Here is an excerpt from an article by Álvaro Lleó de Nalda, Alex Montaner, and Amy C. Edmondson for the MIT Sloan Management Review. To read the complete article, check out others, and obtain subscription information, please click here..
Credit: Phil Bliss/theispot.com
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Companies that have defined a values-based core purpose for their existence and pursue strategies aligned with that raison d’être can gain many advantages: greater focus, more engaged employees, more loyal customers, and better financial performance.1
It’s no wonder that developing a purpose statement is now on many business leaders’ agendas — especially as employees increasingly question their organization’s impact on communities and the planet.2 But if companies do little else with the statement than post it on their website, there’s little likelihood that it will confer much benefit.
Purpose is not a lever that can be pulled; rather, as our research has confirmed, it exerts its power as a deeply held commitment that is shared throughout an organization and motivates action. The identity of the organization, its role, and the reasons why that role is meaningful and valuable all flow from that shared commitment.3 Purpose makes a difference in organizations only when it changes the way people operate.4
For purpose to have a transforming and lasting impact, leaders need a deliberate, sustained approach to identifying, operationalizing, and measuring it. Our earlier research identified a set of key elements for defining and developing a solid purpose. We have subsequently developed a set of processes we call the Purpose Strength Framework. (See the “Purpose Strength Framework.”) Here, we’ll explain how companies can use it to turn intention into consistent action that yields the benefits of being a purpose-driven organization.
How Purpose Gets Its Power
The power of purpose comes from its capacity to link people through a shared belief about the identity, meaning, and mission of the organization.5
Purpose inspires people by illuminating the priorities of an organization that most naturally flow from its identity: its history, why it exists, and its ultimate aim. It creates a sense of meaning by connecting the work people do with their feelings and values so that they will act from the heart. And it helps to clarify how the organization contributes to each stakeholder. In these ways, purpose guides the daily actions of people within a company.
Shared belief in identity, meaning, and mission derives from a purpose that is authentic, coherent, and has integrity.6 To be authentic, it must express what people in the organization feel is important. It is coherent if it is consistent with the work that the organization performs day to day. Integrity springs from meeting the first two conditions, and from the company staying true to its purpose even when it hurts the bottom line. Our research has found that when all three criteria are present, employees are twice as likely to go beyond the call of duty and do things for customers, colleagues, and their organization that are not strictly required by their jobs.7
We worked with a European consumer electronics retailer whose purpose was conveyed with a clear, simple message — “Do right by the customer” — that encouraged employees to use their judgment when providing service. This implicit autonomy let every salesperson see customer interactions as opportunities to create their own legacy of great customer service. Employees were constantly reminded to define service from the customer’s perspective, ask customers questions about their specific needs and preferences, and go beyond expectations. The purpose was one that employees could understand, identify with, and contribute to.
An effective purpose also must be dynamic. Leaders need to stop from time to time and ask, “How are we living our purpose? How can we do it better?” When everyone in the company contributes to these reflections, the purpose can become even more powerful and more deeply shared by employees, because it integrates their views.
As with any major initiative, implementing purpose requires the full commitment of top management. Purpose can have an impact only if senior leaders thoroughly embrace it and are prepared to make changes in how the company conducts itself to align its daily operations toward the purpose.
That purpose must also align with the company’s strategy. The organization might define its purpose and then develop a strategy that flows from this purpose, or it might start with a strategy and assess its strategic initiatives through the lens of its purpose. Either way, a successful purpose implementation process requires a purpose-based business strategy that makes explicit the proposed shared value that stakeholders and the company will derive.8
When senior management is on board and leaders have established a clear connection between the company’s purpose and its business strategy, they can begin to incorporate the purpose into operations. Doing so relies on three processes: purpose knowledge, purpose internalization, and purpose contribution.
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Here is a direct link to the complete article.
Álvaro Lleó de Nalda is associate professor of managing people in organizations at the University of Navarra. Alex Montaner is a senior consultant with DPMC. Amy C. Edmondson is the Novartis Professor of Leadership and Management at Harvard Business School. Phil Sotok is CEO of DPMC North America.
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