According to thinkers like Aaron Hurst and Umair Hague, we’re currently entering a ‘purpose economy’. In this new age of purpose, companies are prompted to step back and (re-)define their purpose, in order to create shared value with their stakeholders. Companies that succeed in having a clearly articulated and widely understood purpose (4 in 10 according to research) tend to be more profitable over time: it helps them gain strategic clarity, helps drive cross-functional innovation, adds brand value, and is a critical element in the engagement of their human capital (see slide below for more detail). Although we believe in the current trend and see it as a valuable new belief system for organisations, we also see organisations struggle with the ‘how’. Here are some tips – based on experience – to get your head around the problems that come with the ‘ignition’ of purpose in organisations.
When it comes to solving the ‘purpose’ problem, the first thing is to recognise the problem as it is: multidimensional, overarching, and sometimes paradoxical in nature (benefits for one stakeholder may mean costs for another). Igniting a purpose is not just a branding exercise, nor a strategic repositioning effort, nor an employee engagement program – it is all of these at the same time (see slide below). Teams from a single functional background, like Human Resources, are therefore unlikely to understand the complete scope of what needs to happen; instead cross-functional teams with a direct owner in the board are more likely to create value.
Next to being highly complex, the purpose puzzle is also a sensitive one given that different regions may hold different belief and value systems (first slide below). Increasingly, we live in a multi-polar world where globalisation has led many organisations to embrace multiple belief systems, regions, economic policies etc. For purpose- and values-related activities this can be relevant, because employees in different regions may hold very different attitudes when it comes to ‘abstract’ topics like purpose and values. As an example (based on the second slide below): treating employees in Japan and Russia to a similar values program will almost certainly run into trouble.
So, how to get a grip around the purpose problem? A useful model to get a first grip on the problem is the ‘purpose ladder’, which is a simplified granularity model to explain how certain business elements relate – which can be used as a discussion starter with the board. The model starts, as Simon Sinek already explained, with the purpose of the organisation: its aim to bring positive impact (value) to its stakeholders, or its ‘aspirational reason for being’. The chosen purpose should be powerful, specific, linked to individuals purpose within the organisation and ideally quantifiable, to track positive impact over time. The purpose then flows down in to mission, vision, values, and finally into business targets at all levels. Of course, the amount of freedom employees experience when they’re asked to translate the purpose statement into actual agreements can change per layer, depending on factors like maturity, culture, function etc.
To summarise, although the purpose puzzle is a though one, getting your head around existing complexities – both due to multidimensionality and cultural differences – is worth the effort. A good first step is to plot the organisational purpose on the purpose ladder and explore the possible value on all levels of granularity. We hope you found this valuable, and wish you a thought-filled and productive day!