Purpose-Led Planning and Strategy Execution

By Nikos Mourkogiannis

What every organization needs to achieve enduring success is Purpose. Let others play with strategy and tactics. Purpose is the game of champion organizations, enabling leaders to inspire and lead their organizations to greatness.

Never could Purpose be more critical to companies than it is in today’s troubling economy. A one-page mission statement does nothing more than serve as a roadmap whereas a statement of Purpose of as few as four or five words acts as a goal. As such, Purpose is invaluable to all organizations, serving as a call for action that leaders can use to stimulate staff to act consistently and decisively. It can trigger innovative thinking and a sense of teamwork and thereby overcome market conditions.

For companies suffering from complacency or, worse, lack of focus, and the subsequent economic shortfall, Purpose can act as a savior once it has been determined. With a clearly defined Purpose, the organization can transform itself. The top management team will have a well-thought-out foundation on which it can build strategies and then make decisions that reflect those strategies. With an understanding of what the organization is trying to accomplish, trust lost by staff as the company waffled will return. Employees will become committed to the strategic plans and work to achieve them, thereby closing the gap between strategies and execution in the past. In my work as a consultant, I find this gap to be a serious problem. According to one study, nearly half of the leaders surveyed (49%) admitted to a gap between strategy and execution.

Worse, that same study found that 64% of the leaders interviewed lacked confidence that the gap could be closed. I believe that purpose can help close that gap. I contend that a key reason for the gap is confusion, and a clearly communicated Purpose can put an end to the confusion. Purpose can serve to motivate and direct staff to make the strategies happen and put an end to the strategy-execution gap. Purpose achieves successful strategic execution by making clear to all in the organization where it is going and then, via strategies built around that goal, aligning resources deliberately and consciously to get there.

A study on strategy execution by the American Management Association, conducted by the Human Resource Institute, identified alignment as critical to strategy implementation. The study findings noted, “’Alignment’ can refer to the top-to-bottom cascading of goals within an organization, the sharing of information among business units, and even the ability of a firm to recognize and capitalize on the nuances of the external business environment.” The study explained how actions that rated highest in importance included aligning organizational vision (think Purpose) with strategy, aligning strategy with vision (think Purpose)/mission statements, aligning business units with strategy, and aligning business units’ goals with the organizational vision (again, think Purpose).

Alignment around Purpose helps overcome apathy and boredom. A Harris Interactive poll showed that only 37 percent of the people in one company knew where their company was going and, worse, why. Consequently, almost two-thirds of the firm’s employees had no sense of the Purpose of the organization.

In essence, Purpose accurately tied to plans and strategy execution—strategic alignment and success—entails three steps:

1. Determination of Purpose or corporate vision: why you are in business

2. Strategic plans: how you are going to achieve that purpose

3. Corporate behaviors: how are you going to operate (corporate values and policies and procedures, including people management) to achieve strategic plans and thereby achieve Purpose

Admittedly, determining Purpose entails a discovery process in which the top management team analyzes their organization’s past and brainstorms opportunities in the future, as well as considers the present. It’s a process that begins with a clear understanding of corporate moral ideas and values, moves on to a study of the company’s history, then questions members of the top team about their view of a Purpose, then takes a creative leap to the Purpose, and finally tests that Purpose through metrics and models. Finally, strategies are studied to ensure that they will deliver both the Purpose—that is, its goal or the shared recognition of the reason why the company exists—and profits.

Purpose doesn’t mean making money. It’s not a means of producing goods or services or satisfying shareholders. Those are all the things that an organization must do in order to fulfill its Purpose. Purpose explains why a particular group of talented people should spend their valuable time working together in this particular organization doing these particular things. For instance: Are we here to discover new inventions? To increase people’s happiness? To create quality? To control the direction of our industry? Or for some other reason?

For instance, Southwest Airlines doesn’t really see itself in the airline business. It considers itself to be setting standards in the customer service business. It just happens to fly airplanes. