CEOs are currently facing a barrage of competing pressures, some old such as the relatively short-term demands of shareholders and markets, alongside newer challenges such as industry disruption and the ever-louder calls for business to show itself as willing and able to address global challenges, like food security and sustainability.
And to address these pressures, companies need to harness the energies of their staff, to engage them to grow and innovate. This is why purpose is so valuable. Here are five ways in which purpose can help to motivate employees and transform a business, taken from the EY Beacon Institute’s The State of the Debate on Purpose:
1. Strategic clarity
“Having a strong purpose can hone your strategic response,” says Keller. “Rather than being sucked into focusing myopically on hitting the numbers for the financial quarter, purpose can keep organizations focused on driving longer term, sustainable value.” Purpose also works as a means of setting boundaries for what an organization will and will not do as part of its growth strategy. In addition, particularly when addressing complexity, purpose can serve as a lens through which to view the big strategic picture, rather than through silos.
All of these are particularly prevalent in times of transformation. A company which has been through this purposeful transformation is Johnson Controls. Going through the largest overhaul in its own long history, Johnson Controls decided to spin off its successful automotive business. According to Kim Metcalf-Kupres, Chief Marketing Officer, purpose has been a key driver behind this decision:
“The heart of our motivation and inspiration is really to find and stick to what Johnson Controls is good at. The purpose behind our company has really been captured in a vision that we’ve used for many years about creating a more comfortable, safe and sustainable world. Our strategies have evolved with that vision in mind. And as we look for the next century and the megatrends that are driving the world, we think the things that we bring to the world are very relevant. As we look at the makeup of the company and the implications for us as an organization, that’s challenged us in this age of activism to really understand what fits in our core and what does not.
As well as driving incremental improvements to products and services, purpose can inspire original ideas and creativity in an organization. Guided by purpose, employees can be empowered to recast themselves as problem solvers and value providers. As many as 63.4% of executives surveyed by the Economist Intelligence Unit(supported by EY) said a sense of purpose helps them innovate and better able to disrupt or respond to disruption. Purpose can also act as a foil to short-term thinking, and as a means of opening up the creative process across the company and beyond. Electric car pioneer Tesla is a case in point, sharing its patent portfolio with the world.
“When people understand their organization’s values, they are engaged and inspired to work together to promote those values, says Jensen. “Purpose can be the ‘common denominator’ that allows organizations (even competitors, in some cases) to collaborate with each other (and their customers) on new solutions while achieving their common goals.”
Purpose provides an antidote to using fear when it comes to managing organizational transformation. Instead of anchoring the need for change to a fight or flight scenario – which runs the risk of demotivating employees – tying change to the company purpose can help staff see that the short-term changes relate to long-term strategy.
“Most change initiatives seek to create a sense of crisis or urgency,” says Keller. “But there is a need to balance the burning platform with a burning ambition: creating a compelling ‘run to’ vision that is magnetic and can help break through fears and inertia.”
A clear sense of purpose can also be used as a force to guide the company through change as external pressures demand new ways of value creation. “By encouraging company leaders to focus on the horizon, purpose helps them consider their internal systems holistically,” says Keller. But the work of transformation in an age of disruption is continual: “Even after the company is fully aligned behind a compelling purpose, leaders must continue to reinforce it from the top.”