Recently I attended the Global Drucker Forum in Vienna on the theme “Growth & Inclusive Prosperity”. Over two days we listened as an array of management thinkers shared their perspectives on why inclusive growth matters and what we should do about it. One theme emerged consistently: pursuing profit as an end in itself does not necessarily lead to greater prosperity, but what really makes a difference is having a clear sense of purpose that drives the organisation forward. The argument goes that growth essentially comes about as a by-product of pursuing a higher purpose. For example: “to contribute to the sustainable development of society by empowering people to stay a step ahead in life and in business” (ING); “to help people do more, feel better, live longer” (GSK); or “to make sustainable living commonplace” (Unilever).
So, what is the evidence that purpose drives sustainable prosperity? Or are we simply seeing the emergence of yet another management fad?
We tackled this question at the Corporate Research Forum (CRF) in our 2015 report Organisation Agility (co-written with Chris Worley of the Center for Effective Organizations, and author of The Agility Factor). We found that organisations that manage to sustain top-quartile profitability over decades (‘agile’ organisations) operate four distinguishing ‘routines’.
1. Strategising: agile organisations have a more adaptable way of developing strategy. It’s driven by a strong sense of purpose beyond making money, is widely shared across the organisation, and is underpinned by a clear sense of ‘who we are’ that’s consistent over time.
2. Perceiving: agile organisations are much more open to their external environment. They have a greater surface area in contact with their ecosystem and are good at passing information quickly and in an unfiltered way between those in contact with the outside world and key decision makers. This allows them to react quickly to market changes.
3. Testing: agile organisations routinely experiment with new ideas. They also build in some excess capacity, so they can rapidly deploy people and other resources to support experiments, and they commit to taking action based on what they learn.
4. Implementing: agile organisations view change as part of everyday life, not a one-off programme. They build capability to drive change deep within the organisation, and delegate authority sufficiently to allow changes to be executed successfully.
Chris’s research found that the more routines an organisation has, the better it tends to perform. Those organisations with three or more agile routines were seven times more likely to experience sustained levels of above-average performance. However, agility is rare. Only 18% of organisations met the performance standard.
So, having a well-crafted purpose statement will set us nicely on the path to agility and sustained high performance, right? Not so fast!
First, our research found that it’s not just having a clear sense of purpose that’s important; it’s about the ways in which that purpose drives behaviour within the organisation. Can people at all levels translate the purpose into their day-to-day work? Is it consistent with the promises made to customers and other stakeholders? Does the purpose ring true in terms of how people act, or the behaviour that gets rewarded.
Second, each of the routines has to work together. Being purpose-led isn’t going to help if your organisation is so silo-driven that different parts of the business never talk to one another, or has so many layers of bureaucracy that decisions take too long to be made or implemented.
Creating an agile organisation is not a one-off event like crafting a purpose statement. It requires ongoing commitment at the most senior levels to building adaptable and responsive management processes and an openness to change. Having a clear purpose can help, but is only one piece of the puzzle.
For more information on past and planned CRF research, and accompnaying report papers, you can reach me at email@example.comBack to top