Over the last two years now I have been looking for genuine thought leadership from business leaders and academics and there are few if any who are providing thought leadership at a national level.
Jennifer Westacott, CEO of the Business Council of Australia has taken a position in the absence of many. I have previously mentioned her article in The Australian.
She has presented it in a way that challenges business to look at the Why? She says:
I’m not convinced enough of our organisations have got a genuine focus on purpose.
I’m not sure they constantly ask the question — why?
Yes, many have well-crafted mission statements. But that is not the same as a true understanding of the “why” — a clarity of direction that is shared across the organisation.
There are a few things we can do to help clarify that purpose. First, context is still king.
She continues about values:
Values-driven organizations with a strong sense of purpose are successful across the long term.
Values driven governments with purpose can withstand major shocks, major disruptions and protect the living standards of their citizens.
Values are our foundation, purpose is our engine. Combined, I believe they can drive enduring social and economic prosperity for all Australians.
Purpose and Values are at the centre of all strategic conversations and too often they are documented in a perfunctory way so that managers can get on with the important stuff. Westacott suggests that there is a lack of genuine purpose in business in Australia. A lack of real focus on the big question, why are we doing this? Which simply put, is why do we exist?
To answer this question with integrity is challenging. But there is mounting evidence that business can be more successful if it addresses the tough questions. Firms of Endearment (2014)
The concept of mission (and purpose) statements has been around forever. Certainly, in my early years of strategic planning, it was an important part of the planning process. Deciding what business you are in was an important question. As time moved on (the early 80’s), a business articulating values became an important stage in the planning process.
Some of the questions I used in facilitated workshops included:
- Who are we? (identity)
- What business are we in? (the work we do)
- Why do we exist? (mission)
- Where are we going? (direction)
- How will we get there? (strategy)
- How will we know we are there? (Vision – some Strategic objectives)
It was obvious to me then that Why do we exist was an important question>
The concept of Mission and the work we do, morph into one so what we really discussed was the work of the business.
The mission often emerged as being:
- The best commodity supplier
- The leading financial services business
It mostly focused on the DOING of the business. It was in the early 80’s that articulating values became the vogue. Whole consulting firms emerged to assist businesses articulate their values and change their culture as if this was the answer (the silver bullet). This is not unlike today with Innovation.
In the early 90’s Jim Collins, in his early work, published Built to Last (1994) wherein he reframed the conversation a little. He suggested that there were only a few businesses in the US that had existed for over 100 years and one feature of those businesses was that they had:
A Core Ideology, which included: A Core Purpose and Core Values.
He defined them as:
Core Ideology: Core Values + Core Purpose
Core values: The essential and enduring tenets – a small set of general guiding principles; not to be confused with specific cultural or operating practices; not to be compromised for financial gain or expediency.
Core purpose The organisation’s fundamental reason for existence beyond just making money –a perpetual guiding star on the horizon; not to be confused with specific goals or business strategies. as principles to guide decisions and inspire people through the organisations over a long period of time.
Built to Last (Pg.73)
The comments by Westacott are provocative. If businesses in Australia had a genuine purpose “beyond” making money how would their leaders behave? Maybe there would be more and better leaders.
Over the many years I have worked assisting business leaders with strategy, this conversation has created much discussion, so much so, I created a simple matrix to assist them with the conversation.
The matrix enables leaders to think about the purpose of business from four perspectives.
On the X-axis the parameters are Ego-Centric v Other Centric
On the Y-axis the parameters are Infinite v Finite.
It encourages a genuine debate about different perspectives, which don’t really make money the priority. Sometimes business leaders find this difficult. Certainly, a number of them insist that shareholder value is included in the mission because the shareholders expect it!
At that point, I know that we have a purpose without real meaning.
More recently some research has been completed and published in Firms of Endearment (2014) which highlights that businesses that “focus on humanistic values produce higher levels of employee productivity, stronger customer loyalty, and higher margins…”Pg 204.
It continues “providing shareholders a good return on their investment remains an important objective, the idea is spreading that investment returns can be greater when wealth creation for shareholders is not the sole or even the main purpose for which a company exists.” P204
There are other more important purposes, which drive business and create prosperity.
Just imagine if Australian business leaders collectively understood this and could address their purpose with integrity. Answering the question Why for each of our Top 200 ASX businesses might produce a very different business culture for Australia. I suspect this is what Westacott is postulating.
In my very early consulting days I discovered this story which I have used on many occasions to challenge business leaders.
The Stonemason story
Three stonemasons in the middle ages were hard at work when a visitor came along and asked them what they were doing.
–The first stonemason was hard at work, sweat on his brow.
“I am cutting this stone”, he grumbled.
–The second stone mason, though less distraught, responded with a deep sigh, “I’m building a parapet”.
–The third stonemason replied with a radiant face, “I am building a beautiful cathedral that will glorify God for centuries to come”.
Sometimes it is a matter of perspective.
It maybe that business needs a new way to have intelligent conversations about why they exist. Larger Profits and Shareholder Value may serve a few very well – but it just might be that business has a much larger obligation to society.
In the end, a TED talk by Simon Sinek entitled How great leaders inspire action has a very clear message.
This is a very powerful presentation, which challenges the very heart of business. Westacott’s observation is thoughtful and timely. Maybe if a sufficient number of businesses understood the answer to the question Why do they exist? – and acted on it, Australia could become a nation with purpose.