Our Purpose: The Thread that Binds Us All

Flawless execution, focus on the customer, leading with values, knowing your mission, partnering with stakeholders: all pieces of the cloth critical to the success of any organization. With these, a leadership team can build an excellent company. Today though, it may not be enough. There’s one more element that can raise performance a significant notch higher: an integrating thread of purpose woven among many pieces.  Why are we doing what we are doing?  How does what we are doing bring meaning to our work on a daily basis?  How do I as a leader take our purpose and empower others to express it through channels no one might have dreamed?  

Here’s an example. Larry Webb, my long time friend, is the CEO of New Home Company, which just went public on January 31st.  New Home builds beautiful production housing and is known for extremely happy buyers who love not only their home but the experience they had in buying it. In the CNBC interview on the floor of the New York Stock Exchange, Larry said, “We build homes, and for each of us at New Home Company we see it as a noble purpose. To provide a new home for a person is to provide a future of wonderful experiences.” I spoke with Larry after the interview and he said, “Many builders try to push flawless execution or operational excellence, but you can only push this so far. I’ve found that if we talk about a higher purpose in our work, people bring more meaning to their job.  They know they can’t do shoddy work and if they do, it will defeat the noble purpose of what we are about. Our people really believe we are doing something important and they evaluate their decision making based on this.”  

Larry understands the power of purpose. As my friend, Dick Gochnauer, the former CEO of United Stationers, a Fortune 500 business products wholesaler says, “A leader’s role is to to weave all of the pieces together under a broader purpose. A leader shows people how the purpose can create alignment with all of the other elements. Purpose plays an incredible role in creating motivation.”

Larry Webb

Here’s another example. Last week Satya Nadella was appointed the new Chief Executive Officer of Microsoft, replacing Steve Ballmer. Satya wrote a memo that went out to 100,000 employees. The memo did not focus on the need to work harder, be more creative, or execute more carefully. Instead, it outlined the purpose Microsoft serves in the world and why, through this purpose, employees can drive the values and ideas necessary to support a dramatic shift at Microsoft. Here are some excerpts of what Satya said:

“Why am I here?

I am here for the same reason I think most people join Microsoft — to change the world through technology that empowers people to do amazing things.

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“To paraphrase a quote from Oscar Wilde — we need to believe in the impossible and remove the improbable.  This starts with clarity of purpose and sense of mission that will lead us to imagine the impossible and deliver it.”

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“We need to prioritize innovation that is centered on our core value of empowering users and organizations to ‘do more.’ ” 

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“Finally, I truly believe that each of us must find meaning in our work. The best work happens when you know that it's not just work, but something that will improve other people's lives. This is the opportunity that drives each of us at this company.”  

Satya Nadella gets it! Frankly, with this kind of leadership Microsoft may reassert a leadership role in mobile and the cloud.  With Satya’s leadership, we may see massive value added to the company. Financial value creation is the result of a clear and powerful purpose. In other words, the power of leadership, by weaving purpose into everything you do, can accomplish amazing things.  

So what is your company’s purpose? You may already have it down clearly and now it’s a matter of finding ways to express this purpose through your team’s behaviors and attitudes. If you are still pondering your purpose, I suggest you don’t rush in quickly with an answer. The question is complicated. Purpose needs to link to your strategy, your mission, your values, and your tactics.  Purpose supports strategic execution. Here are some questions and suggestions to help you along the way:

1.  What do you do that contributes to a better world?  

2.  If you are successful, who will benefit and why?  

3.  Write down 10 things you do that benefit others. Is there an integrating theme here?

4.  If you are successful in your efforts, how will all of your stakeholders benefit?  What do you see as the underlying purpose here?  

5.  Test out ideas. Don’t jump the gun too quickly. Form an idea, get a dialogue going, and then enhance the idea. You will be surprised at what you learn.  

