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Purpose and Its Advantages

By Canadian Management Centre

During this time of economic instability, companies want their people not to drag their feet but to walk with a stride that indicates that they know their companys reason for being. So Doug Conant, President and Chief Executive Officer of Campbell Corporation, remarked to the editors of MWorld on the impact of his bringing purpose to the company. There is much talk today about purpose, and it seems to stem from a book by Nikos Mourkogiannis entitled Purpose: The Starting Point of Great Companiesand with cause. Purpose encompasses a set of values that defines it and inspires and motivates a companys employees. Purpose is based on ideas and it is the right ideas, the creative ideas that make a company a success.

Mourkogiannis, whose book has been released in paperback and in several foreign countries, described how purpose is a competitive advantage when strategically leading an organization. As he explained, purpose stimulates two key forms of action that contribute to a firms strengthinnovation and relationships. They create an enduring advantage that is not dependent on the fate of a single strategic position.

We recently interviewed Mourkogiannis on how businesses can apply purpose to better position themselves in the marketplace.

What is purpose and why is it especially relevant today?

NM: Purpose is a companys reason for being. It extends well beyond the financial purpose of an organization. By purpose, I am referring to its goal or direction. This is more than a companys missionpurpose is an ongoing belief in the companys ability to achieve some tangible good. It is critical today because it forces a companys management to think about where the organization has been, where it is, and most important where it is going. It isnt designed to give management a better business quarter. Rather, it is designed to give shareholders, management, and employees long-term sustainability.

Ive found that once management has a clear idea of its purpose, it is able to align its strategies around it and ultimately close the gap between strategies and implementation. That may explain why companies that have a clearly delineated purpose are more successful than the average company. You can run a business without a sense of purpose but you cant grow a business without it.

In todays economy, companies would be happy to make money, yet you say that isnt enough?

NM: No, it isnt enough. Of course, making money is important, but a financial sheet reflects only a point in time. A purpose has a much longer-term importance to the organization. When we talk about purpose, we are talking about long-term thinking and planning.

Today, if you operated solely quarter to quarter, you would get lost. Purpose enables you to focus on the alignment of everything as it relates to purpose.

When would purpose be especially critical to an organization?

NM: My research has identified six situations that indicate that something is missing in the area of purpose.

First, some aspect of lack of purpose usually can be traced to a morale problem. Theres a shortage of energy or buzz. Usually, research finds that the flatness is due to employees feeling that top management cannot or will not walk the talkthey may not even believe what they are saying.

A call for a new strategy may be linked to the issue of purpose, too. Either the purpose needs to be reconsidered or theres a need for reassurance about the relevance of the current purpose or the foundation on which it is built.

A merger or an acquisition can also call for a re-examination of a companys strategy and its employees efforts. As a part of that reconsideration must come a review of the companys purpose. You are bringing two cultures and related purposes together. So it is critical to consider both to see how well they can be integrated and understood. The study can lead to many different decisions. For instance, you may choose to place a firewall between the organizations and retain the original purpose for each or you can create a hybrid that ireflects how the puzzle fits together.

The gap between strategy and execution also can be due to unclear corporate purpose. Yes, the strategic planning had identified the areas to be targeted and action plans have even been developed, but nothing has happened regardless. Often, that is due to confusion about where the organization plans to goits purpose.

Ive seen reputational problems that wont go away, no matter what the PR department tries, due to lack of clarity about the organizations core value, which translates to its purpose.

But it isnt only problem situations that signal the need for a clearly defined purpose. Assume that a company has identified an opportunity for corporate growth or a new CEO comes on board, and there is considerable expectation about the consequences. When those expectations arent met, then morale declines and the company suffers.

Theres much talk about talent management. Does a clearly communicated purpose impact talent?

NM: Absolutely. Purpose influences not only retention of customers but also of employees. It is a matter of internal and external brand management. It creates buy-in. And when you have that commitment from your employees and customers, you are protected from sudden economic shifts and even well positioned for growth. .

What happens when a company grows? Does purpose change?

NM: It may change. Thats why it is critical to re-evaluate purpose periodically.

Your research has identified four purposes or reasons for people to work together. What are they?

NM: There are discovery, excellence, altruism, and heroism. Discovery animates many technological businesses, but discovery isnt limited to this kind of company, only that it reflects organizations with a love of the new and innovative. Companies with excellence as their purpose have all built their identity around the artistry of their endeavors. Organizations that are built around continuous improvement teams also fall into this category. Altruism means less about helping others as it does about making their customers happy. Nordstrom, Hewlett-Packard, and even Wal-Mart have established appeal around this idea. Heroic organizations focus on their capacity to win every competitionorganizations like Microsoft. ExxonMobil, and GE.

How can you tell what your organizations main purpose is?

NM: Often, all it takes is some reflection, but it may help to ask yourself a number of questions. In my book, I list many, but heres just one: How would you answer the following questionInvestors and venture capitalists put their money into our firm, instead of others, because?. Your response will give you insights into your companys purpose.

For instance, if you reply that they expect your firm to be a leader in new ideas and technology, then your organizations purpose is closest to discovery. If you find that there is always a market for your products or services, then likely your business falls into the category of excellence. If you can say that there is always a fortunate that can be made from making customers happy, which is what your firm does, then its purpose is likely altruism. If you can say that the company will dominate its niche, then its purpose is probably closest to heroism.

What if it is none of these?

NM: If none of these answers apply, then you may not have any clear purpose in your organization. And if you want to galvanize your organization, then bringing your top team together to identify your organizations purpose may be a good place to start.

Can you go further and develop a purpose? And, if so, how do you begin?

NM: Yes, you can actually choose a purpose. Leaders pursuing greatness with any hope of getting there will inevitably recognize that they cannot be great in all possible ways. Some purpose must be chosen. In my upcoming book, I describe a methodology that can be used to develop a clearer understanding of purpose and to put that purpose into action. Now let me just say that a starting point for developing a purpose is review of your strategy. The strategy doesnt determine the purpose of a company, but it is a clear guide to the unconscious purposeor the predispositionof the current leaders. Ask yourself, Is my goal market domination (heroism) or is it to lead innovation (discovery), or to produce premium products and services (excellence)?

There are many more steps to take. And, most important, you need to create metrics to measure progressand prove how serious you are in achieving greatness through a clearly defined purpose.

For more insights from Nikos, visit www.nikosonline.com