For example, EY Beacon Institute and Oxford University Saïd Business School conducted an extensive study “to explore how organisations drive their purpose into their strategy and operations.” EY Beacon Institute summarised the research findings under ten headings:
Really? Is that it?
- Make leadership buy-in a starting point, not a finish line
- Use purpose as a decision-making filter
- Drive purpose beyond culture and into strategy
- Measure purpose, but don’t over-measure it
- Don’t confuse purpose with CSR.
- Position purpose as a North Star, not a to-do list
- Bring purpose to life with stories
- Lean on purpose during good times, too
- Accept that purpose is not always a win-win
- Celebrate your successes — and acknowledge your shortcomings
Source: Ten ways leading companies turn purpose into strategy on the website of EY Beacon Institute.
It seems to me that in many enterprises the link from purpose to strategy, and from strategy to action, is tenuous at best.
How can these connections be strengthened?
The answer, I suggest, is by means of a mission: an enterprise-wide programme of work in which everyone from the CEO to the most junior employee participates.
Purpose determines strategy, and strategy serves purpose
What is purpose?
EY Beacon Institute defines purpose as “an organisation’s aspirational, human-first reason for being.”
Human purpose is unknowable, but I operate on the basis that we are here to create the new and infuse the world with value, meaning and joy. We are here to enrich the world.
Lou Gerstner, the former chairman and CEO of IBM, wrote that “In the end, an organization is nothing more than the collective capacity of its people to create value.” (Source: Who says elephants can’t dance?)
My definition of purpose is therefore “a heartfelt desire to enrich the world in a particular way.”
The following graphic shows how purpose determines strategy, which is brought to life by means of a mission composed of sub-missions and contributing projects.
Purpose is expressed as vision of realised potential: an actual picture accompanied by vivid and compelling synopsis depicting how the world will look, sound and feel when the enterprise is utilising its value generation capability without constraint and manifesting its purpose to the full. This is idealistic, and rightly so.
Strategy is not a laundry list of objectives or a detailed master plan, but a pithy statement describing in the broadest of terms how the obstacles to the manifestation of purpose will be surmounted.
Strategy is a cohesive response to an important challenge.
Three things make up the ‘kernel’ of good strategy:
A diagnosis that defines or explains the nature of the challenge.
A guiding policy for dealing with the challenge.
A set of coherent actions that are designed to carry out the guiding policy. They are not ‘implementation’ details; they are ’the punch in the strategy’.
Source: Good Strategy/Bad Strategy, by Richard Rumelt
In a generative enterprise, the overriding and persistent challenge is the manifestation of purpose.
If you fail to identify and analyze the obstacles, you don’t have a strategy. Instead, you have a stretch goal or a budget or a list of things you wish would happen.
Source: The perils of bad strategy, by Richard Rumelt, in McKinsey Quarterly, June 2011.
Translating strategy into value-focused action
Enriching the world means generating the greatest amount of value for the greatest number of beneficiaries.
A beneficiary is a person or a body of people gaining value by virtue of an enterprise’s activities.
I adopted the term stakeholder three decades ago, long before it moved into the mainstream, but I now prefer to talk about beneficiary for the sake of clarity, sidestepping the various interpretations and critiques of stakeholder theory.
Read more about beneficiaries
Value means benefit, and it comes in three main forms: economic value, conceptual value and experienced value. Now-to-new work is mostly concerned with experienced value. For the now-to-new practitioner, experienced value, meaning and joy are closely related.
Read more about value, value generation and anti-value
Value for customers means that after they have been assisted by a self-service process (cooking a meal or withdrawing cash from an ATM) or a full-service process (eating out at a restaurant or withdrawing cash over the counter in a bank) they are or feel better off than before.
Source: Service logic
by Christian Grönroos, a Professor of Service and Relationship Marketing at Hanken Swedish School of Economics, Helsinki, Finland.
Value is not ‘delivered’, as if by FedEx. It is co-created through the interaction between the beneficiary and the value generator. A value generator is something tangible (a product or other physical artefact) or intangible (such as a service, a theatre performance or a piece of music) that produces experienced value when the user interacts with it.
If you would like to know more about value co-creation, I strongly recommend Evolving to a New Dominant Logic for Marketing (pdf; 17pp), a groundbreaking paper written by Stephen Vargo and Robert Lusch, and published in Journal of Marketing, Vol. 68 (January 2004). The Wikipedia entry for Service-dominant logic is also very informative, and includes this useful summary of axioms and foundational premises:
Value generation capability
This is the latent power of the enterprise to produce value generators, make them available to potential beneficiaries and help people gain as much value as possible.
The main components of an enterprise’s value generation capability are:
- Capable people (employees, contractors, gig workers, professional service providers etc. – see here)
- Enabling practices
- Enabling technology
When executives and management writers talk about capability, they are usually talking about value generation capability. I prefer the long form as it serves as a constant reminder that the purpose of every commercial and nonprofit enterprise is generating value, no matter what the official framing of that purpose might be.
Here, the term is borrowed from the field of space exploration. It is not a synonym for vision or purpose, and it is not about mission statements. Mission is strategy in action.
In a generative enterprise, mission is an enterprise-wide programme of work aimed at manifesting purpose – or some significant aspect of it – within a given timeframe.
Each successive mission has the aim of manifesting purpose more fully.
A mission consists of a mission objective and a suite of projects aimed at meeting the objective by a specified date. In some cases, a mission will be formed of two or more sub‑missions, each composed of a set of projects.
Strategy and mission are so closely connected that they can be considered one continuous stream of work.
Strategy is upstream of, and gives rise to, mission. Mission is downstream of, and animates, strategy with the ultimate aim of manifesting purpose and generating maximum value for customers or users and other beneficiaries.
The full manifestation of purpose is a never-ending quest.
More than a mission statement: How the 5Ps embed purpose to deliver value, by Sebastian Leape, Jinchen Zou , Olivia Loadwick, Robin Nuttall, Matt Stone, and Bruce Simpson, on McKinsey & Company website
Purpose: What you need to know about moving from theory to action | A collection of articles located on the McKinsey & Company website