. To quote another attendee: “Within purpose is a spirit of endeavour. It helps the leadership team move away from a reactive posture that’s based on an almost irrational fixation on past performance – where they’re driving the business forward by looking in the rear-view mirror, and therefore oblivious to the huge pot holes right in front of them. We talk about agility and responsiveness, and the challenges of transformation, but what we’re really saying is that all changes starts at the people level. Purpose is about galvanising individuals who are set in their ways to look up and see the future for what it is: an ever-changing mix of risk and opportunity”.

As for future-proofing an organisation, purpose was viewed as an essential link that connects companies to evolving market dynamics. With it comes the ability to elevate a company’s focus beyond immediate revenue targets and customer needs, to introduce employees into the narrative, and to turn their attention toward more holistic customer requirements and the broader requirements of society in general. As an example, take a corporation like Coca-Cola whose maturity level enables them to focus efforts on creating a more sustainable supply chain – including their use of plastics and building manufacturing centres that benefit local communities. Such moves and many more besides, help create a deeper connection between what businesses ‘do’, the capital they help create, and the good that they’re doing on a global scale.

Where purpose enters the picture is in integrating these data points together, and ensuring that the very mechanism businesses put in place to generate value also leads to a constructive, meaningful, and beneficial impact on both employees and the wider societies in which they exist. And it’s at this point of convergence between societal expectations, employee engagement, and strategic direction, where purpose promises so much – and not least a platform for a sustainable and profitable future.

Nick Berman

Partner
Interim Management
Business Transformation & Technology


Nick specialises in senior level (£500 – £2,000 per day) interim management recruitment within business transformation, supporting organisations through significant periods of change. Assignments include cross-functional change & programme management roles as well as transformation project positions ranging from programme directors to PMO Managers.