In his 1954 landmark book, The Practice of Management, the late management guru Peter Drucker wrote: “It is management’s … responsibility to make whatever is genuinely in the public good become the enterprise’s own self-interest.” More than half a century later, Drucker’s wisdom remains equally relevant, if not more.
Today, the expectations from the public and stakeholders on businesses stretch beyond creating wealth for shareholders, jobs for employees, and products or services to meet customers’ needs. Given their resources and span of influence, businesses have both the obligation and opportunity to play a vital role as a force for good in the world. And ‘doing good’ is not restricted simply to the familiar domains of corporate social responsibility (CSR) and philanthropy, but integrating the sense of purpose deeply with business strategy, decision-making, and daily actions.
A study by Colombia University revealed that purpose-driven firms produce superior financial performance. They have achieved an outstanding aggregate return of 1,025% over the past 10 years, compared to 122% for the S&P 5001. According to Fast Company, the most purpose-oriented group to ever enter the workforce will account for 75% of the workforce by 2025. Several leading companies such as Unilever, Patagonia, and Wholefoods have risen to the challenge. They stand for something greater than themselves, and the results are astonishing.
According to Paul Polman, CEO of Unilever, “Purpose and profitability go hand in hand.” Purpose-led brands such as Life Buoy and Dove are not only contributing to the bottom line but making a positive difference to the life-saving hygiene practices of rural communities and self-esteem of women. For example, Unilever’s commitment to double its revenue and half the environmental impact by 2020 through the Unilever Sustainable Living Plan has led to significant increase in share price, level of employee engagement, and attractiveness to job seekers.
In turbulent, volatile, and rapidly changing times like the present, a clear sense of purpose can provide a stabilising anchor as well as a compass for navigating the uncertain terrain. However, unless an organisation’s purpose is deeply embedded in the hearts and minds of its employees, it risks becoming a beautifully crafted rhetoric or perceived as another marketing gimmick.
When executed well, an organisational purpose can be a powerful force that liberates the potential of all its stakeholders to be a force for good in the world. And here are three vital building blocks for creating a truly purposeful organisation to unleash that potential.
1. Discover the Purposeful Advantage
Traditionally, businesses gain ‘Competitive Advantage’ when organisational capabilities are applied to better satisfy customer or consumer needs. When a third dimension of societal needs is added, the result is what we call ‘Purposeful Advantage.’ In short, a purposeful organisation operates at the sweet spot where organisational capabilities, customer/consumer and societal needs intersect.
2. Create an Enabling Culture in your organisation
According to Drucker, “Culture eats strategy for breakfast.” Without an enabling culture, even the best strategy will fail to deliver on its promise. And the same applies to purpose. Culture has a profound influence on behaviours, which ultimately shape the performance and impact that an organisation makes in the world.
While each organisation has its unique culture, there are several vital elements that are common to purposeful organisations. Examples include: Being purpose-driven and values-led; making decisions that are guided by purpose, and consistent with the values espoused by the organisation Promoting openness, equality, inclusiveness; every employee is treated with respect and feel safe to express themselves authentically Balancing autonomy and accountability; employees enjoy sufficient freedom to act in the best interest of the organisation and willing to held accountable for their actions
- Embracing the ‘Growth Mindset’ – willing to take a risk and learn from failures
- Valuing long-term performance and impact over short-term profit
- Possessing the agility to evolve and thrive in the age of disruption
3. Develop Purpose-led Leaders
An organisation is only as purposeful as its leaders. Hence, organisations need leaders who are driven by a deep sense of purpose and at the same time, possess the courage, conviction, and tenacity to lead, inspire and support others to fully live their personal and organisational purpose.
Purpose is deeply personal. It is not something that can be taught or learnt, but something to be unearthed from within. Developing purpose-led leaders often involves deep introspection, external stimulus, and purposefully-designed disruptive experiences that invite leaders to uncover the essence of who they are, their values, passion, values, gifts, talent, strengths, life experiences, fears and concerns.
So, where does the journey towards becoming a purposeful business begin?
In our work with leading global organisations, we have found that the pathway that works best isn’t a sequential one. Ideally, the three building blocks are addressed simultaneously. In other words, like three strands of an interweaving rope, leadership, organisational culture, and purposeful advantage develop best when they evolve together.
About the Author:
Simon (Mac) McKenzie is the Managing Director of BRIDGE Asia-Pacific and has extensive operational and leadership experience and a senior level, both in the private and public sector.
He identifies his purpose as working with leaders and organisations to address some of the big challenges the world is facing over the next 25 years – be it inequality, water security, sustainable growth, education, energy security, climate change or peace-building.
Author: Simon McKenzie, Client Director at BRIDGE Source: Britcham.org.sg
Mac can be reached at Mac.McKenzie@bridge-partnership.com