Purpose Driven Strategy has become a prime topic of management in the last decade due in no small part to the popular books like Start with Why by Simon Sinek; Firms of Endearment by Raj Sisodia; Leading with Purpose by Mark Koehler; Purpose: The Starting Point of Great Companies, by Nikos Mourkogiannis; and the Progress Principle by Teresa M. Amabile & Steven J. Kramer. Executive seminars are held about it, business models are built on it, and consulting companies have established whole practice lines dedicated to it.
This concept of Purpose Driven Strategy is a fundamental change to the approach expressed by Milton Friedman when he said:
“There is one and only one social responsibility of business-to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game.”
In a sense, it is a new type of Humanism where organizations don’t just work for their shareholders but for the betterment of all the stakeholders and the community at large.
Purpose driven strategies are more adaptive and more successful. Purpose acts as an attractor and aligns across the organization by permeating the value system, creating the rules and enabling good judgement. Survey after survey shows that today’s top talent wants to know that they are contributing to the world at large. A UNC survey found that a whopping 75% of subject participants scored high on levels of happiness, but low on levels of meaning.¹ A survey on workplace fulfillment, which reached more than 12,000 employees across a broad range of companies and industries, found that 50% lack meaning and significance at work.² Yet, 40% of U.S. workers say they routinely put in more than 50 hours on the job each week, often without overtime pay.³
A New Humanism
The challenge for leaders is how to actually instill purpose into the organization and make it meaningful. Many companies have sought to establish their purpose (or pay consultants to do it) only to spend weeks wordsmithing a watered down statement to hang in their office only to see it easily forgotten. Few see it really start to align and motivate their people. This is because purpose cannot be captured in statements that are easily memorized. If purpose is true and impactful, it shows up in the actions of the leadership and the staff in real and very practical ways.
Recently, I have been meeting with a number of leaders in companies around the southwest United States to understand their purpose driven strategies and how they drive it into organizations. Each of these organizations has an incredible record of growth and low turnover. They include:
- Pinnacle Technologies – A medical tissue bank that gives people longer, more productive lives
- Infusionsoft – A technology firm that empowers entrepreneurs and enables small businesses
- Able Engineering – An engineering firm that is out to create a healthy, self-esteem building home for their employees and their families
- A for-profit educational institution that has job creation and improving the standard of living in their community at the center of its strategy
Based on these visits and some personal experience I have gathered working for organizations with successful (and failed) purpose driven strategies, here are some simple guidelines:
Make Your Purpose Clear & Simple: Only 38% of employees said “the company’s mission” is a top reason they love their company.4 Yet, each of the organizations that I met with has a very clear purpose. Some organizations take a bit of a shotgun approach, but multiple causes create confusion and fail to align people’s motivations. It is better to have a single clear idea to rally around and discuss it ad nauseam. Once that Purpose is established and understood, all subsequent plans should start with how they support it.
Be Sincere: For successful organizations, their purpose is not just words on a wall. Real passion for the cause builds, supports, and motivates. Opportunism debilitates. I can tell you I have sat in many meetings with companies who were looking for something good to do so they could tick it off and send out a press release, but the cynicism showed through and the employees rarely felt that organization was doing more than posturing.
Align Purpose & Mission: Often leaders will confuse purpose with mission. While a mission is what the company does, purpose is why it exists. The distinction can be subtle, but it is an important one that should not be taken lightly. At the same time, aligning purpose and mission is essential. The purpose should be found in the daily activities of the business and the employees. They should be able to track their tasks to the ultimate result. A 10% improvement in employees’ connection with the mission or purpose of their organization would result in a 12.7% reduction in safety incidents, an 8.1% decrease in turnover, and a 4.4% increase in profitability.5Organizations in which employees are primarily motivated by shared values and a commitment to a mission and purpose are 9x more likely to have high customer satisfaction.6
Measure Performance: Creating corporate-wide metrics infuses the purpose throughout the organization. A study by Tiny Pulse found that the number one factor contributing to employee engagement was transparency, but only 25% of workers believe management is very transparent — despite that nearly twice as many managers consider themselves transparent.7 Compare that to a recent Gallup finding that only 29% of American workers described themselves as engaged employees, which cost companies about $550 billion a year in production costs.8 Rewarding behaviors that drive the purpose shows the organization’s dedication. Many companies make this maybe 5% or 10% of their overall metrics, but if it is aligned properly with the Mission, it should show up in 80-100% of what they do. However an organization measures performance, it should be made very clear how the company, division, and individual performance are aligned with the purpose.
Invest Organizational Time & Resources: While incorporating your daily activities toward your purpose is essential, so is setting aside specific time and resources. This, again, shows an organization’s dedication. This should be on company time and should enable everyone to participate at some level. Time outside of work is OK on a volunteer basis, but scheduling all efforts after hours, on breaks or on weekends sends the signal that the purpose is ancillary to the organization.
