Over the past few years – and we should all be grateful for it! – there has been an ever stronger emphasis on becoming a Purpose-led organisation, and for leaders in those organisations to lead with/from purpose.
Purpose: the new key to unlocking organisational performance?
The rationale is simple: if you are clear about your organisation’s purpose, decision-making will become easier (not necessarily easy, but at least easier!), because there will be no misunderstanding about what should orient them; as soon as they’ve integrated that purpose, your staff will know what to do without you having to tell them, leading to lots of virtuous cycle loops of more meaning at work, more autonomy, more well-being, less bureaucracy, more efficiency, etc. Your customers will be more intentional in choosing you, and more faithful in staying with you; and your shareholders might even relocate their decisions in a “shared-value creation” paradigm (see Michael Porter’s work), rather than in the narrow view of the sole “shareholder value” paradigm.
In other words, leading with Purpose can only be win-win, can’t it?
Well, it’s not that simple… As always, walking the talk is the primary challenge, even more so that we may not always be aware of how much our walking may diverge from our talking. And here’s a way to think about it.
Over 70 years ago (yes, this issue of Purpose is not new!), the Tavistock Institute was already exploring these issues, naming it “Primary task” at the time. A bit later, the Grubb Institute, who worked closely with the Tavistock, introduced the concept of Purpose, seen as “the impact that an organisation intends to have on its Context; the primary reason why an organisation exists”.
Three levels of Purpose
Gordon Lawrence, who worked for both institutes and was a leading figure in that field at the time, suggested, in the mid-70s, that there were in fact 3 levels of Purpose. Because his words were a bit ‘jargonny’, we’ve adapted them to the following:
The Formal Purpose is what used to be called, up to 5 years ago, the “mission statement” of the organisation, and has now often been rebranded as the “statement of Purpose”. As its name indicates, it is the formal expression of what the organisation sees as its primary reason of being – the formal description of the impact it wishes to create in the world.
Take Renault for example, one of France’s leading car manufacturers; their website describes their Purpose in this way: “We make the heart of innovation beat so that mobility brings us closer together”. Beyond “heart” and “closer together” – probably here to access our own emotional field – the key words in that statement are “innovation” and “mobility”. Put it succinctly, Renault’s purpose is to innovate in the field of mobility.
If you ask their staff, or their customers, they will probably tell you a different story. For them, Renault is a car manufacturer. From a staff perspective, Renault’s Informal Purpose (that story that we tell ourselves in corridors’ talk, or in meetings behind closed doors) is to make lots of cars that lots of customers will buy, in lots of different countries. A customer’s perspective on that informal purpose is probably a variation on that description, something like: Renault makes innovative / reliable / nice cars with a good quality/cost ratio.
There is yet another level of purpose though; one that is less visible, but nonetheless very much at the heart of any organisation’s activity. We call it the Enacted Purpose, and by that we mean the impact that the organisation is actually having on its context, whether it is aware of it or not. It is inferred by our assessment of those impacts – including those that are not always included in traditional impact assessment, and tend to be named ‘externalities’, or ‘collateral impact’.
One take on Renault’s activities could lead us to suggest that its enacted purpose could be to contribute to climate change, by creating machines that release CO² into the atmosphere. Of course it is not their intended purpose, but their impact on the world is such that an external eye could identify it as their enacted purpose.
Leading with Purpose
Renault is clear about the place of its Purpose in the company’s strategy and operations: “Our Purpose is the foundation of everything: our values, our strategic plan, our orientations in terms of social and environmental responsibility” (Renault.com website on 22/02/2022).
However, in a purpose-led organisation, the challenge for leadership is to ensure that all three levels of purpose are aligned as much as possible, or at least that all actions are aimed at aligning them – as the figure below illustrates:
In order to do that, leaders will need to undertake an honest assessment of where their organisation is on those three levels, and take the corrective actions to reduce the gap between them.
They might also need to revisit the very statement of purpose that they’ve formally adopted. For Renault, it could go something like: “We make the heart of innovation beat so that environmentally-friendly mobility brings us closer together”.
Funny how 2 words can make such a difference! By inserting a connection to its own impact on the world’s ecosystems, Renault would go such a long way in creating the conditions for transforming its enacted purpose, setting out to leverage innovation not only at the service of mobility per se, but of an environmentally-friendly mobility. This would open huge avenues of transformation, not only in terms of products (moving to electric cars for example), but also of business models (see the carpet company Interface move from selling to leasing for example, where product ownership remains with the manufacturer, who’s much more inclined to ensure a much longer shelve-life for its products).
Leading with Purpose in the 21st century
As we just saw, leading with purpose is a double-edged sword: whilst it may be tempting to attract employee and customer loyalty with an inspiring formal purpose, it will only work, in the long run, if leaders ensure that they strive for aligning formal, informal, and enacted purposes.
Could this be a put-off for organisations wondering about becoming purpose-led organisations? Well, I hope not; for in the 21st century, we have no choice but to transform our businesses so that their impacts move from being degenerative, to being regenerative. And engaging one’s company around defining its purpose could be such an energising, fruitful way of doing it.