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The Purpose Profit Connection (and why most companies get it wrong)

Every leader knows teamwork is essential. Yet after working with hundreds of organizations, I can confirm, much of the time and money spent on team building is a complete waste.

Meaningless jargon, adjective-heavy iterations of strategy, and PowerPoint graphics detailing the organizations’ commitment to respect have little impact on business performance.

What does drive results? Clarity of purpose.

The Noble Purpose of an organization is to improve the lives of their customers.  Period.  An effective Noble Purpose is both aspirational and effective. It gives people meaning and direction.

Top performers value a good work environment; they want teamwork and high integrity. They also want to accomplish exceptional results.

Without a clear purpose – i.e., succinct clarity about how you serve customers – endless decks detailing mission, vision, values, etc. are nothing more than what one of our clients calls “a word salad.”

Contrast a word salad of jargon with the clarity that comes when every person in the organization understands their role in delivering for customers. Clarity about customer-impact is what creates camaraderie, drives innovation, and gives people a greater sense of meaning about their jobs.

Purpose is a hot topic these days. Harvard Business Review’s 2018 July-August cover story devoted to Purpose outlined the human and economic benefits of moving beyond a transactional approach: greater employee engagement, improved customer retention, and ultimately, positive impact on both operating financial performance (return on assets) and forward-looking measures of performance (Tobin’s Q and stock returns).

We recently worked with a CFO who asked us with true curiosity, “Is this purpose stuff just fluffy?” Our answer is, it’s only fluffy when you’re not specific. There’s a big difference between a feel-good purpose that drives smiles and high fives and a customer-driven purpose that drives business results.

When we originally introduced the Noble Purpose methodology in 2012, several large organizations implemented it. We’ve seen since, the organizations that focus on the impact they have on customers reap the emotional and economic benefits of higher purpose. While organizations that focus more internally, emphasizing how we treat each other, aren’t as effective in rallying their teams or winning the market.

Our experience mirrors the data. A study of over 500,000 workers in U.S. companies revealed, camaraderie alone does not translate into business results.

In the Harvard Business Review piece, The Kind of Purpose That Makes Companies Profitable, George Serafeim and Claudine Gartenberg unpack employee beliefs across a sample of 429 U.S. companies.

They found, Camaraderie-Purpose organizations, (“This is a fun place to work; We are all in this together”) did not exhibit superior financial performance. Only ClarityPurpose organizations  (“Management makes its expectations clear; Management has a clear view of where the organization is going and how to get there”) exhibit superior financial results.

We don’t believe in a transactional approach to business. It commoditizes an organization, and creates a poor work environment. The research, and our personal belief system, points us in the opposite direction.

Money and meaning are not in conflict. They’re linked. When we run executive sessions, we focus on the connection between purpose and profit.  Executives are relieved to learn: money and meaning are the dual pillars of a successful strategy.

When leaders activate a sense of higher purpose in the hearts and minds of the team, it creates a high performance organization. Teamwork becomes easier when everyone is pointing in the same direction.

In the HBR piece, the authors note, “Purpose does, in fact, matter. But it only matters if it is implemented in conjunction with clear, concise direction from top management.”

People crave purpose and meaning in their work. We are hardwired with a desire to contribute to something bigger than ourselves and we want to work with people who care about each other.

People also want direction. The best people have a fierce desire to win. If you want your organization to be more focused, you need more than flowery adjectives, team building retreats and trust falls. If you want real results, you need clarity of purpose.

A compelling Noble Purpose drives profits, it also makes your work meaningful, and dare I say it, even fun.