Is Building a Purpose Based Business Only an Optimists Dream? No.
I love working with purpose based companies. There is a palpable passion. The brand represents an idea that is bigger than the product. The employees and shareholders bond to something aspirational. It is a feeling that fuels the day and builds emotional commitment to the company.
These are not companies who have merely defined their purpose. They LIVE their purpose. Their purpose has created a unity to accomplish a mission. Their purpose fuels the ideals or values that everyone commits to exemplify.
The cynic in me has seen some of this become lip-service and a type of culture-washing. The optimist in me hopes that more companies will try to live a more inspirational corporate model. The realist in me has lived it and knows that it works. It is hard work and not a program. You don’t give up on it when the business is in a down cycle. It is not a piece in a CSR statement. It is a mindset and a way of living for everyone in the company.
Patterns of purpose based companies:
1) Discipline and order. I’ve listed this one first because it may seem out of place with such a wispy or theoretical idea of purpose. A purpose-based company is not fleeting or laissez-faire. Discipline in this context does not represent rules, bureaucracy or control. It represents commitment, preparation, execution, and cultivation of growth enabling achievement. Order represents arrays for decision-making, shrewd planning and forecasting, and judicious management. Discipline is the elegant flow of task/role definition in a way that uses individual strengths pushing the team to a higher level. Being good at fundamentals is critical whether the sport is basketball or business. It is not static, but constant smart adaptations that allow the system and people in it to be their best. Recommended read: Essentialism.
2) Intention and critical thinking over inclination and habit. Every program, project, process, plan, and policy is designed to support and accomplish the purpose and mission while reflecting the values. People in a purpose based company can develop to a place of autonomy because they know how to align their actions with the plan. Their behaviors embody the values. They create a unity with other processes and people in the company to create value-adding relationships. They serve the customer first by doing their best work. Managers are very diligent about developing people to accomplish goals and reach for aspirations. What separates management in purpose-based companies? Developing people to be great at their job now and in the future and developing people to be great organizational citizens. They are servants of the business AND people and know the business will be its best when the people are able to do their best. The bottom line – all people in a purpose based company are actively and intentionally thinking on many levels – short-term success, long-term impact, partnering with the consumer, inspiring each other, being the best, supporting one another, doing the best work now and advancing skills for the work of the future. Purpose-based companies are in a paradoxical relationship of staying true to their purpose while being in a state of continuous renewal.
3) Structures create advantageous cycles. Should you be top-down, grassroots, centralized, matrixed or decentralized? The direct answer is yes, all, some … do what makes sense for the business. It’s not about what structure you should choose – it should be about organizing in a way that helps drive accomplishment and pushes the company closer to its aspirations. Structure may change to reflect cycles, priorities, and plans. How should the company and/or team structure work so the many talented people can make the biggest impact?
The structure should reflect the values. Management cannot espouse openness and set up trustless systems. Smart structures are designed around interconnectivity and feedback cycles to make sure information is flowing. For example, more companies may have cross-functional agile teams designed around solving problems and/or creating value for the customer. It’s not about what function or department they serve – it is about what value do they create? The company may be top-down in terms of creating the vision and setting the broad plan, but may be bottom-up in terms of filling in the details of that plan. Or, it may be more centralized in early stages of change, but the control will be distributed as people learn the new processes and implement the change at the team level. However, purpose-driven companies don’t rely on control as a standard – they teach, coach, trust, and enable. The structures are filled with systems of peer accountability and rational, realistic consequences. The long-term intention is usually to distribute leadership and create frequent feedback cycles for continual improvement. No company can spare wasteful misuse of its talent or financial capital – make sure every structure has purpose. Also, be very careful that smart trial and error is not labeled as waste. Mistakes and failure should be part of the business process or it will stagnate. See this HBR on failure. Information is a currency in any group and you want to make sure information is used to create business wisdom that will drive value.
4) Purpose -> Vision -> Values -> Mission -> Plan. It all creates a culture. Drive, ambition, empathy, commitment, passion, pride – you can see it and feel it when you interact with employees. Most importantly, employees know why they are there, what to do to make an impact and how to add value to the customer. They know the value of distinction and how to use your competitive advantages to create value. Unity, aliment, and action – always.
5) Measurement and ROI. Companies love numbers! Purpose-based companies are excellent at choosing the right numbers. With all of the data we have access to, it is the wise companies who know what data matters and how to use it. There is a difference between data, information, and wisdom. Looking to the future carries higher weight in meetings than regurgitation of the past. They do not ROI everything. They ROI sensibly – too much ROI-ing becomes bureaucratic, an exercise in statistical presentation, and drains time. Smart planning draws out risks, rewards and creates an atmosphere for trying something amazing in a calculated wise way. The right measurements distinguish between failing smart or failing foolishly. They know a triple bottom line matters. First, stay in business – no company can support its employees, consumers, community, and shareholders if it isn’t viable. But there is a line. Purpose-based companies know this. Is the company simply playing not to lose and only to survive or are they playing to win and truly make a difference? Purpose-based companies know there is a certain place where reinvestment must happen or the company will not be viable. Putting employees first makes for better consumer loyalty. Better consumer loyalty makes for better shareholders. How you measure your success and where you draw your lines with your numbers is critical. Remember – your financial plan is merely the numerical representation of the business plan and the business plan starts with the purpose.
6) Interconnectivity. Purpose-based companies facilitate the connection of corporate purpose to personal purpose. I’m not a fan of the generational taxonomy between millennials and boomers. Perhaps it is because I am one of those defiant gen-x’ers. But, it is statically proven that this interconnectivity is the key to engaging your millennial recruits and employees. I would argue that it is your key to engaging all of your employees and your consumers. Regardless, it is more rewarding to work with a group of people who have a similar sense of commitment and passion for what they do and why they do it. It is more fun to be on a winning team. It is also more fun to be on a committed team of people who bring their best every day and share passion. Purpose-based companies make this connection happen. Employees know how to hook their vision into the corporate vision over and over again day-after-day. It brings energy to each person, to the team, and to your customers.
7) What shareholders does the business serve? I would be remiss not to emphasize employee ownership and profit sharing. Creating and driving value creation is better when the shareholders are those who benefit from the results. If you want to create a system of integration – really do it. Invest. There are times employee ownership happens in stages with different financial instruments, but sharing the risks and rewards and driving rights and responsibilities is powerful.
Check your purpose.
Individual – if you can’t hone in on your personal purpose, try vision mapping. Make it creative and thoughtful. In a facilitated environment, you can learn your aspirations, how to make calculated efforts to reach them and how to connect them to your work.
Corporate vision, purpose or mission? Some companies use the terms of vision and purpose interchangeably. Don’t get too caught up in the literal words from an academic perspective.
Mission statements typically define purpose, but usually through primary objectives. Mission statements apply to the entire business and talk about general courses of action. Vision statements describe purpose as well, but it is focused more on aspirations. It is uplifting, inspiring and usually timeless. Vision statements give a picture of the future condition of a business. The mission is about what and how we will get to our next horizon. The vision is about how we show up in the world and why we exist. One could debate how to use the words vision, mission, and purpose – but what matters is, do you know where you are going and why you are going there? If it is simply to make money – that is your reality. But, it will not create investment by your employees, your shareholders and your community. You may increase some shareholder investment when you are only about money – but again, short-termism will be the prominent mindset. Perhaps it will create short-term purchasing from consumers – but it will not build a loyal following, and your product will almost certainly be abandoned when a viable competitor arises.
A common, good example is Nike. Their purpose is not simply to make and sell athletic wear.
“Our mission — to bring inspiration and innovation to every athlete in the world — drives us to encourage every person to reach their full potential, whether it’s on the track, field or court, at work or at home. We strive to help people be active and engaged, fully participating in the world around them.
What’s good for our consumers is also good for our employees and our communities. We believe that investing in our employees and communities is essential to achieving our ambitious growth and innovation agenda.” (Nike. 27, September 2017)
Mission statements create action
Vision statements create feeling
Values create resonance
The combination is the head, heart, and soul of the company creating purpose, unity, alignment, drive, and commitment.