Walking the Talk: Leading with Purpose
BlackRock is a 30-year old financial management company. They have approximately 6 trillion US dollars in assets under management, making them one of biggest investment companies listed in the stock market. Their CEO, Larry Fink, at the end of 2017 surprised everybody by sending a letter to the CEOs of the companies in their portfolio, by focusing a lot of attention on the notion of purpose.
In his letter, Fink not only touches on the roots of the social dimension of purpose, by stating:
“Society is demanding that companies, both public and private, serve a social purpose.”
But also goes as far as defining the purpose as a necessary step to the financial and business success of any company:
“Without a sense of purpose, no company either public or private can achieve its full potential. It will ultimately lose the license to operate from key stakeholders. It will succumb to certain pressures to distribute earnings, and in the process sacrifice investments in employee’s development, innovation, and capital expenditure that are necessary for long-term growth.”
And while the notion of purpose is nothing new in the context of marketing, and it’s well-known the wave of marketers building more purposeful brands, this is the first time that, in a very evident way, the concept of purpose emanates from large shareholders to the firms’ leadership team.
The big question is how do you go about building a purposeful company and making sure that it is true to its objective? Business books are full of examples, and there are plenty of well-documented business cases of companies successfully changing their vision, mission, and even their corporate culture. But the truth to the matter is that – unfortunately – the vast majority of those change efforts are nothing but paint on a wall or ink on a white piece of paper – they never really materialize in practice.
So, how do you make sure that the “purpose” actually becomes a reality within the boundaries of any company?
In big transformation projects managed by very savvy change managers, three aspects are key: you need to have clear communication about what you want to achieve and how; you need to have early adopters and short-term wins.
In a similar fashion, when making the purpose happen, it’s pivotal to leverage these three aspects. First and foremost, a condition sine qua non for success is purpose ambassadors: generally speaking, executives very high up in the hierarchy of the company, at the very top of the leadership who become the evangelists for the new gospel. And, among their key responsibilities, not only they need to ensure a smooth communication approach within their divisions, their functions, or any part of the company they lead, but they also need to scout and select a number of moments of truth. Those are the moments where employees given a choice between traditional behavior and a purposeful one, chose the latter and get rewarded for it. Best not through a financial reward, but through recognition within the company – because they are living examples of the new mantra.
The moments of truth, are also necessary to the second key success factor: the more credible is the purpose, deeper its roots in the organization. And the stronger its message will stick to the organization’s boundaries, to the walls in the office and outside the office.
To make it credible it needs to be lived every day in every single action. As Fink states, compromising your social role for short-term financial return – e.g., giving back to the investors or saving costs rather than investing in a more sustainable, more inclusive long-term plan – ultimately damages the credibility of the process and the transformation towards a purposeful organization.
So, in every day’s actions – the ambassadors, the company’s leadership, the business units leaders, their directors – they all must manage with purpose in mind, by co-creating a more purposeful organization day after day.
The third aspect is conceptually complicated, and it deals with the culture: purpose and the company’s culture have a symbiotic relationship. They either enhance each other, or destroy each other. If they are not a perfect match, they’re going to be toxic for one another. So, the culture is going to kill the purpose or the purpose is going to damage the company’s culture.
As the culture is, at any given point in time, the snapshot of the most common behaviors happening within the company. It is not just the statement, it’s the expected behavior in a company, at any given point in time. This is why it is so important that there is a match between the purpose and culture.
A company’s culture which is too far away from the purpose is going to ultimately damage itself and damage the building of the purposeful platform of the company itself. Addressing the cultural dimensions means – of course – addressing systems, processes, but most of all the human variable. Which is why the most important aspect for enabling purpose within the company is starting from HR and in particular from recruitment: purpose should become the beacon through which we attract the right people, but also the filter by which we select the people we want hire. If they don’t fit, if they don’t love the purpose, if they don’t believe in the purpose, their behavior is going to ultimately damage the purpose itself.
In conclusion, once the company has found its “why”, which needs to fit with the culture, it’s very important to identify ambassadors among the top executives of the company. Those should reassure with their everyday behavior that the purpose is credible, and therefore make it stick within the boundaries of the organization. In addition to that, the company needs to address the talent side of the equation, to ensure that the collective behavior not only reflects what the purpose needs, but also builds on, and is engaged with, and loves what the purpose stands for.