Clarity of purpose is central to success in everything that we do. In a business sense, purpose provides the basis for a corporation’s existence: the motivation and meaning for ‘Us’, as an organised association of individuals. With a purpose, we can be proactive, watching for trends which point the way towards our purpose; but without a purpose, we can never do more than react to events. And without an explicit business-purpose, all we’ll be left with is implicit purpose – primarily the infamous “what’s in it for me?” – which is not a good basis for business…
But what exactly is ‘purpose’, in a business context? What does ‘purpose’ look like? And what’s the relationship between purpose and the pointless-seeming platitudes in ‘purpose-statements’, ‘mission-statements’, ‘vision-statements’, ‘value-statements’ and the like?
In business, the purpose is the reason why the company exists: it’s as simple as that. So a purpose-statement is a formal statement of that purpose. It defines a direction, not a goal: something to aim for, perhaps, as an expression of collective response-ability, and something to measure against, but not something that can be completed or ‘achieved’. The vision-statement describes the company’s vision of where its purpose fits within the wider context of the industry, the community, and society and the environment in general. This is linked to, and often merged with, the values-statement, which identifies philosophies and social values – such as fairness, truthfulness, trust and human development – which will be upheld and promoted by the company in all its operations and transactions, especially within itself. Defining these formal statements is not something to be taken lightly, because they form the anchor around which everything that the company does can be assessed: as the old phrase goes, “be careful what you ask for, because that’s what you’ll get”!
You’ll perhaps note that I haven’t included mission-statement in that summary. That’s because, as I see it, there’s actually no such thing – despite the fact that so many companies proudly display them! It’s not a ‘mission’ that we need at the company’s core, but an overall purpose: and in most cases, a purported ‘mission-statement’ is just a poorly-designed substitute for a purpose-statement, rendered unusable by a subtle form of power-under embedded in its structure. Even at its best, a ‘mission-statement’ is a purpose-statement that’s been assigned a dangerously misleading label – and hence, in practice, may be more of a hindrance than a help in creating connection with purpose.
The problem is that a ‘mission’ is literally a ‘sending’, a single goal that’s an expression of someone else’s purpose, and for which that ‘someone else’ supposedly takes responsibility: so if a mission-statement is presented as a substitute for a true purpose-statement, the ‘purpose’ is effectively based either on attempted export of responsibility to whoever defined the mission, or import of responsibility from those assigned to carry out the mission. It’s true that a clear purpose has the feeling of a mission – the urgency, the literal ‘enthusiasm’ – but it’s essential to understand it as a choice, not a ‘sending’. Expressing a purpose requires personal commitment, whereas a mission is ‘just following orders’: if a mission-statement is used as the core statement for a company, then everyone in the company will be ‘just following orders’ for a mission for which no-one accepts ultimate responsibility – a guaranteed source of serious problems. Even worse, if and when the goal is achieved, the company loses its stated reason for existence – which can easily destroy the company. If all that you have for your company is a mission-statement, throw it away and start again… At the very least, look for the purpose behind the nominal ‘mission’, and start again from there: on the surface, the difference may seem small and subtle – a mere semantic quibble – but it turns out that it’s a difference that is surprisingly important in practice.
A purpose-statement only works if it’s real, and describes a real purpose. It used to be said that the only purpose of business was “to maximise the medium-term earnings per share”: but in practice money in itself doesn’t provide enough of a purpose to create long-term success – as even the asset-strippers found out, the hard way. ‘Making money’ is best understood not as part of a purpose, but as an indicator of successful conformance to purpose, a desirable side-effect of fulfilling the purpose. And as we saw earlier with exclusive money-based ‘valuations’, focussing solely on profit rather than purpose can cause us to miss the point: as Charles Handy put it, “It is like saying that you play cricket to get a good batting average. It’s the wrong way round. You need a good batting average to keep on playing in the first team.” In the same way, “being the pre-eminent provider of ‘xyz’ goods and services” isn’t a purpose either: positioning in the market-place is another side-effect of fulfilling the company purpose, vision and values – and ‘pre-eminence’ is not necessarily a desirable one in some cases, especially if we’re caught up in the kind of ‘control’-delusions that we saw earlier.
