Compass on pebbles.

In the Face of Instability, Revisit Why Your Organization Exists

By Helen Lane, Corey Smith, Mark J. Cappellino

July 21, 2020

Introduction

Change is our one constant, and constant change places continual pressure on organizations seeking to execute their in-crisis strategies. There are a variety of reasons strategy execution can succeed or fail in our current environment, but one often overlooked element is the connectivity between the C-suite’s defined strategy and the enterprise’s overarching purpose. In fact, while 84% of executives believe a shared organizational purpose will lead to more successful transformative execution, only 46% claim that their organization’s purpose is considered when making strategic and operational decisions.[1]

Leaders are seeking to rapidly redefine and reprioritize strategies in the ongoing COVID-19 crisis. Interim responses must eventually transition to ongoing, iterative strategic planning. With this in mind, understanding and embodying an organization’s purpose provides a catalyst for leaders seeking to transform and innovate. Leaders who leverage and communicate purpose as a driver of strategy report enhanced innovation and improved change delivery, as well as positive impacts on financial performance.[2] In short, purpose should be central to the development and execution of strategy.

Organizations seeking to drive strategy must consider their organization’s purpose – its reason to exist – in order to drive greater value through its strategy, in-crisis and beyond.

In tracing the importance of purpose as central component to successful strategy, we discovered the following principle: when defining, executing, and refining strategy, leaders must anchor on and articulate the organization’s purpose. In doing so, they will engage their teams and increase the chance for strategic success, higher-quality results, enhanced employee satisfaction, and improved customer loyalty.

Understanding Purpose

An organization’s purpose is defined as its stated reason for being – the reason why the organization exists. It is linked to the unique value it provides its customers.

An organization’s strategy is the defined, prioritized set of focus areas, connected initiatives, and cascading activities performed to differentiate the organization from its competitors in the marketplace.[3]

Purpose can be articulated explicitly via a purpose statement, and it can be articulated implicitly by an organization’s culture. A strong purpose statement defines why the organization exists, as well as the overarching value it seeks to provide. Purpose unites both executives and employees, empowering them to do the work that needs doing. Mark Cappellino states that purpose is the uniting factor by which those in an organization go out to change the world.[4]

Leaders can leverage their organization’s purpose to provide a foundation for strategy development and innovation, allowing the organization to approach changes in industries and markets and refine how they continue to provide value to customers. For example, The Walt Disney Company exists to: “entertain, inform and inspire people around the globe.”[5] Its brand acquisitions and foray into its Disney+ streaming platform under CEO Bob Iger were strategic decisions which can be interpreted considering this purpose.

When discussing purpose, we can often start thinking in lofty, philosophical terms. There are concrete outcomes driven by purpose-driven strategy, however. Fifty-three % of executives who claim their companies have a strong sense of purpose also indicate they are more successful innovating and transforming their businesses. This is in comparison to 31% of executives still trying to communicate their purpose and 19% who have not thought about purpose at all.[6]

53% of executives who claim their companies have a strong sense of purpose also indicate they are more successful at transformation efforts. 31% of executives are still trying to communicate their organization’s purpose. 19% of executives have not thought about purpose at all.

Additionally, purpose provides an anchor for leaders and employees currently buffeted by our global crisis. A strong, articulated purpose impacts talent retention and can be used as a catalyst for effective change management.

Leaders able to define and communicate their organizations’ reason for existing and their unique value to customers can drive employee satisfaction, increase strategy execution, produce higher quality products or services, and increase customer engagement and loyalty. Purpose can be used as the platform by which sustainable growth can be obtained in the face of complex change.[7]

Key Methods for Connecting Purpose to Strategy

When working with leaders seeking to link purpose and strategy effectively to drive successful transformative change, we have identified the following key methods:

Gain Executive Alignment & Consensus First

Executive level buy-in and support is the number one driver for both successful strategy definition and strategy execution.[8] We have seen many strategic efforts fail because their sponsors did not first align with the C-suite and gain consensus. In fact, a strategic initiative’s failure can often be signaled early by leaders’ inability to communicate the “why” and “why now” motivating the effort.[9] Often, further conversations are required to clarify the connection between purpose and strategy, and there may be a higher level of vulnerability and awareness required among leaders.