I’ll be giving more examples of companies who lead through a well defined, inspiring purpose statement. Why? Because purpose is at the roots of leadership. It involves moral judgements. Purpose is aspirational and inspirational. It focuses on the future and what role a leader plays in that future. If purpose is defined clearly from a moral foundation, it can redirect an entire company and for that matter, an entire world.

* Picture of Larry Webb courtesy of Bay Area BIA 

What is the Purpose of Business?

My leadership posts are written primarily to those of you I know and trust, who make a difference as you live out values consistent with what builds great companies and great countries.  As our world continues to change, so do the accompanying challenges. It behooves us all to dig seriously into accepted assumptions, asking what is still relevant and what is not. As a truth seeker, I ask questions - and am always open to new ways of thinking.  Today I’m writing a leadership post that starts with what I call, “First Things.”  If you don’t get the “First Things” right, then you have embarked on a course that ultimately leads you off track.

Peter Drucker said, “the purpose of business is to create and keep a customer.”  I buy this for what it is but today it is just not enough........

It’s a great place to start but business leaders need to rise to a higher level of thinking.  For historical context, Drucker was writing to counter Milton Freedman who in 1970 said the purpose of business was to generate profits for shareholders.  Freedman, at the time, was highly concerned with the meddling of big business in government policy.  Drucker rightly brought us back to what enables profits: a happy, loyal customer.  

However, as we evolve into a global world of interconnected people, the purpose of business is also making a shift, creating a higher responsibility for a business leader. Today the purpose of business is to create and keep customers AND to do so in responsible ways for all stakeholders.  It is a both/and: a moral imperative and a strategic imperative to expand our vision for long term global success. 

How we lead businesses and organizations will define America and will define modern capitalism. We as business leaders need to reimagine our future and understand that our role in business is as critical as any scientist’s role in modern medicine. We as business and organizational leaders are major drivers in defining the culture and  ethos of our country.  

Photo of Doug Rauch, Past President of Trader Joe's

Last week I heard Doug Rauch, the former president of Trader Joe’s for 14 years, speak at an event about Conscious Capitalism, of which Doug is now the CEO. This non-profit helps like-minded people transform the way business gets done. Here is what the Conscious Capitalism website says about profit:

“We need red blood cells to live (the same way a business needs profits to live), but the purpose of life is more than to make red blood cells (the same way the purpose of business is more than simply to generate profits).” 

While making money is essential for the vitality and sustainability of a business, it is not the only or even the most important reason a business exists. Conscious business focuses on purpose which ultimately can lead to more profits. 

I see an entire movement building in America and around the world, especially with millennials, of people who are asking the question, “How do we work in business to both serve customers AND serve all of our other stakeholders so as to build a lasting legacy?”  As Doug Rauch went on to say, “Employees, customers and others trust and even love companies that have an inspiring purpose, one they can identify with and personally adopt.” 

As knowledge customers in our new connection economy engage in making choices, we are indeed choosing to buy from companies that inspire us.  Not only do we want a great product or great service at a great price, we want to know the company we are buying from is one that thinks about the impact they are having in the world. For example, if a company uses cheap child labor, I don’t care how inexpensive the product is, I’m not going to feel good about paying for it. In contrast, Trader Joe’s was built on the foundation of healthy and tasty products that guarantee customer satisfaction and Trader Joe’s supports investments in employees and trusted trade partners. I’ve never gone into a Trader Joe’s and not felt good walking out the door.  

Tim Cook, the CEO of Apple, earlier this week, when asked about designing functionality of the iPhone for the blind, said to a conservative activist investor group who was challenging him about the importance of driving profits, “When we work on making our devices accessible to the blind, I don't consider the bloody ROI.”  Tim was angry, which is very unusual in his investor meetings.  Tim understands deeply what a new leader knows in this transparent, connection economy: that some things are just morally right to do and in the long run if you don’t it, it can cost you your culture and your company.  