A purpose-statement must be something which provides a reason and focus for work, and which is credible and meaningful for all stakeholders. So the overall statement needs to cover the full range of contexts of the business, from the personal to the collective, and as Stephen Covey puts it, “should deal with all four basic human needs: economic or money need; social or relationship need; psychological or growth need; and spiritual or contribution need”. (As we’ve seen earlier, though, the spiritual dimension is more than just Covey’s ‘contribution need’: the connection to ‘that which is greater than self’ is a primary source for motivation, from which personal power – the ability to work/play/learn – and response-ability – the ability to choose and act upon appropriate responses to contexts – both ultimately arise.) Above all, what we need in a purpose-statement is an aim, not a goal; and we need it to make clear distinctions between that aim, the means and contexts through which we express that aim, and the indicators by which we identify success in that purpose. The ‘toolkit’ here includes detailed processes for identifying and describing purpose at both the personal and collective – project, team, division, company – levels, so for now I’ll just summarise those three key parts of the statement: the aim, the means and the indicators.
The ‘aim’-section is straightforward, and states why the company exists – the fundamental reason for the company’s existence. In effect, it describes the company’s vision for the company itself – whereas the vision-statement describes the company’s vision for the wider community, which is somewhat different. Both aim and vision are addressed to feelings, and their aim, in effect, is to provide a wake-up call – a feeling that’s strong enough to move us out of bed on a Monday morning! The emphasis on feelings is why they often seem like lofty platitudes: yet that’s all they can seem to be if all we apply is the rational mind, because it’s feeling, not thought, that provides the real source for motivation, and hence for personal power and response-ability. The rational mind provides choice as to how to use that power, but not the power itself. And that’s also part of the reason why ‘making money’, on its own, doesn’t work as a purpose: to access the feelings needed for motivation, we need to connect with what we need money for – comfort, relaxation, satisfaction – rather than the money itself.
The overall aim is similar for all businesses – so similar, in fact, that we could use Stephen Covey’s ‘universal mission-statement’ as a starting-point from which to explore our own aim:
- The aim of all business: To improve the economic well-being and quality of life of all stakeholders.
‘Economic’ here means not just money – as Covey himself originally argued – but the much broader sense of economy described earlier. ‘Quality of life’ is more difficult to define, but is essentially experiential, though some aspects at least should be assessed by the measures described in the ‘indicators’-section of the purpose-statement. And as also described earlier, the aim needs to describe our relationship not just with the ‘owners’, the shareholders, but with all of our stakeholders – because the only way to ‘win’ is to ensure that everyone else wins with us.
The ‘context’-section of the purpose statement describes how the company intends to work towards that aim. Unlike the aim, this will be necessarily be different for every company – in fact, it’s the way the company distinguishes itself from other corporations. This is where that “provider of ‘xyz’ goods and services” clause fits – but without any “pre-eminent provider of” puffery… It describes the context – usually the general industry and more specific area of that industry – in which the company’s work takes place. For technology-oriented companies in particular, the description of the work-context should be generic rather than specific, and take a long-term rather than medium- or short-term view: for example, “network interconnection facilities” – a generic market which will probably continue indefinitely – rather than “Novell/Windows-compatible hubs and routers” – a market which might well disappear after a decade or two, as names and technologies change. Involvement in industry-groups and standards-bodies – or, for that matter, community and environmental activities – might well rate a mention in this section of the purpose-statement, as they indicate the company’s intended relations with the wider context of its stakeholders.
The ‘indicators’-section of the purpose-statement describes how the company will confirm that it’s working ‘on purpose’. Profit is one obvious indicator, and a necessary one – though it may be wise to distinguish between short-term and at least medium-term profitability here. But we also need measures for other economic qualities, such as morale, or equity, or social responsibility – particularly if we’ve referred to any of those qualities explicitly in the ‘aim’- or ‘context’-sections of the purpose-statement. Again, these measures need to be described in generic rather than specific terms: “consistent financial performance and profitability” is more appropriate, for example, than an arbitrary and perhaps non-achievable “minimum 10% increase in profit each year”! And the measures we specify here need to show a balance across the whole spectrum of the company’s economic activity: purpose-fulfilment especially, but also knowledge-technology and relationship-management – including relationships with the wider scope of stakeholders.
