Every now and again you run in to some insights that are worth sharing. These three articles, together, fit that profile. They also espouse core underlying principles I've shared and worked with clients to on to drive value. If you haven't seen these articles, they're worth a read and point towards a changing future. In short, they point toward a world where those attracted to efficient capital allocation, strategy above all else and profits will be well served to explore Purpose as part of their platform. They point to new opportunities and new ways of seeing things. They point to disruption and irrelevance fro the status quo. They are brought to us not by those you would think are typically purpose inclined, but from the "other side," Blackrock and HBR, which makes them all the more inspiring and powerful to consider.
The Year of 2017 was the year of Purpose. With critical mass comes the opportunity for success and valuable lessons. During the past year I’ve been from Istanbul, Turkey to Santa Barbara, CA and places in between talking and working with representatives from Fortune 500s to small non-profits. I’ve talked with the C-suite and the shop floor. Studying success is important, but learning our lessons is too. These are seven sins to avoid if you want to drive competitive advantage and performance from Purpose.
The Missing Middle
Top Management goes on a retreat. They come back inspired. Signs get put up. The shop floor gets regaled with new mantras. Then the Executives leave, and the middle management – the men and women who get stuff done -- keep managing the way they always have. One of the Key differentiators between winners and losers, from my personal experience and according to this Harvard Business Review article, is when middle management actively engages in embedding and acting on the firm’s Purpose. There are many strategies to achieve that engagement and action, but evaluating Middle Management on whether they’ve applied Purpose to key systems, tools and processes that drive strategy is one of the most effective. Another? Measure whether middle management is engaged in the Purpose via pulsing surveys. If the middle is missing, the doers aren’t engaged, and Purpose won’t drive the value you seek.
Leaving Purpose Out of Strategic Planning: Missing the Focus Advantage
Strategy must follow Purpose. According to this HBR article, Purpose does indeed trump strategy. But the two are not mutually exclusive. They’re peanut butter and jelly. Good by themselves. Great together. Why? The camaraderie and culture around Purpose is fun. It’s inspiring. It gets people talking. It moves people. That’s a good thing. But, camaraderie and teamwork don’t drive results by themselves. Purpose derives values when it becomes the tip of the sword for solid strategic planning which clarifies focus and drives great execution. Said another way, Purpose must be harnessed to goals, actions, initiatives and ultimately KPIs. This CEO conversation is familiar. “Yes, we’ve got a Purpose statement. No, it isn’t part of our formal strategic planning process.” I’ve used more than 15 techniques during retreats and strategic planning sessions to help organizations connect Purpose to Strategy. A side benefit, the act of doing so helps engage the Missing Middle and insure success.
You Think It's Important, But You Don't Measure It
I’m a performance junkie. I love scoreboards. It amazes me that people say you can’t measure Purpose. I know of at least 7 ways to do it. And I know that most successful business initiatives and strategic planning initiatives have KPIs tied to them. What does your missing middle respond to? Metrics. What element ties together goals, objectives and initiatives? KPIs. How do you know if people are exhibiting behaviors? Quantify them! Purpose isn’t soft. It is specific. So are the outcomes. Find ways to measure them.
Failure to Connect People to Purpose
Millennials are 5.3x more likely to stay if they understand how their role connects to the organization’s Purpose. Yet, less than 27% of Middle Managers help their direct reports connect their role to their Purpose. I’ve worked with many organizations who have service problems. Almost always, the employees involved have little understanding of how their role influences achievement of Purpose. Nearly unilaterally, when they DO understand this, performance increases, as does innovation and problem solving. Here’s a simple exercise many CEOs I know adopt that is incredibly powerful. Take a Purpose Gemba walk -- walk out the floor – and ask questions that connect people to Purpose, their work purpose and the organizations. Don’t like doing things publicly? Do it in private during performance reviews.
Not Accounting for the Impact of Change
Change is hard. More importantly, people’s response to change can dramatically impact performance. If you’re pursuing Purpose, you likely prioritize people. If you do, don’t forget to account for the impact of change. What change? Becoming Purpose-driven is like resetting the operating system. When you make the commitment to be Purpose-driven, make the commitment to develop a change plan to insure you help you’re people through the change.