As leaders we are on a journey to build great companies with a lasting legacy.  We are building purpose for our companies that inspires all stakeholders.  If you identify yourself as one grappling with how to build a lasting legacy, then you and I are on the same page. If you disagree, I’d love to hear your comments. I personally think we are on the cusp of a cultural shift in business, driven by the new social transparency of all decisions a company makes. It requires a new way to drive long term profits. It starts with the right mind set of the leader and the right governance structure that will support the leader. We can all be a part of the journey and learn a great deal along the way. In the end, we will build great value, not only in our company, but in the trust people are willing to extend to modern capitalism.  

The A-B-C's of Strategic Execution: Your Next Solution

As Commander of all NATO forces in Afghanistan, General Stanley McCrystal was in the business of creating strategies that worked. But in his appearance on the Charlie Rose Show, he confessed the true difficulty is not only in creating a strategy, but in getting BUY IN.

Coming from a general where subordinates are expected to repeat orders and execute, this might sound surprising, even disturbing.  In a classic command and control environment, you’d think it would be easier.  But as the general explained, execution is extremely difficult, regardless of how much positional authority you possess, and it requires contagious leadership. 

Here are three points that will help you as a leader evaluate how you are doing in moving from strategy to true BUY IN.  Let’s call it the A-B-C's of passionate execution.  

A:  Articulate the Strategy:  You must continually articulate the purpose of the company, the values you stand for, and the strategy you are pursuing to achieve your purpose.  In some cases a key part of the strategy itself may be all about supporting the culture you seek to develop and the core values undergirding it.  Stan Bergman, the CEO of Henry Schein, a  $9 billion dental equipment and services company, says that in many ways Henry Shein's culture is their core strategy.  They refer to it as Team Shein.  Stan visits over 140 locations a year talking about the Team Shein culture of respect, cooperation, and service, which is fundamental to the way Henry Shein serves a local dental practice.  Stan also lives the values, - he walks the talk - so his  words actually articulate his actions.   

B. Believe It:  You must demonstrate a soulish integrity that communicates, "I truly believe this is our future and we will win if we embrace our strategy."  In some cases, the best strategy is adaptability, so a leader can communicate, "This is the direction we are pursuing, and as we learn we will adapt."  In other cases, the leader can be certain that the strategy articulated is the strategy believed.  Why?  Because it has been time tested,  the company has continuous feedback loops, and the entire company is modeling the purpose and strategy.  I saw this in a large homebuilding company that delivers over 1200 homes across a 2000 mile span of territory.  As the president of the company, Dennis Murphy, said to me, "Opportunity follows strategy.  Strategy does not follow opportunity."  What he meant by this is that just because the company saw a new opportunity, it did not mean in any uncertain terms they were going to follow that opportunity.  The strategy had been time tested over years and the hard part now was sticking to the strategy and executing against it.  New opportunities were actually distractions to be avoided if they did not fit within the basic strategic framework of the company’s purpose.  

C.  Community Owns It:  In today’s world of knowledge workers, we don't just have hands that go out to implement our ideas.  We need hearts and heads to embrace our strategy, share it with others, and work on living it out in all of their thinking.  A strategy not owned by the community of stakeholders responsible for realizing the results is only a document in Drop Box and nothing more.  It must be a living document, owned by the community of all stakeholders, including each and every one of your employees, your suppliers, your shareholders, your customers, and the community you serve.  When a community of stakeholders owns the strategy, you know you are winning.  John Walsh, the CEO of UGI, a multi billion dollar energy company in Pennsylvania, told me he knew their strategy of uninterrupted service to customers was working when the drivers of propane trucks were telling heroic stories of how they delivered propane gas through some of the worst snow storms ever recorded.  They were proud of what they had done and they pulled a team together to make it happen.  These drivers could articulate the strategy, they believed it, and they owned it.    

The A-B-C's of strategy appear simple.  However, if you are in a leadership role, you know there are a thousand different ways you can mess it up.  Thus, the need to stay focused on the basics and keep asking, Have I ARTICULATED our strategy, do I BELIEVE IT, does our COMMUNITY OF STAKEHOLDERS own it?