That’s the basic structure of the company’s purpose-statement: the aim, the context and the indicators. And much the same goes for the vision-statement and values-statement, though these describe what the company is more than what it does. Together, they provide an identifiable aim for all of the company’s efforts: a proactive purpose for everything that the company is and does.
Yet the company itself is only one side of story: the purpose-statement and the like describe the collective intent, but the corporation’s activity arises from the personal power and response-ability individuals – each of whom have their own purpose, whether they’re aware of it or not! And that individual power becomes shared as power-with when ‘alignment’ occurs between personal and collective purpose – when the individual regards the collective purpose as describing a direction and focus which, at least in part, is much the same as their own. In fact, if alignment doesn’t occur, the resultant mismatch will inevitably increase inefficiencies within the organisation: and those inefficiencies will increase, rather than decrease, if we try to ’empower’ individuals without first ensuring alignment – if only in a sense of general agreement with the collective purpose. So a purpose-statement, on its own, means nothing: it’s only by involving everyone in the expression of that purpose that we can access the power that it can provide.
Although it’s short – or in some ways because it needs to be short – creating a meaningful purpose-statement can be a lot of work. And it isn’t something that can be knocked up by corporate management over a weekend retreat, published, and then forgotten about – because that’ll guarantee that it will be forgotten about! That weekend workshop or whatever is only the start: to be of practical use, the purpose-statement needs to be discussed not just with a few key managers and shareholders, but with every stakeholder, to ensure that the stated purpose matches well with their own. And that really is a lot of work… But it’s work that’s well worthwhile, because a meaningful purpose is probably the key protection against power-over and power-under – both within the corporation, and between it and the ‘outside’ world.
In terms of the classic sequence ‘telling, selling, participating, delegating’, telling others about the corporate purpose is only the start: it’s appropriate only with stakeholders who have no direct involvement in the company, or for the very first stage of potential involvement – such as in recruiting literature, for example. At a minimum, ‘selling’ the purpose to employees and other direct stakeholders is essential; but we need to make it clear, and demonstrate, that everyone is invited to participate in its development – because it’s only then that ‘our people’ can gain a sense of their own stewardship of the corporate purpose, and thus identify their own extent of alignment with it. Beyond the development of an initial purpose-statement that can be used as a basis for discussion, though, there’s not much that we can delegate to others: we can’t assign the responsibility to anyone else, because the purpose identifies mutual responsibilities between the company and its stakeholders – and defining those relationships is something in which every stakeholder needs to be involved.
Admittedly, involving ‘every stakeholder’ is in some ways an impossible dream, because ultimately everyone has some kind of stake in our business. Even so, there’s a lot that we can do – and need to do – both with employees, shareholders, suppliers and other direct stakeholders, and with the public at large. We can create a dialogue with our direct stakeholders through a corporate intranet or extranet, for example; whilst to create dialogue with their indirect stakeholders, several large multinationals such as Shell use mass-media advertising, public websites and ‘tell-us’ mail and email addresses – of which at least the latter are options that are available to even the smallest corporation. The main result to be aimed for is clarity on corporate purpose: ‘outsiders’ especially can help in this, as they’re beyond the reach of internal politics, and their external perspectives can help protect the purpose-development effort from the common tendency towards insular, self-referential ‘groupthink’ within every corporation.
Although clarity on purpose is the main aim, there can be important pay-offs in many other areas too, both inside and outside the corporation: for example, purpose-development efforts that are open to the public do help to improve relations with the general public – including those who don’t choose to become directly involved. And as the writers of the ‘Cluetrain Manifesto’ put it, “markets are conversations”: so creating a conversation with others about the nature of the company also creates a market for the company’s product’s and services. The catch is that the invitation to involvement must be real, and be seen to be real: if we invite people to a conversation, and then openly ignore everything they say, the only possible result is a public-relations disaster of epic proportions.
