The fundamentals of leading a purpose-driven company

Purpose as something business should care about has gained huge momentum in recent times.

Many credit the purpose revolution – if that is what we want to call it – with the millennial generation questioning this organisational construct, redefining loyalty and searching for meaning in the workplace. Yet when we dig into the views of the multiple generations now spanning the typical workforce, we find the search for meaning is not exclusively for millennials or even centennials – everyone wants to be talking with pride about what drives their company and how they contribute to something that counts in the world.

To be seen to have a credible purpose is to be trusted to be aiming to do the right thing. So it’s no surprise then, with the stories of rotten organisational cultures at companies like Carillion and the revelations of sexual harassment in Hollywood that triggered the #metoo movement, organisational intent and in particular the behaviours of leaders, have come firmly into the spotlight.

If this had not fully grabbed the attention of business leaders, then two signals in the last six months surely did. At the end of 2017 the Financial Reporting Council published a proposal for a revised UK corporate governance code building on the findings of a culture report they published in 2016. In this proposal they set out six elements of best practice – including establishing purpose, strategy and values with an aligned culture as well as seeking out employee views and the wider engagement of all stakeholders.

This was swiftly followed in January this year by a letter to investors from Larry Fink, founder and CEO of BlackRock, entitled “A sense of purpose,” in which he explained “Without a sense of purpose, no company, either public or private, can achieve its full potential.”

He continued, “Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”

It took the market by surprise, this challenge to business leaders to step up and run more purposeful businesses. He spelt out what he meant by writing:

Companies must ask themselves: What role do we play in the community? How are we managing our impact on the environment? Are we working to create a diverse workforce? Are we adapting to technological change? Are we providing the retraining and opportunities that our employees and our business will need to adjust to an increasingly automated world?

In the last quarter of 2017, coming off the back of a series of projects helping our clients tackle the question of purpose, we decided to launch a piece of research to examine what it truly takes to “become purposeful” – a response to the challenge set out by Larry Fink.

If there is an overall message, it is that when you can achieve a true sense of purpose in your organisation it is galvanising at all levels and provides connective tissue that drives strategic focus.

But it is not for the fainthearted. It is fundamentally cultural and the challenge to match intent and reality is not to be underestimated.

What we did uncover, speaking to 350 business leaders through both qualitative and quantitative routes, is that purposeful organisations share certain fundamentals that together allow purpose to take hold and embed itself in the way people think and work every day.

These fundamentals are:

1. When purpose is rooted in truth, purpose takes root

The purposeful organisations we came across had invested in the development of a credible, meaningful purpose through an honest and rigorous examination of why, at its best, their organisation really mattered and to whom. For some it took them back to their roots but for all it questioned the conventions that the only thing that mattered was shareholder return and/or financial aims.

2. Purpose only takes hold when leaders take hold of purpose

In the most purposeful organisations, where culture and purpose are aligned, leaders are fully engaged with purpose and are the key owners. Leaders of course role model culture and therefore if employees at large see leaders enacting purpose, they will too.

3. Purpose needs room to breathe

Where purpose jostles for space with a gaggle of other organisational or brand “constructs” it struggles. Competing ideas such as Vision, Mission and Ambition bring complexity and confusion. In organisations where purpose is elevated as a “north star” supported by values that guide people towards it, purpose was not just a rallying cry but at the heart of their cultural engine.

4. Purpose is for every day

Where employees not only understand purpose but are empowered to use it with a sense of collective responsibility, then purpose comes to life. People in an organisation need not just to be talking about it, but sensing it in what they do and, more importantly, what they decide to do on a day to day basis.

What was particularly illustrative of the power of this topic during our research is that some extraordinary organisations were happy to participate and go “on the record” with their stories, good and perhaps not-so-good, about their purpose journeys.

We saw that organisations find the first two fundamentals potentially the easiest to tackle – the definition and to some extent leadership engagement. But the second two are undoubtedly where the rubber hits the road and the experience of our research participants was not all smooth sailing – there are tensions to becoming and sustaining a truly purposeful organisation.

It’s for sure no longer a fashion statement – it’s a big topic that looks like it is only getting bigger – and for any organisation thinking about culture, brand and their way in the world, purpose has its place.

Helen Rosethorn is a partner at Prophet and author of ‘Becoming Purposeful’ a report exploring the fundamentals of purpose-led organisations.

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