Why are you here?
The Operating System for Evolutionary Organisations Part 5/10
picture from Jukan Tateisi on Unsplash
Set a purpose and direction
Why do I work here? When was the last time you asked yourself that question? And what was the answer?
“The social responsibility of a business is to increase its profits,” — said American economist Milton Friedman once. In the 20th century, the sole purpose of business was to make money, pushing corporations to optimize their processes to maximize profits as much as possible. However, all these efforts caused a lot of harm, both to the environment by accelerating climate change, air pollution, as well as accumulation of plastic waste and to employees by making them unhappy.
The idea of purpose for a company has evolved since then: Nowadays, for an organisation to thrive in the increasingly complex world this focus on profits and shareholders has an adverse effect. It does not motivate people but detaches them from caring.
This is the 5th article of a series of 10 where I will dive into why traditional organizations are doomed to fail and how a new breed of evolutionary organizations offers a better way forward. These innovative companies are complexity-aware, nurture self-determination, and act developmental. Thus fostering happiness and achieving lasting success. On top of that, I sprinkled in a little bit of science, distilled a framework of 3 universal principles, and defined an operating system for organizations consisting of 8 essential components, with which any CEO or founder can transform their organization into a workplace that thrives.
The 8 essential components of the operating system are:
Purpose and Direction
Virtues
Density of high-quality talent
Radical candor and transparency
Autonomy
Flexible roles
Developmental practices
Careers and compensation
In this article we will deep dive into the first component “Set a Purpose and Direction”.
You will start receiving these articles on a bi-weekly basis right here in your inbox. You can also go to the website to read all the articles there or find them here directly: 1, 2, 3, 4
“A mission statement that places shareholder value as the definition rather than the result of success is uninspiring.“ Jim Barksdale, former CEO of Netscape, once quipped. Profit is necessary and investors deserve a fair return, but the objective is purpose, not profit.
Tami Simon, the CEO of Sounds True, gives a definition of a business’s purpose that is as simple as it is beautiful: “We have this idea about business—everything we do has to help us make more money, be more productive, or whatever. But that’s not my view of business. My view of business is that we are coming together as a community to fill a human need and actualize our lives.”
Several of the founders interviewed by Laloux from "Reinventing Organizations" used a similar metaphor: “Profit is like the air we breathe. We need air to live, but we don’t live to breathe.“ In Evolutionary Organizations, profits are a byproduct of a job well done.
After all, as Dignan author of “Brave New Work”, says: “Purpose can be socially positive or socially destructive. After all, the key difference between a charity and a terrorist organization is intent.”
Since we spend almost a third of our lifetime at work, wouldn’t it be nice if what we do there is something meaningful? This is what purpose is about. If we “elevate purpose above all” by placing the emphasis on maximizing value and creating meaning through the work of the companies, we can make all this time worthwhile.
For instance, Whole Foods emphasizes that its purpose as a company is to “nourish people and the planet”. This goes far beyond the basic purpose of making money, as we’ve discussed above, and gives us a lot of information about the value this organization contributes to the world. On the contrary, grocery giant Kroger’s purpose is to “be a leader in the distribution and merchandising of food, health, personal care, and related consumable products and services.” This practically tells us nothing about the company. Nor is it motivating nor does it tell us anything about why the company is here and what it wants to achieve in the world.
Purpose is about enabling human flourishing
For Evolutionary Organisations, the purpose is about “enabling human flourishing”, first and foremost. However, such organizations also emphasize the importance of profit, because, without it, no growth is possible. Therefore, most of the Evolutionary Organisations we know today are very profitable.
Philosopher Viktor Frankl perhaps captured it best: “Success, like happiness, cannot be pursued; it must ensue, and it only does so as the unintended side-effect of one’s personal dedication to a cause greater than oneself.” This idea is another great paradox: by focusing on purpose rather than profits, profits tend to roll in more plentifully.