Not Understanding What Purpose Is and How It Is Different From Vision, Mission, Values and Strategy
If you can’t see the pieces of a jigsaw puzzle and what makes them unique, you also can’t see how they fit together. Go ahead, try this. Walk in to a room and ask people what they mean when they say Purpose. Take the next step. Ask them how Purpose is different from Mission, Vision, Values and Strategy. Try it one more time. What role do Purpose, Mission, Vision and Values play in Strategy and execution? Unsure? So are thousands of people on multiple continents. Purpose, Vision, Mission, Values and Strategy are incredible levers and each has a role to play in creating value. CEOs that don’t understand the nuanced differences don’t get the benefits they should. Purpose, in particular is commonly misunderstood.
Here’s the definition I use, which came from a Harvard Business Review. Purpose is “an aspirational reason for being which inspires and provides a call to action for an organization and its partners and stakeholders and provides beneﬁt to local and global society.” Did it differ from your definition? It is strikingly different and far more specific than what I hear from most CEOs.
Now, how do Purpose, Mission, Vision, Values and Strategy intersect? Here’s how I differentiate the Why, Where, What and How. When I work with companies, I recommend they connect them from the inside out, driving from higher level and aspirational to specific and actionable as you walk through solid strategic planning sessions.
A recent Harvard Business review article offered this insight. "“To safeguard your company at the level of purpose, you must make strategy the servant rather than the master. Strategies are time-bound and target specific results. Your purpose, in contrast, is what makes you durably relevant to the world. Strategy is but one of several important means to operationalize your purpose. Intrinsic human connection to your purpose is even more important.”
Driving competitive advantage through Purpose means understanding the role of Purpose, Strategy and other critical levers and emphasizing them in appropriate places. Use these definitions and guides as a starting point.
Talking Without Walking: Not Connecting Purpose to Behaviors
Purpose is powerful. It’s magnetizing. When it is talked about, but not acted on or is acted on in inauthentic ways, it makes people even more disappointed than if they hadn’t talked about Purpose at all. Despite knowing that, here are some extraordinary numbers. 69% of Executives know Purpose matters, 34% build it in to their decision making. 68% of employees say that talking Purpose but not living it would have a negative impact on their work. And, more than half of workers say that companies do not act in line with their Purpose and Values. Wow! Yet, many organizations fall apart here. Etsy recently had more than 1000 employees sign a petition against Senior Management saying it wasn’t truly living their Purpose and Values. PWC, whose Purpose is, “To build trust in society and solve important problems,” came under pressure for requiring a receptionist to wear high heels. What is an organization whose Purpose is to solve important problems doing mandating high heels? The bottom line, if you’re going to state a Purpose, you need to know what that means, define behaviors so people know what it means to live it and exhibit it in actions and decision making. People are smart. They’ll notice when you're doing something different than what you say.
Purpose Prioritizers Outperform. Some More Than Others.
Do Purpose prioritizes out-perform? Yes! Driving value from Purpose means avoiding common mistakes. Are you looking for additional ways to build your success? Follow these four principles. Or, email me to discuss the processes, techniques and templates that can help you succeed and turn Purpose from an idea you’ve got to something that drives your organization to new heights.
You’ve found your Purpose. You’ve articulated it. You know that purpose-driven = performance. A common roadblock? Not incorporating Purpose in decision making. According to a recent study from Price Waterhouse Coopers, 69% of Executives believe Purpose is central to success. Only 34% make decisions based on Purpose. Disconnect!
Simply put, if you want results from Purpose, you need to integrate it in your decision making. It’s simply a matter of Flipping the Filter, changing the lens we use to make decisions. Sounds simple, but it’s far harder to execute. Why? We’ve been doing something else - making decisions based on profit or gross margin, as an example - for so long, it’s hard to kick the habit. But when done right, it can have profound results, including increasing your top and bottom line.