We also need to be aware that it’s not just our collective purpose that we’re working on here: every one of our stakeholders – including ourselves as individuals – has their own individual or collective purpose too, each of which interacts with ours. We need to identify the extent to which we share our purpose with each of our stakeholders, to create power-with for a win/win in every interaction between us. So it’s in our interest to help everyone with whom we have any kind of working relationship – especially our direct stakeholders – to identify their purpose, and accept stewardship of it for themselves, so that we can each identify the respective boundaries of mutual response-ability. As James Autry put it, “the wise leader realises that the first obligation of leadership is to help people find meaning in the work, no matter what the job”: the same applies to our relationships with every stakeholder.
One result of this process is that, on occasion, we’ll find that there’s a serious mismatch of purpose between ourselves and some of our stakeholders. Sometimes the mismatch may be resolved by some creative re-thinking – such as in the case of an engineer I knew, who realised that she really wanted to work with people as much as with things, and changed her involvement in the company to a part-time role. But sometimes – as in the case of a shareholder who wouldn’t accept that a company could exist for any purpose other than his own personal benefit – it’s time to say goodbye, no matter what the cost. Even so, it’s still a win/win for everyone: sure, the relationship changes, but we’d no longer be carrying ‘passengers’ who won’t accept their own response-ability in the purpose – or, worse, who’d sabotage that purpose through frustration, indifference or sheer boredom!
But the people we most need to involve are ourselves. Engagement of others in our purpose occurs most through our own example: we say what we mean, and demonstrate that we mean what we say. A purpose-statement isn’t just something to hang on a wall, it’s a description of our aim in the entire way we work with others. So it’s not just something we’re expecting others to do, as in the traditional ‘top-down’ style of management: it’s something that we’re asking ourselves to do – to live – even more than anyone else. A purpose-statement, vision-statement, values-statement and the like is not just a commitment to a way of doing business: it’s a commitment to a way of life, in everything that we do. And it’s a commitment, too, to which we expect to be held accountable, by everyone – which is why we need to involve everyone in helping us to keep to that commitment.
Accounts and accountability
Identifying the company’s true vision, values, principles and purpose can be hard work; and framing them in the form of clear, concise statements is hardly simple, either. Even so, in many ways that is the easy part: the real work comes in translating those commitments into profitable business practice. Yet despite the effort – much of it challenging, much of it embarrassingly visible to the outside world – it’s still far less than the hidden costs of ‘business as usual’. Those hidden costs are not just internal, either: in the past, many businesses were profitable only because they could ‘export’ to society at large most of the social, environmental, political and medical costs of the business. But government and the general public are now far more aware of those costs – and are increasingly demanding that businesses clean up their act, in every sense. Clarity on purpose, in all its business activities, helps the company as a whole to become pro-active in addressing these issues.
And apart from anything else, choosing to be more accountable for these hidden costs is good business sense. That slogan “reduce, re-use, recycle” isn’t merely ‘tree-hugging environmentalism’, as some managers and business commentators still seem to think: it’s about reducing human and financial costs, and the long-term – or even medium-term – risks of a ‘tragedy of the commons’ scenario. Paid parental leave or medical leave isn’t about being ‘nice’ to people: it’s often the only way that a company can protect its investment in highly-skilled staff – and not providing it may be the luxury that the company can’t afford. Losing consumer confidence or social reputation can destroy, or at least damage, a company very quickly indeed, as Shell discovered after two public-relations disasters – Brent Spar and Nigeria – in quick succession: hence, as one senior staffer explained, “we developed the concept of a reputation ‘bank account’, or reservoir – we saw we would need to make deposits there because, from time to time, there might be unavoidable withdrawals”. And social activism by businesses – as long as it’s for real – can be one of the most cost-effective marketing media of all: Ben & Jerry’s demonstrated that the cost-per-contact via a free festival was barely one-thousandth that of a single newspaper advert, let alone a whole campaign – and as one of their franchisees put it, “the harder you try to blow money on seemingly unprofitable community projects, the more money you end up making”.
