Aligning purpose to strategy
Aspiring for purpose-driven leadership is one thing, but does it matter? Why should a business strive to develop authentic leaders at all? It would be much simpler to be operationally excellent and leave matters of doing good to others.
This traditional business trade-off between profit and purpose (or money and meaning) is short-sighted and ultimately incorrect. A strong purpose is associated with business success. Businesses don’t decide between profit or purpose, but instead decide to profit through being purposeful.
Research by McKinsey & Company shows that companies investing in sustainability initiatives perform better financially than companies that do not. Similarly, being efficient in the use of resources (energy and waste management, for example) is a strong predictor of financial performance. Other researchers have shown that “over a decade-long period, purposeful, value-driven companies outperform their counterparts in stock price by a factor of 12.”
Purpose is an enabler of success, and it makes sense to embed purpose in business strategy.
Purpose is profitable because the two are synergistic. The pursuit of profit and purpose means that businesses are much more focused on the end consumer, much more attractive to employees, and much better able to make the decisions that create long-term success. Purpose-driven companies can create markets where companies without a purpose cannot. This is as true for small start-ups as it is for large, established players.
For instance, purpose is central to the turnaround strategy for HP:
Putting purpose at the heart of strategy inspires companies to think differently about innovation; to reach beyond incremental improvements to create transformative solutions; to connect customer needs with human, economic, and environmental impact. The result can be game-changing innovation that creates new market opportunities.
How to achieve great results through purpose
• Be authentic, no matter what. Actions that are consistent with an organization’s purpose are “authentic” and far more effective in connecting consumers with the purpose.
• Bring in the right people. Ensure that people hired in an organization are a good cultural fit.
• Create shared value. Creating economic value while addressing social needs and challenges is a great way to grow long-term future markets.
• Compose a clear, comprehensive narrative. Ensure that everything an organization does can be linked to a unifying, purposeful narrative.
(Source: Sherry Hakimi, 21 July 2015)
Authenticity. Culture. Narrative. These are all business strategy considerations for a leader, and a fundamental part of the leader’s role is to bring an organization’s purpose to life. John Baldoni describes how purpose comes to life through an organization’s vision, mission, and values:
Purpose is also the trigger for vision, mission, and values. Vision is what you aspire to achieve; it is the process of becoming. Mission is what you do; it is the process of doing. Values are what hold the organization together; it is the foundation for individual and corporate accountability. Knowing your purpose provides clarity.
These are ultimately all questions of culture. Leaders entrench purpose in an organization by shaping its culture, and leading authentically means that purpose is naturally expressed by the leader’s actions.
Profit and purpose are synergistically linked. Purpose is brought about through authentic leadership. These links mean that authentic, purposeful leadership is intrinsic if an organization is not just to survive, but thrive.
So that’s it for this course. We hope you’ve taken a lot away from this experience and are already applying some of this in your own leadership role.
Before you go, take this quick quiz. It will help you appreciate how much you’ve learned in this course. See you next time!
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