Lewis Carroll once said, “If you don’t know where you are going, any road will get you there”, and this old adage still rings true in the business world today.
Defining your organisation’s strategy is critical to provide a clearly articulated path of travel for the business. It sets the direction for the employees of the business to know where the business is going and what the organisation’s ambition is.
A strategy provides clarity so that the organisation’s leaders can choose their road to give them the best chance of success. Numerous studies and surveys have been performed regarding the benefits of creating a purpose lead strategy and hence a purpose lead organisation. The benefits of purpose-driven organisations include, but are not limited to:
1. Achieving better results
A recent Harvard Business Review study revealed that 52% of purpose-driven companies experienced over 10% growth compared with 42% of non-purpose-driven companies. It does also depend on other factors such as sectors and capital. Still, the study also highlighted those purpose-driven companies benefitted from greater global expansion (66% compared with 48%), more product launches (56% compared with 33%) and success in major transformation efforts (52% compared with 16%).1
2. Engaging committed employees
According to the Deloitte Insights 2020 Global Marketing Trends Report, purpose-driven organisations generally experience 40% higher levels of workforce retention than other organisations. When employees feel that their work has meaning, they become more committed and engaged.
3. Winning the war for attracting and retaining top talent
McKinsey, the global consulting firm, recently performed a survey, and one of the statements that stood out for me was that 70% of employees feel that their work defines their sense of purpose in life, and 62% indicate they are seeking even more purpose from their work.2 If this is such an important factor, it can be leveraged by a purpose-driven organisation to attract and retain top talent.
What these highlight to us is just how influential the purpose of an organisation is and why it is so important to define a strategy that aligns with this overarching purpose.
For this reason, when we facilitate organisations in setting their strategy, it is so important to start at the top of what we call the Strategy Pyramid and work our way down.
Before an effective strategy can be defined and articulated, the leadership team of the organisation need to be aligned on what the purpose of the business is. They need to be able to answer the question of ‘why does the business exist?’. When facilitating an executive team, one of our main objectives is to understand from them why each member of the team personally gets up in the mornings and what drives them individually. There will often be a direct link between their personal motivations and the stated purpose of the organisation.
The purpose of the business is the underlying bedrock upon which the business is built. The purpose typically doesn’t shift, but it can be rearticulated or stated differently to emphasise different components during the lifetime of the organisation. The purpose should remain unchanged for a lengthy period, say 10 years.
The purpose should speak to the values that define the culture of the business. Where the culture is strong and lived within the organisation, it manifests into specific behaviours that the employees exercise.
Once the leaders of the organisation are aligned on the purpose then they can go about defining the ambition of the organisation. The ambition is normally set with a defined timeline, typically three or five years. The ambition should ideally be measurable, and a metric that defines what success would look like in the desired future state.
This future state that is defined in the ambition of the business will need to be aligned with the purpose of the business because this is the ultimate goal to deliver on the purpose and the reason for existing.
A practical example of where the purpose of the organisation has clearly influenced the strategic direction taken comes from one of our clients. They are a successful private equity firm that has been operating for over 30 years. They originally started with the primary objective and purpose of delivering positive change and transformation whilst uplifting the communities they serve. They planned to achieve this purpose by leveraging the original seed capital provided and investing it wisely in specific significant assets that will over time generate returns for the shareholders. These returns would be paid out to the shareholders, who would use the funds to deliver targeted community upliftment projects. This purpose is clear, and it resonates with the employees of the organisation. It is also this purpose that acts as a compass and guides important strategic decisions that need to be made.
From humble beginnings, the leadership teams of the past built a significant, diversified asset portfolio. The purpose of the business remains the foundation upon which it was built and is used to make strategic decisions. During their recent strategy review and facilitation to set the strategy for the next period, there was one critically important decision; do they invest in potential high-growth assets or do they invest in cash-generating assets? In a typical private equity firm, you would not be surprised if the decision was to invest in the high growth assets; however, in this case, the organisation needs to deliver returns to shareholders to ensure their overarching purpose is achieved. In order to uplift the communities, there is an imperative to be paying out regular cash dividends and, therefore, this influences the nature of the assets they invest in.
If a strategy provides a roadmap to success for an organisation, a purpose provides the heart and reason for existence. If this reason for existence is lived and is real in the organisation and it resonates with the employees the organisation is likely to attract the right people who will be committed and engaged to help drive the strategy for success.
For business leaders, it is important to make sure that your purpose is authentic and if you leverage this in your strategy development, you should be on a road destined for success.
1Brower, T. (2021) The Power Of Purpose And Why It Matters Now, Forbes. Available at: https://www.forbes.com/sites/tracybrower/2021/08/22/the-power-of-purpose-and-why-it-matters-now/?sh=1ddce7e5163a (Accessed: January 30, 2023).
2Purpose-Driven Organizations More Likely to Have Engaged, Committed Employees (no date) Cigna. Available at: https://newsroom.cigna.com/purpose-driven-organizations-more-likely-to-have-engaged-committed-employees (Accessed: January 30, 2023).