You may not know it, but Lincoln - yes, that car company you thought might go away a few years ago - has done a lot right the past few years. In fact, they’ve recovered from some extremely rocky times, reinvented themselves and have experienced significant growth for three years running. That includes double-digit growth this year despite a decline in the luxury car market as a whole. When I talked with Executives there, many things stood out. What rose to the top? Their Executive team was willing to Flip the Filter and make their most important decisions based on Purpose. The result, innovative new products, distinctly different messaging (hello Mathew McConaughey), positioning in the marketplace and of course the rapid sales rise I’ve already mentioned.
Inside Out Decision Making - Lincoln Shows us How
As Lincoln began their process they did what any good company would do. Research. A lot of it! They were smart enough to know that what drives behavior isn’t necessarily what people say. Why? The portion of our brain responsible for decisions isn’t connected to our ability to communicate. They took the time to “get under the hood,” of what was articulated and understand what truly drove behavior. The outcome? The realization that what people were looking for was experiences. But not the experiences most car companies cater to with those fast revving, 0-60, turbo-charged experiences you see in most car ads where the car is the experience. Yes, people wanted a great experience from their car. But, what was the point of that great experience with the car? What they found was the car was the gateway to experiencing the world. It was a tool, not an end all. From that a Purpose that inspired spilled out: Creating products that empower people to experience the world. From that came some powerful attributes about what the brand would be. Elegant. Effortless. Serene. Think about the Purpose and the Attributes Lincoln defined. They’re profoundly different from what other car companies tell us about themselves and their products.
It's one thing to define a Purpose and to define what you want a brand or products to be. It’s quite another to live it. Decision making is the magnet that pulls intentions, Vision and Purpose together for compelling outcomes. Lincoln shows us how by making decisions from the inside (Purpose) out. When they faced What decisions (Features and Benefits) they didn't start with Gross Margin or Profit, they started with, will this feature or benefit help buyers experience the world? Will it help make an experience that is effortless, elegant and serene? If someone is driving the PCH will what we've created empower the customer to experience that drive in all its majesty? If it does, if the feature accomplishes that, then find a way to incorporate it. Then let's look at how to make that work (innovation driver!) from a profit and margin standpoint. BUT do that without diminishing the Purpose or the brand attributes we want to define us. Was it cost effective to include 30-way perfect position seats, adaptive cruise control auto hold or 19 Revel audio speakers strategically placed throughout the car? Probably not. Did it help achieve the Purpose? Yes. So they were included. Perfect examples of making decisions from the inside out. Ask Lincoln how they feel about the outcomes.
Stating a Purpose is a great start. But a great Purpose or Vision means nothing without action. Actions are defined by decision making. Flip the filter. Make decisions from the inside out. Results will follow.
It’s easy to say Purpose Matters. The evidence is unequivocal. It’s quite another to know what the Purpose is. Developing shared Purpose, a Purpose that defines the cause and passions of an organization, is even more challenging. Surprisingly, that’s as true for early-stage companies as it is for those that have been around for 5+ years. In a world where we’re under siege with commitments, communications and just “growing the business,” where do you start?
For those of you that have a well-defined Mission statement, you may have a good start. I’ve written previously about using a technique called the 5 Why’s, which originates from Lean, to get to your root cause, or reason for being. For some organizations that’s all they need to get to Purpose. For others, particularly those with 10+ people or those of you that haven’t revisited your Mission in a while, you need to go deeper and wider.
I’ve asked many questions and used many processes to help organizations get to their core reason for being, the cause that ignites the shared passion of the team, the Why of their organization. Two questions stand out as having been the most effective in a team-based setting. They get you the raw material to understand what your team believes and what inspires them.
The words that came out surprised some people and were incredibly powerful. Many on the team didn’t know how aligned and committed each person was individually to their customers, to service, to being good and to helping people. The word cloud became a rallying point for developing a shared Purpose that both inspires and drives the business.
Developing a Shared Purpose can be daunting. Don’t let that stop you. Starting with two powerful questions can go a long way in initiating that process. Results will follow!
The voice and stories from this blog originate from the collective wisdom and experiences not just of our team, but with those we were fortunate to learn from.