Defining your organization’s purpose is only the first step.
What is “purpose” and why is it important?
Across society and around the world, we are seeing a rejection of Milton Friedman’s idea that corporations exist only to make money. It’s never been more clear that a blind focus on profits will not lead us to a world we want to live in – or even CAN live in – in the future. Companies can and must do more.
One response has been for organizations to focus on defining their overall purpose. If it’s not simply about making money, then what is it? The search for organizational purpose has become a global phenomenon. But what does that mean?
According to Craig James, co-president of CAT-STRAT, a consulting group focused on purpose initiatives, purpose answers the big question of why. “Defining your purpose is about clarifying why you exist, how you want to act, and what impact you want to have on the world,” explains James. “Once defined, everything the organization does should follow from that purpose. For many, that process is transformational.”
What are the challenges of aligning your organization with its purpose?
As hard as it can be for organizations to come to a unifying vision of their purpose, it can be exponentially harder to align their day-to-day operations with such a broad overarching vision statement.
This is because taking on a clear purpose means you must balance more traditional financial outcomes with broader objectives. Finding this balance isn’t always clear or easy as it applies to every function and team. In fact, the prospect of taking on a transformation like that can seem overwhelming. Where do you even start?
According to Tim Kelley, head of the management consulting firm Transcendent Solutions, the place to start is decision making. “I often present my clients with a menu of options for how they want to roll out their purpose to the organization,” says Kelley. However, “decision making isn’t optional, it’s mandatory.” According to Kelley, “if you’re not using your purpose in decision making you’ve wasted your time.”
Why focus on decision making?
Ann Latham, the author of “The Power of Clarity” describes decisions as “literal forks in the road with impact on results, costs, time, feelings, and relationships.” They are a pivot point. A bridge where the current organization meets its future state. So it seems natural that our decision-making process should be in line with our vision for who we want to be and the impact we want to make in the world.
That’s not to say that all decisions are the same. Some decisions can have a large and immediate impact on progress toward or away from your purpose. Other decisions have small impacts individually, but cumulatively can make a significant difference. These smaller, more mundane decisions are much like the break room donut. Choosing to eat that donut won’t instantly thwart your vision of losing weight. But continuing to make similar decisions will add up over time.
How do you align decision making with purpose?
Once you have a better handle on both those big and (small but) cumulative impact points, the next step is setting up decision-making processes to align with your purpose. How do you do that? Often these alignment opportunities occur in three areas:
- Who is involved – what do your purpose and values say about which stakeholders should be considered and consulted?
- What criteria are used – what makes for a good solution? Is purpose alignment one of those criteria? If so, how heavily should it be weighted versus other concerns?
- How do you measure success – we measure what’s important. The KPI’s we set say a lot about where our focus is as an organization.
Consulting groups such as CAT-STRAT offer services to identify priorities, define current state processes, and design optimized decision-making processes – all in line with strategy, best practices, values and purpose. “Decision-making processes can, and should be, optimized just like any other critical business process,” says CAT-STRAT’s Craig James. “In fact, due to the impact on results and culture, it’s one of the most important business processes to optimize.”
When done right… what are the outcomes?
At DAVOS 2020, Colin Mayer of Oxford University stated that “if a corporation’s statement of purpose is credible – if it demonstrates a real, irreversible commitment to profiting from solving problems – it builds trust and authenticity, as well as loyalty in customers, employees, suppliers and communities.”
The key to that statement is credibility. To be credible, that purpose must be meaningful and it must be lived out. Execute both well and you win the kind of trust internally and externally that builds real, sustainable value. Yet the reverse can be true too. Initiatives that are long on vision statements and short on operational alignment run a high risk of destroying credibility both inside and outside the company.
Tim Kelley’s advice is transparency. “Make alignment with your purpose explicit. Not every decision needs to be 100% aligned with your purpose, but it needs to be a key consideration. And in those times when you HAVE to make choices that stray from that purpose, don’t hide them. Be upfront about them, explain the rationale, and show how you plan to keep the company on track overall.”
In the end, we all want to do meaningful work. Money is important, but we have the opportunity for it all to add up to much more. Let’s all work together to build organizations that can clearly define their purpose and intentionally live out that purpose every day through the decision they make.