Hire Believers: Bringing in new people who support the purpose is essential. Employees who derive meaning and significance from their work are more than three times as likely to stay with their organizations, reported 1.7 times higher job satisfaction and are 1.4 times more engaged.9 Assessing the true nature of the employee’s motivation should be part of the hiring process. Have they dedicated time and energy to this purpose in the past? Do they list this purpose as a reason they want to join the organization? Each of the companies I talked to stated that they focus on this and that their biggest mistakes were when they made an exception or were uncertain of the person’s motivation.
Take Care of Your Own: Each of the companies I visited were highly focused on the success of their employees. They realize that there is no sense to the organization’s Purpose if their people aren’t valued at least as much. Infusionsoft went so far as to have employees list their dreams and hire a person dedicated to helping them realize them (even when it meant the result would take them away from the company). When people were sick or injured or had family issues, the companies I visited made a point of stepping forward even when it seemed impractical. Both Able and Pinnacle described situations where employees had been injured outside the workplace and the company supported their recovery, contributed to their families, and guaranteed the employee a position when they returned. They understand that if the basic needs of the employees are not met, they cannot focus on the higher Purpose of the organization.
Caveat – Purpose is a good thing when used correctly. At the same time, it can be scary if used wrongly. I have seen it used as an excuse to delve into the personal lives of employees, draw moral judgments, and to pursue oppressive policies. when the brain is stressed, it feels like it is under attack, and it shuts down.10, 11 When employees are micromanaged, their effectiveness decreases, and the employee puts the company at risk for making snap-judgement decisions that results in mistakes and poor performance. Clearly this creates a negative impact on the organization. At the center of the new humanism is its people first ethic. It cannot not justify a tyrannical approach. As with most things, the key is balance.
Purpose is a powerful tool. Like Howard Schultz said, “When you’re surrounded by people who share a passionate commitment around a common purpose, anything is possible.” It can align all agents and help drive emergence creating an organizational value much greater than the sum of its parts. It values all stakeholders and the external environment it serves. This is a new, humanistic approach that not only appeals to the top talent, but also supports the profit motive of businesses. Purpose is not simply reflected in statement on the wall but in sincere belief and practical action. Like all powerful tools, it should be wielded with caution and with an eye on maintaining balance.
¹ Fredrickson, B. L., Grewen, K. M., Coffey, K. A., Algoe, S. B., Firestine, A. M., Arevalo, J. M., … & Cole, S. W. (2013). A functional genomic perspective on human well-being. Proceedings of the National Academy of Sciences, 110(33), 13684-13689. Retrieved from http://www.pnas.org/content/110/33/13684.abstract
² Schwartz, T. and Porath, C. (2014). Why You Hate Work. New York Times. Retrieved August 17, 2017 from https://www.nytimes.com/2014/06/01/opinion/sunday/why-you-hate-work.html?_r=1
³ Saad, L. (2014). The “40-Hour” Workweek Is Actually Longer — by Seven Hours. Gallup. Retrieved August 17, 2017 from http://www.gallup.com/poll/175286/hour-workweek-actually-longer-seven-hours.aspx
4 VirginPulse (2015). LABOR OF LOVE: What Employees Love About Work & Ways To Keep The Spark Alive. VirginPulse. Retrieved August 16, 2017 from http://connect.virginpulse.com/files/Survey_LaborofLove.pdf
5 Dvorak, N. (2017). Three Ways Mission-Driven Workplaces Perform Better. Gallup. Retrieved August 17, 2017 from http://www.gallup.com/opinion/gallup/209849/ways-mission-driven-workplaces-perform-better.aspx
6 LRN (2016). The HOW Report. Retrieved August 16, 2017 from http://www.lrn.com/form/43-how-report-form.html
7 Son, S. (2017). 20 Employee Engagement Survey Questions You Need To Ask. Retrieved August 17, 2017 from https://www.TINYpulse.com/blog/sk-employee-engagement-survey-questions
8 Sorenson, S. and Garman, K. (2013). How to Tackle U.S. Employees’ Stagnating Engagement. Gallup. Retrieved August 17, 2017 from http://www.gallup.com/businessjournal/162953/tackle-employees-stagnating-engagement.aspx
9 Schwartz, T. and Porath, C. (2014). Why You Hate Work. New York Times. Retrieved August 17, 2017 from https://www.nytimes.com/2014/06/01/opinion/sunday/why-you-hate-work.html?_r=1
10 Bates, C. (2012). Blanking out: How stress can shut down the command centre in the brain. The Daily Mail. Retrieved August 16, 2017 from http://www.dailymail.co.uk/sciencetech/article-2127686/How-stress-shut-command-centre-brain.html
11 Alban, D. (2017). 12 Effects of Chronic Stress on Your Brain. Retrieved August 16, 2017 from https://bebrainfit.com/effects-chronic-stress-brain/