As an example, we recently worked with a new CEO who had a clear concept of his organization’s evolving purpose in-crisis. He felt prepared to lead his team in alignment with this changing purpose but we still urged him to hold an alignment session solely to articulate what he saw as the organization’s reason to exist with the C-suite. After the session, he noted that being forced to paint a “vivid picture” with his team helped him further clarify his thoughts. His team was likewise able to ask questions and collaborate on how the refined purpose was going to be communicated throughout the organization.

Model Desired Behaviors

Ongoing alignment can only occur as leaders act on the commitments they made together on strategy. Leaders must first gain alignment on how strategy delivers on the organization’s purpose, then they must translate that strategy into executable actions for their teams.

When it comes to linking strategy to purpose, leaders must be the first to model the changes they want to see occurring throughout the organization. Employees learn both from one another and from watching what their leaders say and do. Effective communication of strategy is vital (more on that to come), but it is critical leaders act with authenticity to drive the desired change forward.

Leaders should not seek to gain total change acceptance. Instead, focus on the critical stakeholders required to embody the organization’s purpose and evolving strategy immediately.

Articulate Purpose and Strategy Again and Again

Communication is key and it should start with leadership. Avoid platitudes or the possibility of hypocrisy.

From the moment the strategy is defined, leaders must continuously communicate the vision behind, and the importance of, strategy execution across the organization. Poor communication of strategy is a key barrier to employees effectively embracing and leading change effectively.[10] Change leadership should start at the top with definition of what is changing versus what is not changing. Leaders should emphasize the organization’s purpose is not changing but is rather linked to the major change.

Leaders must also communicate consistently over time to drive team connectedness. A single email (or even set of emails) does not make for effective communication. Leaders must develop a communication plan and cadence, linking strategy to organizational purpose, and stick to it. In addition, successful leaders will develop communication channels to encourage ongoing dialog, capturing opportunities and issues as the work evolves over time. This will contribute to the narrative of success behind the strategy, helping it “stick”.

Conclusion

Transformative strategy, especially in the context of ongoing volatility, uncertainty, complexity, and ambiguity, requires clarity and alignment on an organization’s reason for being: its purpose. Leaders’ ability to articulate the “why” behind their organization, link this purpose to the strategy being deployed, and connecting the individual employee’s role (the “why me”) will be able to accelerate strategy execution and drive greater value from defined strategies.


[1] “The Business Case For Purpose,” Harvard Business School Analytics Report, 2015.
[2] “The Business Case For Purpose,” Harvard Business School Analytics Report, 2015; Claudine Madras Gartenberg, Andrea Prat, and George Serafeim, “Corporate Purpose and Financial Performance,” Organization Science (October 9, 2018), 30(1), pp.1-18.
[3] Our definition of strategy here is built upon Michael Porter’s concept of strategic positioning. See: Michael Porter, “What Is Strategy?”, Harvard Business Review, November 1996.
[4] See: Mark J. Cappellino, “Conflict Is Just a Matter of Perspective,” Ankura Consulting, February 20, 2020.
[5] See: https://thewaltdisneycompany.com/about/ for a full description of The Walt Disney Company’s mission.
[6] “The Business Case For Purpose,” Harvard Business School Analytics Report, 2015.
[7] Thomas W. Malnight, Ivy Buche, and Charles Dhanaraj, “Put Purpose at the Core of Your Strategy,” Harvard Business Review, September – October 2019.
[8] The Economist Intelligence Unit, “Why Good Strategies Fail: Lessons for the C-Suite,” March 2013.
[9] See: W. Warner Burke, Organization Change: Theory and Practice, California: SAGE Publishing, 2018.
[10] “The Business Case For Purpose,” Harvard Business School Analytics Report, 2015.