The Starting Point of Great Leadership

By Nikos | June 20, 2008

Strategic Leadership

 
For any organization, the starting point of greatness is not in meeting expectations–whether of shareholders, board members, or constituents–but fulfilling a Purpose that fits the identity of the organization. For example, is a foundation charged primarily with discovery: inventing new approaches to helping people? Or with excellence: promoting a high standard of service and execution? Or with altruism: making greater numbers of people happy? Or with heroism: proving that difficult challenges (such as natural disasters) can be mastered?

 
The answer will vary from organization to organization, but the central point is universal. Organizations that thrive over time do so by invoking and fulfilling a purpose: ideally one based on a moral tradition that has stood the test of time. In my book Purpose: The Starting Point of Great Companies, I apply this principle to commercial firms and corporations, but the value of a moral basis of purpose is just as relevant to social sector organizations and their leaders as it is to leaders in any other sphere. While it may be tempting to think of organizations as being made up of instructions, processes, and resources, it should never be forgotten that people are their fundamental components. And one of the distinguishing features of people is that they have strong ideas about what is right and wrong. If you can resonate, collectively, with those ideas, then you can tap into people’s commitment and creativity to a far greater degree. Karl von Clausewitz, Prussian general and author of On War, was right to believe that in war the physical factors are “little more than the wooden hilt, while the moral factors are the precious metal, the real weapon, the finely-honed blade.”

 
Many people who talk about organizational purpose are concerned either with accountability or responsibility–what the organization must do to fulfill its obligations. But if you are interested in promoting greater levels of success, then purpose must be considered as a form of choice: to what ends are the leaders, and the rest of the organization, willing to commit themselves? This way of looking at purpose may not be familiar to all readers, so I will spell it out–first in the context of commercial companies, and then for the social sector.

 

 

The sole purpose of commercial companies is to make products or to provide services in order to create profits for their shareholders. Undoubtedly this sounds familiar. It is the mantra taught in the economics departments of our universities and repeated by many leading economists in the media. This view of heartless Mammonism is reinforced by the stories of WorldCom, Enron, and Arthur Andersen, and many other stories of corporate corruption, and it is further reinforced by such legislative prescriptions as Sarbanes-Oxley, which is so draconian for U.S. companies that they are struggling to compete in the global marketplace. And why do companies need Sarbanes-Oxley? Because, it is said, they can’t be trusted. Because all they care about is money. No wonder many morally committed individuals seek work in the social sector; based on this purpose, they have every reason to fear that their aspirations will find no home in business.

 
There is, however, another tradition in economics, a tradition that does not seek to exclude human morality from the graphs and equations. This is the tradition of J. M. Keynes, of Amartya Sen, and of James Buchanan. It is a tradition that dates all the way back to Adam Smith, regarded by many as the founder of economics, who, before he wrote The Wealth of Nations, wrote The Theory of Moral Sentiments.

 

At heart, the concept of purpose belongs squarely in this tradition. This is not to argue against commercial firms’ making money–quite the reverse. In fact, companies that employ a purpose tend to produce greater profits than those that don’t. But by aiming for some long-term objective that is more important than money, companies actually provide more financial rewards for their shareholders and employees (so long as the purpose they pursue is compatible with the strategic assets).

 

 

Purpose is so powerful because it is founded on deeply held ideas about what is right and what is worthwhile. These ideas are normally rooted in one or more traditions that have been articulated by moral philosophers. Because these traditions have been shared in some form throughout history, they draw on common experience and worldviews. They thus link top management and other employees in a natural and organic way. When a company or foundation is driven by such a shared purpose, its morale will be higher, the quality of innovation will improve, its internal and external relationships will be strengthened, and its leaders will be able to point the way forward with genuine conviction.

 

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