The Purpose Driven Organisation
Initiative, creativity and passion are gifts. They are benefactions that employees choose, day by day and moment by moment, to give or withhold. They cannot be commanded. If you’re a CEO, you wont get these gifts by exhorting people to work harder, or by ordering them to love their customers and kill their competitors. You’ll only elicit these capabilities when you start asking yourself and your colleagues: ‘What kind of purpose would merit the best of everyone who works here’? ‘What lofty cause would inspire employees to give generously of their talents’.
Over the years I have sat through a ton of rev ups in big companies. I’ve seen CEO’s pound the lectern, have had eardrums pummeled by upbeat rock anthems and have watched thousands of employees cheer and stomp. Trouble is, an adrenaline rush is transient. It can produce a thunderclap of emotion, but it can’t produce a long, nourishing rain of inspired contribution – that takes more than breathless exhortation, it takes a moral imperative. That imperative could be producing beautiful products – a goal which motivates many at Apple. It could be curing diseases that were once considered incurable – a mission that inspires employees at Genentech. It could be harnessing the worlds wisdom and making it available to everyone – the majestic notion behind Wikipedia.
A moral imperative can’t be manufactured by speechwriters or conjured up independently by consultants. It can’t be cobbled together in a two-day offsite. Rather it must grow out of some genuine sense of mission, possibility or outrage. A moral imperative is not something one invents to wring more out of people. To be regarded as authentic it must be seen as an end, not a means. In Stephen Scott Johnson’s landmark new book: Emergent: Ignite Purpose, Transform Culture, Make Change Stick. Stephen states “Identifying our purpose is a simultaneous invitation for us all to step up and lead in a different way”. In it Stephen proposes we co-create our way to purpose. He implores us create ‘ripples’ not ‘rockets’ and to catalyze a movement to embed engagement.
Think about all the meetings that you have at work. How many of these give rise to discussion around purpose and destiny. Not much I would offer. In business we are wired for thinking not feeling. We are locked in rooms to discuss strategy, budget and other metrics but rarely does any right-brain thinking enter the conversation. Sometimes you are left wondering whether anyone in the room has a heart. Love, Passion, Compassion, Truth, Beauty, Wisdom and Freedom are noble imperatives that have aroused extraordinary accomplishment and for humans to exceed what is considered possible. It is sad then the world of business has done so much to crush the existence of these virtues. Put simply you are unlikely to receive extraordinary endeavor from the masses if they are not working towards an enlightened ideal.
As a disruptor, you may not be in a position to single-handedly craft an inspiring purpose but you can weave in discussion the power of purpose and principle to advance the conversation. For instance the next time you are being asked to wring out an ounce of incremental performance maybe a counter could be: “to what benefit are our employees being asked to give of themselves”? Or more so: “have we committed to a purpose that is worthy of their initiative, imagination or passion”?
There are a few questions you can ask as to whether your workplace is a ‘Purpose Driven Organization’
- Do you broaden the day-to-day scope of employee freedom without minimizing the need of focus, discipline and order?
- Do you promote the spirit of community rather than the machinery of bureaucracy to bind people together?
- Have you enlarged the sense of mission that people feel day to day to justify extraordinary contribution?
Why do our organizations seem less adaptable, less innovative, less spirited and less noble than the people who work within them? What is it that makes them inhuman? The answers:
- Leadership not aligned to values that matter,
- Organizations that are devoid of identity that ignites
- Management philosophies that exude control, not possibility
Whatever the rhetoric to the contrary, control is the principal preoccupation of most managers and management systems. While conformance (to budgets, performance targets, operating policies and work rules) creates economic value, it creates less than it used to. What creates value today is the unexpectedly brilliant product, the wonderfully weird media campaign, and the entirely novel customer experience. Trouble is, in a regime where control reigns supreme, the unique gets hammered out.
I love the post from Tim Leberecht (author of The Business Romantic) 5 Ways to Create Mission Statements. In it Tim states: “the why of your business is more important than ever, but how you get there requires less logic and planning, and more giving up control.” He also claims: “Imposing a mandate of change from the top down won’t work because it doesn’t proactively engage those on the receiving end, and they simply won’t identify with it.” I couldn’t agree more, so to embed purpose we need to embrace the art of letting go, stepping away and allow the culture to ‘be’ and ‘do’.
