“I think people generally want to belong to something of greater purpose that’s larger than they are.” Mark B. Templeton CEO of Citrix in New York Times – September 22nd, 2012
Ten years ago, in the aftermath of the previous financial crisis, I noted that there was a great opportunity for the corporate world to “to define a more integral and profitable reason for existence”. In that article I highlighted that the issue of the ‘purpose of business’ is at once a moral/ethical point as Charles Handy points out AND a money/economic point as independent research from Harvard, Stanford and others point out. To set aside, forget or lose the purpose of a business seriously jeopardizes its very existence in terms of morals, morale and money.
What often happens, particularly in difficult economic times is that due to the dynamics of Maslow’s hierarchy of needs the legitimate priority of profits replaces purpose. A priority is different from a purpose. The priority determines what one does first. It is a matter of sequence. Purpose on the other hand is ‘why a person or enterprise does something. That is a matter of motivation.
As one CEO of a company recently explained, “I don’t have time to consider or re-examine purpose right now. We’re in survival mode. Maybe later when things turn around financially we will have the luxury to revisit purpose. Right now the purpose is surviving.” For understandable reasons this thoughtful executive sees purpose as a nice addendum when time and money allow, but not core to his company’s surviving let alone thriving. This seems to happen a lot.
Unless there exists a prior, clear and compelling reason for ‘being’, moving the enterprise forward and in the midst of financial crisis this purpose is repossessed or repossesses, the necessary priority of profits undermines purpose which in turn deters profitability. As Handy reminds us it is one thing to prioritize getting food on the table, it is another thing to live to eat, as I put it in an article I wrote in the Virtual Strategist nearly 10 years ago:
When a man who has nothing to eat prioritizes getting food on the family table he acts in a legitimate, necessary and honorable manner. However, if after securing plenty of food, he then lives to eat, it starts to work against him. His legitimate priority has become a deteriorating purpose. So it is with the business person who legitimately prioritizes making a profit and then lives to make a profit. If the legitimate, necessary and honorable priority of making a profit is not accompanied with a broader purpose, then it ironically can begin to eat away at profit.
Another CEO I met, in the midst of a dire economic situation, had a different approach. He had developed a clear purpose other than profits which included providing inner city jobs and education scholarships. He draws upon this reason for being to motivate himself and others in remembering why we are in this. ‘Yes we need to survive because our livelihoods and this company are at stake. Beyond this it’s about providing people with jobs and education.’
As Donald Petersen, CEO at Ford in the 1980s declared while reflecting on moving through a financial downturn, “Putting profits after people and products was magical at Ford.” And part of the magic was the increase of profits!
Developing, communicating and living a clear and compelling purpose simultaneously serves monetary, moral and morale interests as it drives organizational renewal. Philosophizing about ‘why’ in the midst of a crisis rallies hearts and minds around a common cause. This esprit de corps prevails in social movements, militaries, religious causes, arts and athletics. Why not business?
David Packard of Hewlett-Packard exemplified this vision with these words to his executives in 1960.
I want to discuss why acompany exists in the first place. In other words, why are we here? I think many people assume, wrongly,that a company exists simple to make money. While this is an important result of a company’s existence, we have to go deeper and find the real reasons for our being.... a group of people come together... to accomplish something collectively that they could not accomplish separately---------they make a contribution to society, a phrase which sounds trite but is fundamental.
The challenge for executives, particularly in context of the financial downturn is to simultaneously focus on the priority of profits AND the purpose of the business.
Jeff Spahn is Founder and president of Leaders Leading Leaders Inc.