“Our experience has been – most of the best ideas come from inside the organization, the challenge is we’re not very good at listening and engaging in conversation.” – Professor Thomas Malnight
I recently attended an HBR webinar entitled “Put Purpose at the Core of your Strategy” with Thomas Malnight, Professor and Faculty Director of the Business Transformation Initiative at IMD in Lausanne, Switzerland.
Professor Malnight reinforced much of what we have learned through our own work about the power of a purpose-driven organization. Malnight’s research focused on “high-growth” companies, which had an average compound annual growth rate of 30% or more in the previous five years. Initially his global research study was intended to investigate three well known factors contributed to these high growth rates – creating new markets, serving broader stakeholder needs, and changing the rules of the game. One of the most interesting outcomes of the research was uncovering a fourth significant growth driver that hadn’t been initially considered – Purpose.
“What we learned from those conversations was that purpose played two important strategic roles: It helped companies redefine the playing field, and it allowed them to reshape the value proposition. And that, in turn, enabled them to overcome the challenges of slowing growth and declining profitability.”
Malnight offers five questions for organizations to consider using as a compass on the journey to becoming a truly purpose driven organization:
- Does purpose contribute to increasing your company’s growth and profitability today?
- Does purpose significantly impact your strategic decisions and investment choices?
- Does purpose shape your core value proposition?
- Does purpose effect how you build and manage your organizational capabilities?
- Is purpose on the agenda of your leadership team every time they meet?
The Business Roundtable, consisting of nearly 200 chief executives, including the leaders of Apple, Pepsi, Amazon, Bank of America, Accenture and Walmart, recently released a statement that reframed the purpose of business in society through an entirely new lens… saying in part, that delivering shareholder value is no longer their sole objective.
So why the sudden shift in this group of executives viewpoint on the role their businesses play in society? After all, the primary purpose of a company has historically been to deliver value to its shareholders.
For the minority of organizations who have trusted and invested in a purpose-driven approach, they know this realization is nothing new. Research shows that organizations with strategy strongly aligned with purpose have significantly higher levels of engagement and overall better performance.
Read about how these purpose-driven organizations have outperformed the S&P 500 by more than an 8-to-1 ratio here.
Malnight closes the HBR article by summarizing his research:
“The approach to purpose that we’re recommending cannot be a one-off effort. Leaders need to constantly assess how purpose can guide strategy, and they need to be willing to adjust or redefine this relationship as conditions change. That demands a new kind of sustained focus, but the advantages it can confer are legion.”
The world is calling for a new kind of leadership, one that taps into the collective intelligence and wisdom of individuals, while also allowing them to align and connect with the purpose of their work.