Let us look at each element of the Purpose model in turn:
- Values underpin Identity
Go into any progressive business and you will see corporate values laminated above the reception desk. If you are a leader at any level in any organization, you are a steward of company values. Unfortunately, not every manager is a wise steward. Some behave like mercenaries – by mortgaging the future to inflate short-term earnings, by putting career ahead of company, by exploiting vulnerable employees, by preying on customer ignorance, or by manipulating the political system in ways that reduce competition. What matters now, more than ever, is that managers embrace the responsibility of being a stewardship of values. Values are not just for the laminator. Values are beliefs that should inspire daily stories of greatness.
- Identity inspires Philosophy
James C Collins in the seminal ‘Good to Great’ asserted that “companies that enjoy enduring success have core values and purpose that remain fixed while their business strategies and practices endlessly adapt to a changing world.” Studying effective companies Collins discovered that those with strong and positive core values had outperformed the general stock market by a factor of 12 since 1925. Examples cited were 3M, Johnson & Johnson, Procter & Gamble, Sony and Nordstrom. Latter day Wall St darlings such as Apple, Google and Tesla have a strong identity that all can associate with. The core philosophy of any organization defines its enduring character providing a consistent identity that transcends product or market life cycles, management fads and particularly individual leaders. Identity therefore, provides the glue that holds an organization together through tough times and inspires the ongoing embedment of philosophy.
- Philosophy brings Purpose to life
Here is a word that probably doesn’t get much airtime in your organization: ‘philosophy’. Do a search of your company’s internal website and I’m willing to bet you wont find a single reference. That is a problem. As managers it is our creedal beliefs that prevent our organization from being more adaptable, more innovating, more inspiring and more noble minded. We are limited by our management philosophy. Purpose can often be an inspiring phrase. Mine is ‘building disruptive capabilities’. It is your holistic philosophy that will connect and engage. It is philosophy that brings purpose to life.
According to a 2015 Deloitte survey, 6 out of 10 Millennial cited their company’s sense of purpose as part of the reason they chose their job. That same study also found, however, that as many as 28 percent of Millennials believe their talents aren’t being tapped by their current employers. A nice pithy mission statement helps articulate the rational benefits of the organization but rarely does it evoke the intrinsic motivation of employees necessary to enable performance that is extraordinary. A non-tech example that defies this notion is Whole Foods.
Whole Foods an Organization On Purpose
Imagine a retailer where frontline employees decide what to stock; where the pressure to perform comes from peers rather than management and where teams, not bosses have veto power over new hires and where virtually every employees feels that they are running a small business. Now try to envision a company where everyone knows what everyone else is getting paid and where the CEO’s pay is pegged at 19 times the average company wage. Lastly picture a company that doesn’t see itself as a company but as a community of people all united in a desire to make the world a better place. Where this mission matters just as much as the bottom line.
Well welcome to Whole Foods.
No wonder then that Amazon has purchased the retailer known as ‘Whole Paycheck’.
A skeptic may hypothesize the purchase was due to:
- Being America’s most profitable food retailer
- Same store sales triple the industry average
- Revenue per square foot double of traditional competitor
- Stock market darling
A business romantic would contend:
- Freedom and Accountability
Whole Foods combines democracy with discipline, trust with accountability and community with fierce internal competition. The basic organization unit is not the store, it is the team. All new employees have four weeks to impress a peer review (needs at least 2/3rds acceptance). This spirit of radical decentralization permeates the whole business. Small teams are responsible for pricing, product selection, ordering, staffing and in-store promotion. Contrast this with the big 2 retailers who illicit slotting fees and centralize all shelf management requirements. Each team operates as its own profit centre and is measured on its own productivity. Every four weeks this is benchmarked and those who exceed receive bonuses.
There is transparency of data for every team. This explains why hiring is decentralized and such a big deal. Front line employees have the freedom to do the right thing for customers and the incentive to do the right thing for the bottom line. In most traditional, ‘top’ management often are only aware of issues once they are so problematic that response is crisis induced. At Whole Foods no one waits until the issue has compounded for action to take place. As John Mackey states: “We don’t have a lot of rules that are handed down from National HQ in Austin. We have lots of self-examination going on. Peer pressure substitutes for bureaucracy. Peer pressure enlists loyalty in ways that bureaucracy doesn’t”.
Putting so much authority in the hands of its employees requires the Whole Foods management to place inordinate trust in the integrity of its staff. Conversely for staff to stay motivated over the long haul requires reciprocal trust that management will let them share in the riches of the business. Whole Foods builds this trust in a number of ways. The most confronting for traditionalists is that everyone’s compensation is open for all to see. This transparency makes it extremely difficult for management to play favorites, whilst it also spurs productivity and up-skilling as employees can see the roles that are being rewarded.
