Does Your Business Strategy Have A Purpose?

The following is one of my first few posts on this blog back in July last year, I thought it is worth sharing with you again here. The conversation started when a friend of mine called me and wanted to talk about his new venture idea. I am happy for him. No question that it is a big decision to give up your job and go after your dream. The question came up was “why”, is it about money or is it about something else?

I asked him the question "Do you have purpose?" He was a little surprised as he expected me to ask him about the strategy. I said to him “purpose” is bigger than “strategy”. Way much bigger. At best, strategy is just a number of smart ideas to take advantage of a market opportunity or re-configuration of the value chain. But purpose is different, it is a journey. Strategies are about means; they cannot be an end in themselves. An end is a reason. Many companies today are not lacking strategies, they lack a reason--they lack “purpose.”

Purpose is crucial because of its scope and ubiquity. It is large, much larger than any other elements in a business model or organizational design. It is much more involving. It is a choice to pursue your destiny--the ultimate destination for yourself and the organization you and your partners founded... It draws equally upon your emotional commitment and intellectual whole--it calls upon everything you are, everything you've experienced and everything you believe in. How many leaders out there today can talk intelligently (and authentically) about “Purpose”? Purpose is he most powerful mobilization and any successful CEOs must be able to talk about it--although they may not actually use the word itself. Business is about “Purpose” and Management is the art of bringing that "Purpose" to everyone in the organization and even to their customers. There's a lot of be learned from the non-profits guys.

Here’s a good comment responding to my post earlier this week. I thought I should share that with you. It is from Norman Wolfe, CEO Quantum Leaders.    

Idris, I couldn't agree with you more that there is a terrible misunderstanding of the relationship between for profit and not-for-profit. Your friend at the airport said it right when he said all organizations are in business to serve a certain customer base. Success of an enterprise is defined by the simple equation Revenue less expenses = profit and profit re-invested provides growth. Every organization has a revenue stream that is driven by the acceptance of the product/service by the market (whatever the customer base might be). When we provide those products/service with the most optimized set of resources we are doing so with the least amount of expenses. This does two things for us (us being the whole society), it means we are maximizing our profits which allow us to grow and provide the market with more of our products/services. And two it means we are also utilizing the least amount of resources hence we are being appropriate stewards of our society's resources. It matters not whether an organization is a for profit or a not for profit. The revenue for not for profits may comes from sponsoring organizations rather than the end user but it is still revenue. Think of it as selling the product to the sponsor who is purchasing it on behalf of the end user and we drop ship it directly to the end user. The model is the same. One thing I would say that for-profits can learn from the tax exempt world, is the power of purpose, meaning and passion.

Thanks Norman for sharing.

Comments

[patrick]

'Purpose is crucial because of its scope and ubiquity'

You have pin-pointed it there - the purpose of having a purpose. Without wanting to be redundant, the change of business economics from economies of scale to those economies of scope/depth in customer relationships is probably what makes most relevant the idea of having a resonating purpose beyond marketing and corporate responsibility.
As this affects the business economics, interactivity, and the ease by which consumers/users today can turn companies influence off, a significant hurdle might be about who has the mandate to determine commitment.
BR.patrick