What does your organisation stand for?
Photo by Tirza van Dijk on Unsplash
As a Frenchman traveling the world, working and living in different countries, I have learnt to adjust to new cultures rapidly. However, there is a challenge that still frustrates me at times: how to translate some of my mother tongue’s expressions that capture a complex concept with beautiful simplicity?
Take "raison d’être" for instance, loosely translated as "the reason for which a person or organization exists", which for me crystalizes the most important and relevant challenge of our current business era for any organisation.
In this blogpost I share three convictions on the importance of a clear purpose for any organisation.
A clear purpose is critical in any organisation:
- to focus and mobilise the organisation beyond short-term thinking,
- to help the organisation navigate periods of profound change,
- to avoid - in the absence of a purpose by design - the shortcomings of the purpose every organisation gets by default, maximising shareholder value.
The default option
For most organisations that produce an annual report, there is no escaping the mission and vision statements. So one might expect to find clues to an organisation’s purpose in there. However, as many organisations sleepwalk through these forced communication exercises, the opportunity to tackle the key question of purpose is lost. And as a consequence, many leaders serve up a sophisticated menu of products and services in answer to the question: what does your organisation stand for?
This “products and services menu” answer is an ellipsis of course. The missing piece one has to guess is… shareholder value maximisation. In the absence of a clearly defined purpose, the by default purpose is indeed to sell sophisticated products and services… in an indirect play to maximise shareholder value.
The antidote to disengagement and short-term thinking
In any organisation, this (absence of) purpose would be problematic today.
First, because very few employees, and leaders, wake up every morning excited to maximise shareholder value. I won't dive into the question of motivation and engagement here, but the section on employee engagement of GALLUP website provides quantified and reliable data on this fascinating topic.
Let’s just say that without a clear purpose, the talent and engagement race is going to be a challenging one.
But why is this situation so common then? Surely it is because this (absence of) purpose is better for value creation then. In the short-term probably.
But too much emphasis on the short-term leads many organisations I work with to turn a blind eye to the risk of disruption of their business in the mid-term. The problem nowadays is that products and services can be disrupted overnight. If your business is optimised for short-term shareholder value maximisation with those products and services, then there might not be much left of it when the Uber or Airbnb of your industry will arrive. And they will.
Only when a clear purpose is in place can an organisation find the strength and justification to forego immediate rewards to invest, sometimes across long periods of times, for future rewards. In other words, a clear purpose helps an organisation move beyond short-term thinking.
The compass to navigate change
And when the time comes for an organisation to reinvent itself beyond its current business model, a clear purpose is even more critical. How can you adapt creatively, rapidly, when you do not know what you are about?
As an advisor on innovation and business transformation, this is one of the first areas I explore with leaders who want to embark on major change. Not to set a quick goal or ambition for the transformation, but more fundamentally to understand the purpose of the organisation.
This clarity is critical for executives to build a meaningful transformation program. Later on, the purpose becomes a reference point, a compass. The inconvenient truth about business transformation is that it is hard, long and challenging in many ways for senior leaders, middle management and staff. Budgets typically add up to several millions of dollars over a multi-year timeframe, with the program sometimes outlasting key decision makers.
Without a clear purpose as a reliable compass, leaders could put their organisation through incomprehensible change programs that leave staff disoriented, or with strong sceptical feelings that, anyway, “plus ça change, plus c’est la même chose”, Jean-Baptiste Alphonse Karr (“the more it changes, the more it’s all the same”).
In 2015 I had the opportunity to work with aged care providers in Australia as the industry went through a profound shift toward consumer-directed care. At that time, I encountered two providers that, at first sight, looked like twins. Both were undertaking similar transformation initiatives to adapt, change and re-invent themselves. When I asked leaders about the purpose of their organisation, they gave me very different answers though. The first organisation aspired to “increase quality of life for elder Australians with affordable domestic services”. The second one wanted to “help elder Australians, together with their families, experience positively the last part of their life journey, and make sense of it.”
A purpose anchored in the bottom of Maslow’s pyramid of needs on one side, which would likely lead this organisation to offer cheap house cleaning and domestic services. A purpose venturing in higher needs of Maslow’s pyramid for the second provider (psychological needs, self-fulfilment needs). Will those two companies still look like twins in a few years? With such different purposes as compasses, I would argue that those two organisations should end up in very different places...