Transparency doesn’t just extend to compensation. Every employee can garner information from every store (store sales, product costs, profit etc). This ‘no secret’ policy is essential in a company that is bound by trust. Contrast this to the cultural norm at most companies to conceal information, which is a formula of control that is toxic to trust.
In a myriad of ways, the people at Whole Foods have worked to build a company that feels more like a community rather than a bureaucracy. The company’s mission statement is titled: “Declaration of Interdependence” and describes Whole Foods as a ‘community working together to create value for other people’. Again a skeptic may see this as sloppy or naff. How many times have we heard leaders bellow, “We are all in this together” whilst simultaneously taking an annual paycheck that would dwarf a small country. The result being a cynical workforce. In contrast the top executives put their money where their mouth is. Whereas Fortune 500 companies often encourage salaries that break the 400:1 ratio of top salary to average; Whole Foods have set a standard that ensures that the top executive cannot be more than 19 times the company average. This is in line with the notion of community and trust rather than resentment. The entitlement of equity is also bestowed on 93% of employees (in contrast to most companies where stock options is seen as the domain of the top percentile).
Lessons from a Purpose Driven Organization
What ultimately binds the 30,000 strong staff at Whole Foods into a community is a common cause – to reverse the industrialization of the world’s food supply and give people better things to eat (humane treatment, ‘take action’ programs on sustainability, own and operating processing plants, purchase of renewable energy credits). Even with this John Mackey does not see a conflict between a passion for sustainability and a passion for profit. Communities are bound by a shared sense of purpose and this is reflected in their mantra “Whole Foods. Whole People. Whole Planet.” It is less about building the brand than fulfilling a mission.
It would be remiss to think of Whole Foods as a cult organization sitting around the camp fire singing ‘Kum Bay Yah’. Whole Foods is a fierce competitor to all those in the retail game. Key takeaways are:
a) Principles matter
John Mackey a pioneer of passion boldly stated, “we will create an organization based on love instead of fear”. I cannot think of any CEO that would think of this notion, let alone enunciate it. It is the principles of Love, Community, Autonomy, Transparency and Mission that propels Whole Foods greatness and energises the day-to-day actions of its team members. These principles do not emerge fully born; neither do they emerge by bench marking best practice. It comes from living from a fundamentally different philosophical starting point.
b) We must learn to forget
“One of the keys to understanding this company” says Mackey “is that the people who started it did not know how they were supposed to do it.” Mackey and his leadership team have never been prisoners to the orthodoxy of the past. Before adopting any new practice each manager has to ask: ‘is this consistent with our mission?’
c) Disruption can help to resolve management tradeoffs
By being open to the apparent contradictions of freedom and responsibility, community and competition & mission and profits promotes conversation that can ride through the tension. Too often companies try to side step difficult trade offs. So they adopt metrics, processes and decision rules that make one operational objective or performance goal an almost permanent advantage over its opposite number. But as Tom Peters states “hard is soft and soft is hard”. Whole Foods finds ways of reconciling irreconcilable trade-offs to capture the benefits of two sided advantages.
Questions to ask:
- How do you empower people by managing less while retaining discipline and focus?
- How do you create a company where the spirit of community binds people together?
- How do you build an enlarged sense of purpose that merits extraordinary contributions?
Given all this, it is hardly surprising that Whole Foods has been ranked as one of Fortune magazine’s “100 Best Companies to Work For” every year since 1998. Turns out that disruption within business can overcome the disengagement and malaise that is endemic in traditionally managed workplaces. Looking forward, no one knows whether Whole Foods will soar or sink. But if it is the latter, it wont be for lack of ambition. For now, one can simply say that this is a business built on purpose, exudes passion and one that performs.
Again, there’s nothing wrong with organizations focused on utilitarian goals such as profit, advantage, and efficiency, but they lack nobility. And, as we’ve seen so often in recent years, when corporate leaders and their followers are not enraptured by some meritorious purpose, they run the risk of being enslaved by their own ignoble appetites. An uplifting sense of purpose is more than an impetus for individual accomplishment, it’s necessary insurance policy against expediency and impropriety.
There was a time when Disney was in the joy business. Animators, theme park employees, and executives were united in their quest to create enchanting experiences for children of all ages. Apple, I believe, is in the beauty business. It uses its prodigious talents to produce products and services that are aesthetic standouts. There are many within Google who believe their job is to enhance wisdom, democratize knowledge for everybody and empower people with information. Sadly, though this kind of dedication to big-hearted goals and high-minded ideals is all too rare in business. Nevertheless, I believe that long lasting success, both personal and corporate, stems from an allegiance to the sublime and majestic.