Purpose as the north star in times of disruption

Whatever the website advertises, maximizing shareholder value has always been the only true aim of any for profit organization. For decades, the successful manager was the one efficiently passing orders down the cascading line, taking advantage of any organizational opacity and information asymmetry, considering individuals soulless and fully replaceable cogs from which the last drop of energy, passion and creativity had to be squeezed out.

On top of the bitter Monday morning feeling many of us have experience with, a global employee engagement stuck at 15% for too many years acts as a testimony of how stale and inhuman our management practices have become. 850 million full-time workers that are disconnected from their employers and not motivated to bring their best to the workplace may well be a root cause for the continuous decline in labor productivity worldwide. A sense of mounting uncertainty, rising complexity, falling levels of trust, growing inequality only make forecasts more looming for CXOs.

How to get out from this mess?

Instead of taking it purely from the business angel, interestingly some organizations have already started to go back to the very roots of what energizes, motivates and knits us as human beings, using purpose to address many of the challenges they face in the market. The best part of all this is how looking for a new corporate soul is at the same time also a solution for many long-debated paradoxes of management thinking such as shareholder vs stakeholder value, efficiency vs customer experience, profit vs societal good.

EY, the firm I work for, defines purpose as

An aspirational reason for being which inspires and provides a call to action for an organization and its partners and stakeholders and provides benefit to local and global society

Purpose is much more than profit. It is something bigger than yourself. It is about waking up for a mission. It is striving to make a dent in the universe. It’s connecting with birds of a feather to accelerate learning, foster an identity, build something together. Dennis Wittrock at Encode.org remarks how:

“When you have a purpose “You know what you are burning for. You know what you are destined to do. You chose it and it chose you. Doing it is joyful, immersive, and effortless. You are just expressing yourself. It feels natural, like breathing. In fact, your purpose breathes you… An air of exhilaration, curiosity, and excitement pervades the purpose-pulled life. It is a life ignited, ignited by passion”

Purpose is about meaning. It’s about finding, defining and expressing yourself in the work you do. It pulls people towards common goals, culture and values at three levels (see “The Purpose Effect” for more):

  • The personal one, centered around each individual’s identity and commitment. It’s about who we are, what our life should be, what we decide to do.
  • The organizational one, connected to the company’s overall principles, values, rules, leadership and culture. It’s why the firm exists.
  • The role one, through which each employee can see his or her job turned into a calling.

Organizations have to aspire to the sweet spot, a reciprocal and balanced relationship between the three dimensions, the only one through which all stakeholders (shareholders, staff, customers, partners and suppliers, the society overall) will fully benefit from the business and its purpose, even more in a time of uncertainty and disruption. How can purpose reveal a path through disruption? Mapping the journey from rhetoric to reality, published by EY Beacon Institute, offers a number of insights to those that want to pay more than lip service to this journey.

While, not surprisingly, quite every firm (95%) seems to have a purpose, this term may refer to extremely different things, from pleasing a single stakeholder (shareholders, customers, employees), to focusing on many of them, up to inspiring actions towards a larger good: 

The good news seem to be that after the 2008 financial crash, only for 15% of organizations “the business of business is business”. At the other extreme, 40% of the companies surveyed began to demonstrate what EY calls a Capital P Purpose, a broader, aspirational, human-centric mission designed to inspire a call to action.

Even more, under the forces of a VUCA world, 66% of firms have almost or completely changed their purpose and 52% of them are looking at a Capital P Purpose to better serve multiple stakeholders and society. If 84% of executives feel to be operating in an environment that is volatile, uncertain, complex, ambiguous and much more transparent due to social media pressure, Purpose is seen as a source of strength and resilience precisely where disruption hits harder. If words are easy, such effect is, as a matter of fact, proportional to the ability to actually integrate and infuse purpose into business activities. That’s why 97% of companies with a well-integrated purpose (named Purposeful companies) see a good or great deal of incremental value, while only 56% do when the level of integration is lower:

More than future hypothetical returns, 75% purposeful companies are able to reap benefits in the short term and in areas that directly impact the firm’s success under the current market conditions:

In a nutshell, executives agree that having a well-integrated purpose helps their company navigate today’s turbulent environment most of all when it comes to innovation and transformation. At a more granular level, this affects all the stakeholders firms cater to in terms of greater loyalty and better products for customers, better reputation for prospects and investors, higher appealing to talents with an overall more balanced appreciation of both risks and opportunities offered by a new kind of economy that instead tends to scare organizations serving a single stakeholder:

If purpose is no longer just a communication claim and it all goes down to its integration into business activities, how does this integration look like? What should executives care about in the day to day actions?

Despite the evident benefits, becoming a purpose-driven organization is a long and non linear journey. Actually the higher the maturity, the more the integration factors deemed critical to close the gap between need and reality. This notwithstanding, purposeful companies clearly show how pervasive the alignment should be in terms of listening to the market, establishing the right goals, evolving values and behaviors (especially for the leaders), applying purpose to decision making and governance:

Some areas are particularly difficult to tackle when infusing purpose in the company’s DNA. Think about performance measurement, actions of the middle management, communication from the leadership lacking of conviction, remuneration and incentives, insufficient levels of autonomy, disconnect between daily actions, responsibilities and overall purpose. While the details will surely vary due to the history, maturity, industry and senior executives in each organization, following the right steps could at the same time maximize the speed and mitigate the risks of a purpose-led transformation:

As you can easily tell from the diagram above, going from rhetoric to reality is a subtle exercise of equilibrium. It involves a fair amount of business acumen and ambition, pragmatical take and courage, concrete measures transforming processes but also high levels of autonomy and trust left to front-line employees, candor regarding challenges and celebration of successes.

With 54% of employees that would ideally want to work for Capital P Purpose employers and 59% of them considering purpose crucial for job satisfaction, such human-centric transformation would have a dramatic impact not just on corporate financials but also on global labour productivity and personal happiness. Nonetheless, to see such an impact materialize, senior executives must accept how Capital P Purpose will only work if the entire organization is motivated, guided and committed to transform itself from top to bottom as a single team that is sincerely interested to make the world a better place.

Our work provides indications and suggestions but the question remains. Are we really serious about bringing this vision of the world to life? I hope so.

Emanuele Quintarelli

Social media enthusiast and Social Business Leader in EY. Research, reports and reflections about the introduction of web 2.0 inside the enterprise.

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