What’s more, is that socially conscious and purpose-driven companies featured by professor and author Raj Sisodia, which he coined “firms of endearment”, outshined others. The 18 publicly traded companies outperformed the S&P 500 index by a factor of 10.5 over a period of 15 years. (study)
Thus, a purpose is the very foundation of an evolutionary organization. Still, while a good purpose is a strong motivational element, it also poses some problems for entrepreneurs who decide to follow it. A good purpose demands a lot of energy and attention, as well as places limitations on the decision-making process.
When our objectives are overly commonplace, like prioritizing shareholder value, we may find ourselves devoid of deeper meaning. If our aspirations are excessively nebulous, such as the desire to 'change the world,' we might struggle to maintain clear focus. Conversely, when we set highly specific goals, like achieving 'a computer on every desk,' we run the risk of feeling adrift once we achieve that singular milestone. When purpose is effectively cultivated, it has the power to bring us together, provide us with direction, and aid in our decision-making as we progress.
Airbnb offers a great example for a good purpose: “Airbnb’s mission is to create a world where anyone can belong anywhere” It was an ambition that was rooted in the everyday experienced truth of its users, but it also stretched into something much bigger, highly desirable, and could have positive impact on the world. A world where Anyone can Belong Anywhere. It was specific enough but it is also broad enough. Learn more about how it came to live by its creator.
Simple questions to help you find your purpose
You are starting an organization and want to find your purpose? Or you have already been existing for some time but never really thought about why you do all these things? Now is the time to identify your purpose and shape your organization as a power for change. If you are a new company the founders most of the time know best why they started their company and now simply need to formulate it well to be actionable. In case you want a little help you can use these questions within your organisation to get to the essence of your raison d’etre:
Customer-specific:
Whom do we serve?
Who is our customer or user?
Product-specific:
What makes us special / what not
How do we want to special
Why should we care?
Company-specific:
What’s working well?
What’s not working?
What can we do to make work the things that aren’t working?
Is there anything else?
What measures will help us steer?
Purpose:
Why did each of us join the company?
What is our reason for being?
What is meaningful about our work?
In service of what?
What will be different if we succeed?
What are we unwilling to compromise in pursuit of our goals?
Can our purpose change? If so, how?
These questions allow the company and its teams to better assess the current aspirations and see whether the purpose is working to create value. By simply answering these questions, leaders, and employees can find their purpose gradually crystallizing. However, we should always keep in mind that a mission is not a simple decision or an agreement. Instead, it demands an alignment that sets new standards for consistent action.
Purpose empowers people to find meaning, fulfillment and perform better
Establishing a clear purpose for oneself is also one of the biggest drivers of personal happiness and fulfillment. Author Jonathan Haidt explains this well in his book “The Happiness Hypothesis”. According to him, defining a purpose for the company helps each team member to see a greater purpose in their role and, therefore, increase the employees’ happiness and overall work quality.
This way, having a purpose at work is something that allows people to find the sense of meaning, as well as happiness that’s derived from it. Finding purpose in one’s everyday activities allows employees to feel their contribution and find alignment with inner values. In turn, they can perform better in efforts to generate this value, which is what purpose is all about.
Create a long-term vision and short-term actionable goals
Having a purpose is great. It gives direction, motivation, and clarity. Nevertheless, an ambitious purpose is often seen as unattainable, so one needs to make sure to break down the purpose into clear actionable goals.
There is no sense in creating a 2, 3, or 5-year plan in the tech industry where things are changing so fast. That’s a wasted effort. Instead, create a clear plan for the next 6 to 12 months and also be clear on your 30-year vision.
Evolutionary Organisations draft clear goals for the foreseeable future (6 to 12 months) and create a long-term vision (10-30 years) based on the purpose that’s been broken down.
In the next article, I will dive into the next 2 essential components of the operating system of evolutionary organizations. If you are interested, please subscribe. I will then notify you when I release the 6th article (in around 2 weeks) and send you the full white paper about the operating system for evolutionary organizations when it’s done.