A clear corporate purpose is ennobling. It inspires stakeholders to recognize you are doing something unique. It will allow you to attract the best talent and people that believe in what you are doing. A strong purpose gives you a financial advantage over other companies.
So how do you create a clear purpose at your company?
I delved into this in my interview with Dick Gochnauer, the former CEO of United Stationers, Inc. (now called Essendant) and current Board member for the Center for Higher Ambition Leadership. I’ve watched Dick produce some amazing results throughout his career and was excited to hear about his experiences around purpose.
Doug: Having a company purpose statement is very popular now, but you were way ahead of the curve at United Stationers ten years ago. What should leaders know if they want to take on the work of defining purpose at their organizations?
Dick: There are three preconditions that must exist before you start this journey.
- The company cannot be in crisis mode. It has to have the core business fundamentals in place. Otherwise you won’t have the bandwidth. You can’t be starting and stopping this journey.
- You have to have a CEO that leads with a set of core values that improve the value of ALL stakeholders, not only investors. And the CEO can’t be alone in this work. The CEO must have a few other key players to work with through this process.
- The CEO and the senior team have to have credibility with their stakeholders to make this transformation possible. Without this, you won’t be able to convince people to invest the time and resources to make this transition happen.
Doug: So, if these things are all in place, how do you start?
Dick: First you have to create a purpose statement. It sounds easy, but it’s really hard to do. You have to capture the essence of the company. You need to identify your noble cause. Why is the world going to be a better place because this company exists – other than making money? It needs to tap into the idealistic motivations.
Once you have a draft statement, then test it:
- Is it easy to understand?
- Is it memorable?
- Does it articulate our noble cause?
- Is it really connected to the company, who we are?
Doug: Can you share some examples of companies who have done it well, who have very clear purpose statements?
Dick: Everyone is familiar with Southwest Airlines. Their purpose is, “to connect people to what is most important in their lives through friendly, low-cost air travel.”
One thing you’ll notice is that the purpose is not about the company, it’s about what the company is doing to help others. That’s important.
Another example is USAA. “We serve those who are serving us by protecting America.” Easy to understand, motivating, and a higher calling.
Doug: Once you’ve articulated identified your company’s purpose statement, what do you do next?
Dick: You need to communicate it. You cannot over-communicate it. You need to find ways to link everything you are doing and saying to this purpose statement.
And you’ve got to believe it. Otherwise, it will just become a slogan someone sticks in their drawer. You need your belief in it to come through in all of your interactions.
Doug: Once you have the purpose, how do you make it real?
The next step is to build a transformation plan around this purpose. The purpose needs to direct your strategy and the linkages should be clear to everyone. The purpose should link to your culture, and your culture needs to support your purpose. It will inform your structure and the way you will execute the strategy.
Becton Dickenson (BD) is an example of this. Their purpose is around creating shared value with their customers. They looked for opportunities to solve social health problems and in that process identify new product opportunities.
When they enter a new market, they go to local government and health organizations and ask them about their problems, whether or not they are related to what BD sells. Employees are leading into these conversations focused on this purpose. Today, 40% of all of the products and services BD sells come from new ideas that came from this shared value concept. It’s woven into everything they do.
Doug: So, United Stationers is the largest wholesale distributor of business products in North America. As its CEO, how did you help the company define its purpose?
Dick: Our business model was about giving businesses access to business essentials the next day. We weren’t about saving lives, so, how do you create a purpose around that? We were all about trying to help our customers, so we settled on “Enabling our partners to succeed.” Defining our partners as our customers, suppliers, employees, the communities in which we live, and our investors.
One way we approached this was to form a foundation to teach our employees the joy of giving back. By doing what we do every day for a living, we can help solve social problems in our communities.
For example, we started a backpack programs for inner city schools. Employees would pack them up with school supplies on their own time and then deliver them to schools. This led them to find out about other things that were needed, which led to other programs, such as reading programs.
Then customers and suppliers saw what we were doing and wanted to get involved, so it became much broader. It really brought out the heart of our employees and brought real meaning to their work. It showed that we cared.
This became a key element of our strategy, building greater trust with our stakeholders. It ultimately led to our customers being willing to outsource to us, because of the strong level of trust our teams established.
Doug: So talk about results? Does having a purpose statement have a real impact?
Dick: If it does not make a difference, it won’t be sustainable.
We found it made a difference in a lot of different dimensions:
- Employees – They found meaning in work. Engagement, communication, creativity, trust, and energy – all went up
- Customers – They became more engaged and began to trust the company more, so they began to be willing to outsource more of their processes to our company.
- Financial – Our ability to help our customers kept going up through new services and products and increased revenue for the company.
Today, if you talked to people across the company, you couldn’t help but see the change from the way it was before. You can feel the passion and excitement in what employees are doing.
Doug: It became transformational.
Dick: Definitely. It takes a lot of work. It’s not something you can do in an afternoon at an offsite. You have to find ways to make it real. You need to show how it can make a difference and get people to buy in to the value.
This interview was conducted as part of the podcast series, “Lessons Learned: Proven Leaders Speak on Leadership.” Visit iTunes to subscribe to the series. For more articles and video on leadership, visit douglasawilson.com and the Center for Higher Ambition for Leadership.