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teacher of Tecnun
Carlos Rey |
director of the Chair of Mission Management and purpose Corporate of the International University of Catalonia
Professor at IESE Business School
Larry Fink's letter, the Business Roundtable declaration and the Davos manifesto are milestones that call for the need to generate broader management models that are capable of creating value for all stakeholders and not only for shareholders. Today we are calling for human organisations that go beyond maximising profit. Profitable organisations, of course, but ones that are capable of providing solutions to the problems of people and the planet and that do not make a profit without worrying about how they make an impact.
Clarifying, through purpose, the contribution that an organization makes to its different stakeholders seems to core topic to generate trust, create links and be sustainable over time. Various studies have shown how purpose has a positive impact on individual commitment, collective unity, productivity, profits, reputation and investment attraction. Therefore, the interest generated around purpose is no coincidence. However, it is not enough to define a purpose. It is one thing to have a purpose and quite another to live it, and the transition from the former to the latter is neither evident nor automatic. For this reason, we defend that the core topic of the purpose lies in its implementation.
More than three years ago we started a research project in which professors from Tecnun-University of Navarra, the International University of Catalonia, IESE Business School and DPMC professionals worked together to generate knowledge to help organizations to effectively implement their purpose. Thanks to the Purpose Strength Model we evaluate the Degree implementation of purpose in different organizations and we are generating a data observatory with which to conduct evidence-based research.
We have analyzed nearly 50 companies, from six different countries, that have been working for some time on purpose under the mission-driven management methodology, a methodology for deploying purpose through missions at different levels of the organization (Departments, teams and individuals).
A common denominator of these companies is that they have devoted great effort and energy to work on three elements: defining the purpose and aligning it with the strategy, development of a new leadership style and redesigning management systems.
Mission-driven companies spend time reflecting on what contributions they want to make to society and their various stakeholders (missions), aligning them with the business model , making them known and explaining them clearly to all members of the organization. Defining and making the purpose known through the missions is the first step and, as a result, incorporating the following filter in decision-making: "what impact does this decision have on the purpose and the company's missions? How does it contribute to its development?"
In addition, the organizations we have studied have a unique leadership style. One capable of distributing leadership throughout the organization, a leadership that generates leadership. It is striking how they see employees as leaders, not as mere subordinates. They try to make purpose common and shared, and to make people identify with it. They take special care to build trusting relationships and have transformational conversations with each employee, helping them to think about and connect their personal values with those of the organization. When this happens, a huge source of energy is created, connecting the purpose of the company and the purpose staff of those who work in it. The purpose ceases to be something "someone else's" and becomes something of its own. And it is when the purpose is shared that delegation and autonomy should be promoted. As a manager used to say, "worry about them understanding the why and let them surprise you with the how".
Mission-driven companies are working on their management systems so that purpose and objectives go hand in hand. On the one hand, the purpose must be implemented on a day-to-day basis so that it does not remain a mere slogan on the web. On the other hand, it is necessary to rethink how everything is oriented to the development of purpose: selection and recruitment, compensation and incentives, career plans, training and talent development , organizational design ... everything must be aligned with the purpose and facilitate its development.
The core topic of purpose is its implementation. An effective implementation depends on the Degree of consistency that exists in the organization: the Degree in which everything arises and is oriented to development of the purpose. This triad - strategy, leadership and management systems - is core topic to achieve this. We have evidence that when the purpose is consistently implemented the commitment of workers is multiplied. How to achieve a good implementation of purpose in your organization? Surely there will be many ways, some better than others, but we make two practical recommendations. The first is to measure the Degree implementation of purpose. Measuring allows us to know the reality of the organization in order to improve it, and improvement is essential in any organization. The second is to have a methodology for deploying purpose. Our data validate that mission-driven management is an effective methodology for implementing and deploying purpose in the organization.
The purpose has the power to leverage the interests of all stakeholders in unison and the great challenge that those of us who research these issues have is to help organizations to effectively implement their own purpose.