The way to make these real is through the purpose-statement, vision-statement, values-statement or whatever – in Shell’s case, for example, their published and much-publicised General Business Principles – and put them into practice. Once understood and, preferably, fully committed to by all involved, these statements act as the reference-point for all of the corporation’s economic activity: purchases, sales, policies, procedures, products, production processes, choices for hiring and firing – anything which purports to fulfil the corporation’s purpose should be checked for alignment with the commitments made in the statements, and action taken accordingly. Sometimes it can be difficult to do so – for example, Shell withdrew from over a hundred existing or potential business partnerships in one year alone, because of too much mismatch with their General Business Principles – but the cost of not doing so is even higher, especially in the longer term.
By making the statements public, we’re asking others to help hold us accountable to those statements – our choices about the direction and focus of our business. But this kind of ‘business transparency’ is still rare – mainly because, as most companies with any kind of social-responsibility focus have discovered, anyone who has the honesty to air their ‘dirty washing’ in public tend to get attacked, loudly, vigorously, and repeatedly. What’s actually going on in such cases is straightforward power-under – specifically, the use of scapegoating and ‘other-blame’ to conceal problems elsewhere, in other companies or other places – but it still acts as a major disincentive towards opennness and accountability. The only way that this will change is if all corporations are measured in the same way, not just in financial terms but in social terms too. It’s something which many commentators, companies and lobbyists are resisting, of course, but the pressure to do so is increasing inexorably: the United Nations’ ‘Global Compact’ and the internationally-supported ‘Global Sullivan Principles’ are pushing that way, and new measurement models such as AA1000, Balanced Scorecard, the Global Reporting Initiative (GRI) and the Sustainability Integrated Guidelines for Management (SIGMA) provide tools to audit economic performance in the widest sense of the word.
To audit anything, we need to be able to measure it: that’s the reason for requiring the inclusion of appropriate ‘key performance indicators’ in the purpose-statement. Accounting isn’t a separate activity, an afterthought tacked on to satisfy external requirements: as Deming demonstrated many years ago, appropriate measurement, fully integrated into the respective business processes, is one of the keys to corporate quality. Whatever we measure, though, it needs to be measured in its own terms: if our only indicator is money, we end up forcing the financial balance-sheet to carry information which isn’t financial at all – with the sometimes extreme distortions we saw earlier, where meaningless monetary ‘valuations’ for goodwill and potential intellectual property can blow out the real balance by five times or more. And although some non-monetary measures are necessarily complex, this isn’t true for all: morale, for example, can be measured by something as simple as an annual staff survey. Other measures can be derived by analogy: in assessing return-on-investment for ‘human capital’, consider the ‘depreciation rate’ of high staff turnover, for example, or the ‘downtime’ of absenteeism arising from occupational injuries or low morale, or ‘reinvestment’ in the form of staff training and education. From a conventional money-only model, most human issues are written down as costs: yet ultimately, with awareness, all of them can instead be understood as potential profit-centres – and thus, for strict business reasons if nothing else, very much in the company’s interest to help develop them, and measure them, wherever practicable.
In the real world of business, nothing is fixed, nothing is certain – and that goes for the business-purpose, too. Framing a purpose-statement is only the start of a continual process of review: all of the statements need regular review, to ensure that they continue to describe the real aims of the business, both from the perspective of the company itself and from those of its stakeholders. Accounts and accountability, in every aspect of the corporation’s economic activity, are at the core of the company itself: they’re the means by which we ensure, continuously, that we’re still on track, and fulfilling our chosen corporate purpose.
The quest for quality
In effect, the same accountability to purpose is also the core of quality in all of the company’s economic activity. Quality depends on purpose: it’s as simple as that. An explicit statement of purpose is the foundation-stone for a functional quality-management process, such as TQM and ISO 9000:2000. And without a meaningful purpose-statement to anchor them, quality-initiatives will invariably fail and fade away – regardless of the amount of effort put into them.
There’s a commonly-heard comment in business that “we tried the Quality thing, and it didn’t work”. But the reason why it didn’t work is because quality isn’t a ‘thing’: it’s an attitude, or, even more, a commitment to a way of life – which is what brings us back to purpose, and its fulfilment. Just as with accounting – in fact, as the qualitative rather than quantitative aspect of accounting – quality can’t happen if it’s treated only as a separate afterthought to the rest of our business: quality is the means by which we measure fulfilment of our purpose.
