A company has to be something. It has to matter. In a connected, network era, leadership is exerted in a 360-degree social, global and ethical context. Increasingly, companies are asked to take a stand to stay relevant and trustworthy in the eyes of its stakeholders. This involves engaging in a larger conversation about why it exists and how it affects people’s lives and society at large.
There is a growing focus on purpose in organisations. More and more companies say they are trying to change the world for the better. It has become somewhat fashionable for leading organisations to blow their own trumpets and wave purpose flags from their glass and steel buildings.
One session at this year’s World Economic Forum in Davos focused on creating profit through purpose. Watch the discussion between the top executives from Procter & Gamble (P&G), EY and others. Then ask yourself: Which of the represented companies live and breathe a purpose? What does the body language and rhetoric of the top executives tell you about their intentions and commitment to an authentic, noble and inclusive purpose? What is the difference between sweet talking and purposeful action?
Moving beyond the sales pitch
By taking a clear stand and seeking to live a higher-order purpose, organisations risk being scrutinised if they do not deliver on their promises – even for actions that date back in time. P&G has, for example, been called out for sourcing palm oil from companies connected to widespread forest and habitat devastation in Indonesia. According to a 2016 Amnesty International report, P&G’s supply chain is tainted by human rights abuses, involving gender discrimination and children as young as eight working in dangerous conditions. EY is no poster child either. The leak of the Panama Papers revealed the existence of offshore shell companies used to avoid paying taxes by the world’s wealthy. The four largest consulting firms — PwC, KPMG, Deloitte and EY — have all played a major role in establishing the multibillion dollar industry. Last year, EY was also heavily criticised for its failure to spot a €7.2 billion fraud at Anglo Irish Bank when they were responsible for signing off on its published accounts. How is that aligned with EY’s lofty purpose of building a better working world?
Seen in this light, the viewpoints shared by P&G, EY and other executives in Davos seem hollow and void. Calculated and cynical. A quest of economic, spiritual wellbeing and dignity cannot and should not be lead by marketeers. Purpose is not a compelling slogan or a fancy sales pitch based on what executives think the market wants or what happens to be the management flavour of the moment.
We need to call time on purpose washing. Tomorrow’s companies seek to shape cultures and place purpose at the centre of their strategies, using it to drive broader societal value creation. They defy conventional business practices by being farsighted and willing to sacrifice short-term gains for the longer term benefits, which values and reputation bring. By doing so they thrive on being believed, not just noticed for saying the right things. Recent events like Volkswagen’s diesel emissions fraud and the Libor scandal suggest that there is something rotten in the state of business. The litmus test for any ethical and moral organisation is how its people resolve dilemmas when nobody is looking over their shoulder.
Serving the common good
What does it mean to be a purpose-driven organisation? Organisation derives from the Greek word organon, meaning instrument or tool. In keeping with ancient Greek thinking, organon was perceived as a tool to help an individual’s living, making and performing. The word purpose originates from the French word purposer, a variant of proposer, which means to propose. A purpose-driven organisation then should be seen as an instrument to propose human beings a way to fulfil their needs. As such it commits to making itself available for a wider community to achieve its aspirations and dreams. Making hard existential choices and caring for the common good is essential. This is what Peter Drucker had in mind when he insisted that: “Free enterprise cannot be justified as being good for business. It can only be justified as being good for society”. It translates into doing the right things and doing things right while simultaneously asking what is right. Addressing these fundamental questions is not optional if a company wants to leave a positive legacy for future generations.
Overall a purpose has three functions:
Purpose declares intent. The more meaningful a purpose is the greater its motivational pull. Striving to be number one in an industry is not a purpose. Purpose is a consistent and enduring promise to your stakeholders. Articulating clearly why your organisation exists and which difference it wants to make in people’s lives, helps create a company with a distinguishing cause.
Purpose shapes strategy. A purpose gives people a frame of reference and a filter through which they can pass strategic decisions. A clear understanding of purpose and its underlying values serve as a moral compass. It helps people decide if they are doing the right things and tell them which businesses they should be getting into, and how they should be running them.
Purpose provides perspective. A purpose reminds people why they do things, not what they do. It binds the past, present and future together, and galvanises the organisational culture. By actively aiming to create a better tomorrow and leaving a positive legacy it is directed towards meeting the needs of a wider community beyond a company’s walls.
Leaving a legacy
How can we expect the boat we are all on to change direction if a majority the crew is focused on reaching the shore of maximum profit in the shortest time? Are we capable of acknowledging and prioritising the quality of our work and our contributions to society just as much as speed, cost and scale?
All change – all progress – is a shift in language. The conversations we have construct and eventually become our reality. They provide a context in which we act and thereby set the stage for what will and will not be done. My point is that we cannot enter a new era without a richer vocabulary that sparks our imagination and sets a direction for how we build our future, why and for whom. The language of business is too poor to move us forward. Inspiration has to be found elsewhere, for example in the world of arts, philosophy and history. Leaders who do not have the courage to develop their language will never be more than guardians of the status quo.
Inclusive growth is tied to purposeful action. It is always easier to say no than yes, because yes sets things in motion. To solve the interconnected challenges we face as a human species, we need conscious and mature leaders who are committed to daring, caring and sharing. In his book Legacy, James Kerr writes that true leaders are stewards of the future. They take responsibility for adding to the legacy. The ultimate goal of such transformational leaders is to make themselves redundant. What are we waiting for? Now is the time.
About the author:
Kenneth Mikkelsen is a writer, speaker, business advisor and learning designer. He is co-founder of FutureIShifts and an associate of the Drucker Society Europe and Copenhagen Institute for Futures Studies. He is co-author of The Neo-Generalist: Where You Go is Who You Are with Richard Martin. Kenneth can be found on Twitter as @LeadershipABC.