Purposeful Organisations

Leadership teams believe in purposeful organisations

By August 7, 2017 October 3rd, 2017 No Comments

In my last post, titled a horse called purpose, I argued that purposeful organisations (organisations with a purpose beyond profit) consistently outperform their peers because they are able to take better decisions, more often.

This clearly resonated with many of you and I really appreciated the likes, shares and direct feedback. But it left me with three questions, which I was struggling to answer…..

  • What % of leaders share the view that purposeful organisations consistently outperform,
  • What % of leaders believe their organisations are actually executing purposeful strategies and
  • Are the purposeful organisations actually outperforming their profit driven peers?

Luckily for me and you, Ernst and Young have done the hard yards to find the answers by joining forces with the Harvard Business Review Analytics Service.  This is what they found out…..

A majority of leaders believe that purposeful companies outperform their peers

What a pleasant surprise as I had predicted the exact opposite (shame on me😱)!! I thought somewhere in the range of 20% to 30% of those polled would strongly agree that purposeful companies outperform.  Luckily I’m not a betting man as…

“89 percent of executives surveyed strongly agreed that a strong sense of collective purpose drives employee satisfaction; 84 percent said it affects an organization’s ability to transform, and 80 percent said it helps increase customer loyalty”

So there should be lots of purposeful companies out there right?   Wrong!!

Only a minority of organisations are executing purposeful strategies

With so much support for the benefits of being purposeful some of you may have expected a larger percentage of leaders to state they believe they are actually executing purposeful strategies.  And yet…

Whilst over 80% of leadership teams believe in the power of purpose, only 37% felt that their organisations business models and operations were well-aligned!!

The inference here has to be that organisations face significant frictional forces in moving from an understanding of the benefits of being purposeful to actually being purposeful.  (I will explore what these forces are and how you can quell them in future blogs)

Purposeful companies are indeed on average more profitable than their profit driven peers

58% of the prioritisers (organisations that believe they have a clearly defined purpose) saw profits grow at 10% or more, over the last 3 years.  On the other hand, only 48% of the laggards(organisations who’s purpose is not well defined or communicated) saw profits grow at similar rates!!

This is obviously a poll and the concept of ‘purpose’ is somewhat ‘ethereal’ and therefore difficult to define and measure.  None the less the result is still noteworthy and adds to the growing body of evidence that ‘purposeful organisations tend to outperform their competitors’.

Sadly the report does not disclose the actual companies polled, but it did make me wonder how Discovery Ltd have faired over the years as I had referenced them in my last post.

Phew!!!  Obviously looking at one chart, for just one purpose driven company doesn’t prove much, but it would have been a real headache if they were not the dark blue line.😅😅

A final remark

If you enjoyed this post don’t forget to share with your network.  You never know, there may be a CEO out there who wants to build a more purposeful organisation.  Reading this might be the spark that helps them take the first steps!!

The full report can be found here and is well worth a read.

Col

Author Col

The business models that made organisations successful are now becoming their biggest threat in an exponential world. I help incumbents understand these threats and more importantly the changes they need to take to survive and thrive the 4th industrial revolution.

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