And quality isn’t about things, but people: no matter what the issue looks like, and no matter how technical, it’s always a ‘people-problem’. Quality doesn’t reside in external auditing, or in policies or procedures or the rest of the dreaded ISO 9000 paper-trail: it resides in what each person is doing, thinking, feeling, right here, right now, in this item of work/play/learn. The numbers do matter, as a means of comparison, a measure of progress: but quality isn’t about averages, or percentages, or mean-time-between-failure, it’s about this item, right here, right now, in everything we do, in everything we say. Compliance to an external standard may give us a pretty logo to put on the company letterhead, but it won’t give us quality: we’ll only get that from commitment to purpose.
Quality isn’t about what to do when things are certain: it’s about what to do when they aren’t certain – which is what actually happens, most of the time, in real work and in the real world. When we’re back in Chaos Department again – when our suppliers have sent us the wrong material, perhaps, and we’ve still got a tight deadline to meet – ‘following the book’ isn’t likely to be much help: it’s unlikely to bring us what we’d call ‘a quality result’, at any rate. In most circumstances, what we most need is the ability to improvise appropriately: yet there’s no work-instruction for inventiveness or ingenuity, there’s no predefined procedure which can always create creativity. But we can provide conditions under which they can arise. And we can also provide conditions which can prevent them from arising – of which trying to ‘keep control’ by demanding that everyone follow ‘the book’ in all circumstances is perhaps the best (or worst) of all. It’s up to us: it’s always up to us – as individuals expressing our own purpose as well as the corporate one.
Attention to quality requires effort, but the result reduces costs: as a Toyota specialist put it, “when you orchestrate work around quality, costs take care of themselves”. In their American plants, Toyota’s overhead costs are a fraction of those in most typical American companies: yet the cost savings come not lower pay or tighter inventory, but from the way that work is organised. The work-system is structured so as to make it easy for workers to identify and correct errors as they occur: but the real focus – the human side of the system – is in supporting individuals to use their own power and response-ability to resolve problems and make improvements.
So in creating conditions for quality, we do still need that paper-trail of policies, procedures, work-instructions, check-sheets and the like: but we make it work by giving it a purpose. Policies provide the ‘why’ for work; procedures identify the ‘what’; work-instructions specify the ‘how’; but we anchor all of them in the corporate purpose, with every measurement ultimately anchored to the indicators outlined as part of the purpose-statement – and every indicator measured somewhere in the overall quality-system. And everything is anchored in personal power, in individual response-ability – because individual skill and awareness is what’s most needed whenever anything is uncertain. So work-instructions describe what to do when the work is routine; but they also provide guidelines as to when to move back to procedure, to create new – and often temporary – work-instructions for new circumstances. Procedures in turn provide guidelines to return to policy, to create new procedures where required; and policies provide guidelines to return to purpose – the ultimate guideline for every choice that occurs in the business. As we saw earlier, with ‘right of way’ in traffic law, the purpose provides the ‘none of the above’ clause that helps everyone retain their response-ability whenever anything becomes uncertain. Accepting uncertainty, we let go of trying to control the uncontrollable: but clarity on purpose means that we never lose our sense of direction – the focus of the business.
The core of quality is the involvement of people in purpose. Without involvement – or, to use Shell’s term, engagement – we won’t get quality: what we’ll get at best is acceptable compliance to some external standard. Without the engagement of the full range of stakeholders in our purpose, what we produce won’t be perceived as quality, either: and loss of perceived quality can soon kill an entire company, because quality, rather than price, is often the primary – or only – differentiator between products in the marketplace. Markets are conversations, and – as Toyota put it – quality is not a number, but a story: and our purpose provides a ‘story-line’ for a living story in which we, and all of our stakeholders, may play their part. That’s why we need to involve our stakeholders in defining our purpose: because without their involvement, their commitment to that purpose, we don’t have a story – or a business.
Ultimately, quality comes from people; quality is people. Purpose provides a focus, a story, a direction for people’s individual power and response-ability. Yet we fulfil that corporate purpose not through systems, or structures, or formal statements, but by managing our relationships with all of our stakeholders – which is what we need to turn to next.