Having conducted extensive field research, Ranjay Gulati, author of the new book, Deep Purpose, The Heart and Soul of High-Performance Companies, reveals the fatal mistakes leaders unwittingly make when attempting to implement a reason for being.
“My interviews with well over 200 executives across 18
firms revealed the secrets of these companies—not the usual facile frameworks,
but new ways of thinking about business that allow leaders and companies to operate
with heightened passion, urgency, and clarity,” shares Gulati. “I call this, deep
purpose.”
Furthermore, Gultai explains that most leaders think of
purpose functionally or instrumentally, regarding it as a tool they can wield. On
the other hand, deep purpose leaders think of it as something more fundamental;
an existential statement that expresses the firm’s very reason for being. These
leaders project it faithfully out onto the world.
“Rethinking the nature of purpose should prompt you in turn
to re-imagine your role as a leader,” says Gulati.
As you read the book, you’ll also discover that most
leaders pursue purpose superficially because they don’t fully understand how
devotion to a purpose enhances business performance. In contrast, deep purpose leaders
grasp more acutely the mechanisms by which purpose galvanizes organizations and
generates outsized performance.
Today, Gulati answers these questions for us:
Question: Why did you decide to write this book—and why
is its message so important right now?
Gulati: Efforts to tackle pressing problems such as
climate change and inequality have stalled, leaving society at a crossroads. In
this context, advocates of corporate purpose have lauded it as a silver bullet,
while cynics regard it as a cloak behind which companies can hide their true
selfish intentions. In reality, some companies have indeed used the idea of
“purpose” to mask nefarious conduct. Others, however, have pursued purpose in
more authentic ways. By assessing companies that truly embrace purpose as an organizing
principle, I hope to showcase how the vast majority of businesses today might
better employ purpose to serve society while also achieving economic
success.
Question: You talk about how purpose can actually help
to boost company performance. How?
Gulati: A key insight in my book is that purpose is
not a tax on business. Rather it is a generative force that allows the
enterprise to simultaneously perform better on its commercial and social
objectives. But purpose only becomes generative when companies pursue it deeply
and view it as something very fundamental to their being. In that case, the
organization becomes transformed from one in which employees and other
stakeholders connect with it in a transactional way into one in which they feel
personally committed to the organization and its objectives. A number of
studies have suggested a correlation between purpose and long-term performance
(as measured by total shareholder return, growth, and achievement of measurable
social objectives). But few have tried to pin down the specific levers by which
this performance materializes. My in-depth fieldwork allowed me to identify the
specific levers by which the pursuit of deep purpose translates into superior
financial and social performance.
Question: What are the levers of deep-purpose?
Gulati: Four specific levers allow deep-purpose companies to achieve superior results. These are:
- Motivational: attract and retain a more motivated and inspired workforce.
- Directional: greater clarity on strategic choices and direction.
- Reputational: greater recognition as a trusted and reliable brand that in turn elicits greater customer loyalty.
- Relational: enriched connections with suppliers, partners, and others their ecosystem around a shared understanding of each other that is shaped by clarity of purpose.
Question: How does purpose create trust, autonomy and
collaboration?
Gulati: As Satya Nadella told me, “Writing a purpose
statement is easy, what comes next is much harder.” The bulk of my book is
devoted to exploring how deep purpose companies make purpose an integral part
of their organization. I looked carefully at how such firms modify their
organizational architecture to allow themselves to operate with purpose. I
found that deep purpose companies are extremely attentive to their culture and
bring it into close alignment with their purpose. Culture is the translation of
purpose into a set of behavioral anchors and principles by which the firm
operates.
There are some common themes in the cultures of deep
purpose companies. First, they encourage individuals to discover and live their
personal purposes. They also provide guidance and support that helps
individuals connect their personal purpose with that of the organization. Second,
instead of attempting to shackle or control behavior, these cultures tend to
encourage autonomy and individual expression. Together, these shifts help
transform the connection between employees and the organization into one of
trust and commitment rather than transactions and contracts.
Question: What are the skills leaders need to develop in
order to lead purposefully?
Gulati: Leaders must function as both “plumbers” and
“poets.” Plumbers assess market conditions, set strategies, and focus on
outstanding execution. Poets inspire people around a shared purpose. If you
lack a purpose, you must first find one, plumbing the depths of your heritage
for inspiration. Then you must disseminate it, in part by crafting a big story
about who you are, what your firm is about, and what it is there to do. Beyond storytelling
you must ensure that all of your corporate systems, structures, and processes
align with your purpose. And ultimately, you must embody the purpose. Your
actions and words must mirror and echo your organizational purpose. In many
ways, leaders expect more of themselves when they purport to lead deep purpose
organizations.
Question: What advice would you give young leaders just
starting out?
Gulati: The rising generation of young leaders is
more purposeful in their lives than prior generations and cares deeply not just
about the bottom line but fulfilling an organizational purpose. A range of
fast-growth startups operating today didn’t launch with big ideas only, but
also with big ideals. As I’ve written in a recent HBR, “Startups typically
operate with the mentality that growth and profit come first, higher calling
comes second. This strategy, however, is misguided. Increasingly, entrepreneurs
are imbuing their ventures with a grand ideal in addition to a great idea. This
ideal not only serves as a moral purpose but also has three strategic and
operational advantages. First, it can help expand entrepreneurial ambition.
Second, it can attract fellow travelers. And third, it can help align a winning
team.”
And if you are not necessarily part of a start-up and early
in your career, think hard about your own life purpose and use it as a filter
to make important life decisions including where you might want to work. You
will find that you perform best in purposeful organizations where its purpose
is resonant with your own purpose.
Thank you to the book’s publisher for sending me an advance
copy of the book.
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