24th January 2020 0 Comments Purpose

Leaders on Purpose: how to walk the talk and transition into a purpose-led business

Man standing on snowy mountain around cloudy sky

Why purpose?

In 2019 there was a lot of talk about purpose. From the Business Roundtable to the UN Climate Conference, it became increasingly clear that businesses must consider purpose beyond profit to protect the world from existential threat. 

Yet whilst purpose is largely accepted as being vital to today’s business world, it is not necessarily clear what tangible steps companies can take to make it a reality.

Leaders on Purpose published a report last year, drawing together insights gathered from interviews with 30 CEOs, many from FTSE 100, with nearly ten years of independent research into socially impactful organizations. This week, Leaders on Purpose are present at Davos, taking part in critical conversations around stakeholder capitalism in the context of the fourth industrial revolution and the climate change crisis. 

“There is a lot of talk about purpose-driven leadership and purposeful organizations, but not much deep insight on how to transition an organization,” explains Christa Gyori, Chief Executive Officer and Co-Founder of Leaders on Purpose.

Gyori describes this latest research piece as a “how-to guide” for purpose: it’s a report of “important, actionable insights” that shed light on how to “embed a new business logic into corporate strategy, leadership and organizational design.”

Embedding purpose 

Leaders on Purpose defines purpose as “the ambition to create value by contributing to the welfare of society.”  The definition is deliberately vague. The report states that “there is no one-size-fits-all solution” for purpose; no two companies are the same, and therefore no two companies will have the same purpose. 

Uncovering purpose requires individual reflection, often back to the company’s roots. According to the report, revisiting an organisation’s founding legacy can “provide some framing for leaders and their teams to take an in-depth look at their current business practices and the role they see their business playing in the future.”

PayPal’s EVP & Chief of Strategy, Growth and Data, Jonathan Auerbach elaborates: “This starts by taking both an ‘outside-in’ (what is our market opportunity and what is the best way to maximize it?) and an ‘inside out’ (what are our strengths and weaknesses in today’s market and how do we build on what makes us unique while filling the gaps in our business?) view of ourselves and our industries.”

It is worth emphasising that Auberach’s recognition of “market opportunity” does not conflict with purpose. Doing good and doing economically well are not mutually exclusive. In fact, the report found that thoughtfully attending to “complex problems” like sustainability, actually resulted in “collateral good”: 

“Just as socially reckless initiatives can produce collateral damage, purpose-driven initiatives can have a positive ripple effect, spreading progressive change far beyond the immediate purviews of the production line and supply chain.”

Leaders on Purpose defines purpose as “the ambition to create value by contributing to the welfare of society.” 

The report specifies that CEOs view this as “business sense” – not “corporate philanthropy.” Allocating more time to fully understand interrelated social and environmental issues and stakeholder concerns leads to a better grasp of individual needs.

It cites the leading health technology company, Philips, who set out to become a zero-waste organisation. In order to understand how the organisation dealt with waste, they began to research what customers did with products at the end of their life. This attentiveness had a high level of customer attraction and enabled Philips to learn more about their customers. 

“Through this work, Philips created an innovative new business model that is enabling them to meet waste reduction targets while attaining higher customer retention of existing customers and the great attraction of new customers,” the report concludes.

Leading with purpose 

Embracing the unexpected is integral to purpose-driven leadership. The report stresses the value in “failing forward”, creating a culture in which employees are generating adventurous ideas, “seeking to learn” rather than “seeking to be right”. 

“There wasn’t some grand Machiavellian plan that we had drawn up and everyone was told, like troops, to march down a certain road,” explains Anand Mahindra, CEO of Mahindra & Mahindra. “Everything happened serendipitously”. 

Peter Agnefjall, IKEA’s CEO from 2013-2017, expresses a similar willingness to face uncertainty. He told Leaders on Purpose that he would have laughed had they told him only a few years ago that IKEA would one day own wind farms and solar power installations. He adds “but when I look back, that’s what we do now, right?”

Embracing the uncertain means egoless leadership. All the CEOs involved in the research stressed the importance of “agility”; “rather than pretending that they have it all figured out, the CEOs in our study acknowledge that in a fast-changing world, it is increasingly difficult to map everything.”

“If you believe your role as a leader is to be the smartest person in the room and be smarter than anyone around you, that’s a mistake,” says Hubert Joly, CEO and Chairman of BestBuy from 2012-2019, and now its Chairman.

Embracing the uncertain means egoless leadership.

The report revealed that successful, purpose-driven corporations, were increasingly moving towards a decentralised structure, in which the CEO leads an adaptive rather than hierarchical role. 

Diagram showing difference between adaptive and hierarchical networks

Diagram created by Leaders on Purpose

This also meant embracing partnerships with other companies, which can “de-risk the innovation and development process” and “build shared learning” across networks. 

“Actively cultivating serendipity, they create the conditions for positive coincidences to occur,” the report explains. “This turns the unexpected from a threat into an opportunity and helps to integrate profit and purpose in an uncertain world.”

Key steps to leading a successful, purpose-driven corporation

1. Start within: look back at your company’s roots to uncover your purpose
2. Look for market opportunities: doing good and doing economically well are not mutually exclusive.
3. Apply your business sense: it’s not corporate philanthropy
4. Fail forward: embrace the unexpected; thrive to learn, not to be right
5. Leadership should be adaptive, not hierarchical
6. Embrace partnerships with other companies to de-risk and build shared learnings
7. Turn threats into opportunities: integrate profit and purpose in an uncertain world

Learn more about Leaders on Purpose work here

 


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