In this final entry in our four-part series on purpose, we’ll focus on how leadership teams shape their company’s purpose—for better or for worse.
When Satya Nadella took over as Microsoft’s CEO in 2014, he inherited a divided, competitive culture of highly individualistic, disheartened employees. The company’s stock had been flat, and Microsoft was losing competitive ground. “Saddest of all,” he says in his 2017 book Hit Refresh, “many [employees] felt the company was losing its soul.”
He realized that if he wanted to turn things around he’d have to try a different approach, one more bottom-up than top-down. So instead of locking himself away with his top-level executives to devise a strategy conceived from the rarefied air of the C suite, he spent the better part of his first year listening to hundreds of Microsoft’s 100,000+ employees all over the world.
He heard their frustrations and their dreams. He heard what they believed needed to change, and what parts of the company they hoped he would preserve.
After completing his due diligence, he issued a challenge to his senior leadership team that struck at the heart of the company’s purpose:
At the end of the next year if we were tried in a court of law and the charge was that we failed to pursue our mission, would there be enough evidence to convict us?
Just saying interesting things wasn’t enough. I, all of us, had to do them. Our employees had to see how everything we did reinforced our mission, ambitions, and culture. And then they needed to start doing the same.
At the end of the next year if we were tried in a court of law and the charge was that we failed to pursue our mission, would there be enough evidence to convict us?
Just saying interesting things wasn’t enough. I, all of us, had to do them. Our employees had to see how everything we did reinforced our mission, ambitions, and culture. And then they needed to start doing the same.
Discover How You Can Embody Your Team’s Mission
Notice his goal here: not to just ensure that the company embodied its mission and purpose, but that employees—especially leaders—did as well. This ethos was encapsulated in an all-company email he sent shortly after, where he rallied the organization in terms of “we”:
In order to accelerate our innovation, we must rediscover our soul – our unique core. We must all understand and embrace what only Microsoft can contribute to the world and how we can once again change the world. I consider the job before us to be bolder and more ambitious than anything we have ever done.
Nadella knew that making this bold purpose personal to every team member would take intentional work. He understood that lofty goals and strategic plans are easy to see when you’re the CEO, but when you’re an engineer in Europe or a marketer in Asia, such ideals can feel distant and irrelevant.
He was determined to make them feel personal and relevant. Internalizing Microsoft’s purpose was as much their mission as it was his.
“The person without a purpose is like a ship without a rudder.”
– Thomas Carlyle
Find Your (True) Purpose, Find Your Profits
Nadella’s interest in Microsoft’s purpose, and his belief that was essential to get right if the company was going to thrive, wasn’t a new trend. But the fact that such a large, influential company was taking it so seriously was a sign of purpose’s continued relevance and value.
In recent years company purpose has mainstreamed its way into the business and management worlds, and with good reason. Evidence from across industry sectors has proven that genuinely purpose-driven organizations outperform their non-purpose-driven competitors on critical metrics.
For example, brands that have a clear commitment to improving their customers’ quality of life outperform the stock market by 120%, and over the last decade, purpose-driven brands have seen their valuation skyrocket by 175%.
In one study of 28 companies over a 17-year period, purpose-driven companies grew by 1,681% in comparison with the S&P 500 average of 118% over the same span.
Even more compellingly, 77% of consumers said in a survey that they feel a stronger connection to purpose-driven companies over traditional companies, and 66% said they would switch from a product they typically buy to a new product from a purpose-driven company.
Having a strong purpose is clearly good business—as long as it’s not manufactured. Hopefully we’ve said enough about purpose-washing in the last article to warn you away from it.
Making a Purposeful Purpose
Purpose is more than a splashy ad campaign or celebrity spokesperson. It’s not fluffy or vague. As Nadella realized, it’s something employees and customers know and feel. It’s reducible.
With this in mind, here are five tried-and-true ways you and your senior leadership team can create a company culture that practices the purpose they preach.
1. Measure It
As the importance of organizational and team purpose has grown, measurements of purpose have become more qualitative. For example, Contexis, a London-based B-Corp research consultancy, has developed (in partnership with Cambridge University) a widely cited index to measure corporate purpose and its impact.
The Contexis Index is drawn from surveys of more than 100,000 employees across 26 countries, revealing key factors that determine the degree to which an organization has activated purpose among its employees. Index scores are evaluated on the basis of four criteria:
- Clarity: Are employees clear on the company’s purpose?
- Alignment: Is management living the purpose?
- Ownership: Do employees feel emotional ownership of the organization?
- Trust: Do employees feel emotionally safe to freely act upon purpose?
You don’t have to hire a company like Contexis to get useful information, though. Any formal data-gathering process, even if fairly small in scope (e.g., surveys, interviews, etc.), can provide useful intel on your leadership team’s dedication to purpose.
2. Lead from Behind
As part of the research for our 2022 book To Be Honest: Lead with the Power of Truth, Justice and Purpose, we spoke with Kathleen Hogan, Microsoft’s Chief People Officer and Nadella’s partner in their culture change effort.
She described an early offsite Nadella had with his team, during which they sat around casually on comfortable couches instead of around a conference table. Nadella had asked them each to reverse the paradigm of working for Microsoft, but to instead consider that Microsoft worked for them. “How can Microsoft be a platform for you to live out your purpose in the world?” he asked.
With his inquiry, Nadella showed his interest in letting his employees’ voices be heard and their values be considered. This is a reminder that team members’ inputs are essential if you truly hope to link purpose to practice, from the top of your organization to the bottom.
Microsoft’s intentional effort to help employees (now more than 140,000 strong) connect their individual purpose to the company’s collective purpose offers a roadmap for leaders who want to do the same.
“While strategy will evolve, your culture and sense of purpose should be long-lasting,” Hogan told me. “Culture paired with a purpose-driven mission allows your employees to use your company platform to realize their own aspirations and passions.”
The scale of the organization you lead doesn’t matter; even on the smallest of teams doing the most menial of tasks, a sense of purpose can be ignited. Even a one-person shop can benefit hugely from having a clearly defined purpose.
The purpose of a good leadership team is to invite people to see their purpose reflected back in the day to day work of the organization.
Tip
Rome wasn’t built in a day, and neither will your company’s purpose be enthusiastically adopted by your team members (including senior leadership) overnight.
Just remember that much of the value in truly embracing purpose is in the process. By changing their behavior to align better with your organization’s mission, employees will be more likely to understand the organization and, ultimately, connect with it.
3. Accept Tough Trade-Offs
You will always have to make hard trade-offs when investing in near- and long-term purpose initiatives. Being truly purpose driven is a long game, and saying no to even great ideas is essential if you want purpose to endure.
You and other senior leaders should be transparent about how and why those trade-offs are made if you hope to maintain your credibility with employees.
Many executives fear disappointing people and dole out too many “yeses,” diluting the company’s focus and resources with too many priorities and unclear commitment to real purpose.
For example, one of WD-40 Company’s core commitments is to never use any ingredients that cause cancer in their formulas (cancer being the farthest thing from a “positive lasting memory”).
So if someone in the supply-chain organization were presented with an opportunity to significantly reduce costs by using a cancer-causing ingredient, the answer would be an easy and definite no, despite the potential for increased profitability or shareholder gains. This line will never be crossed.
While the stakes may not be as high at your company, they still matter. So choose your yeses wisely.
Learn more about the levels of purpose with our blog: |
4. Manage Competing Expectations
No group of people in an organization faces the (often conflicting) demands of numerous stakeholders more than the executive leadership team.
Customers, shareholders, the board of directors, suppliers, communities, government and regulatory bodies, and, of course, employees deliver an endless spate of demands. Meeting some of them often requires disappointing others. This means you must work to manage expectations if you don’t want to lose credibility, especially in tough moments.
Having a strong, clear purpose helps here, because it defines what a company stands for—and what it doesn’t. It also translates into less time relitigating decisions and dealing with recurring problems. Decision speed should increase as well, since you (and, ideally, everyone else in your organization) know what the boundaries are. Think of it as preemptive problem-solving.
Even when decisions don’t go as some stakeholders might want, if there’s clarity behind decisions and you can trace them back to the company’s purpose, people can handle the disappointment. When you can’t answer “Why was that decision taken?” people get frustrated. Your purpose should easily answer the “why.”
5. Make It, Don’t Fake It
When it comes to purpose, you can’t “fake it ’til you make it.” You either mean what you say you don’t. And if you don’t, your employees and customers will see right through it.
One way to head off this issue is to resist the temptation to promise the world. As the last article in this series touched on, it’s much easier—and frankly, smarter—to walk the walk when the path is straightforward.
Humility is a good guide here. Think of WD-40, Trader Joe’s, Costco, and other companies beloved by consumers and employees. They don’t promise everything. But they do exactly what they say they’ll do.
Putting it All Together
Without an authentic desire to serve, and a genuine belief that serving an organization’s purpose enhances their own, an employee has little motivation to contribute toward a shared mission. People will just continue serving their own interests.
To shape an enduring purpose that sets a company apart both competitively and as an employer, leaders must pave the way. Truly great leadership teams are living, breathing examples of the purpose they expect everyone else to embody.
To be sure, the work is hard. But to attract high-performing talent and keep the most satisfied customers, serving an authentic purpose is becoming table stakes. When people talk about your organization years from now, will your purpose be central to the stories they tell?
I, for one, hope the answer is yes.
Start Embodying Your Team’s Purpose Through Leadership
You’ve read about the power of purpose in leadership and its impact on organizational success. Now, it’s your turn to take action. Navalent’s seasoned consultants can guide you in aligning your leadership team’s actions with your company’s mission.
We offer in-depth diagnostics, data-driven solutions, and real-world expertise to help you embody your team’s purpose and achieve lasting success.
Don’t just aspire; act. Contact us today.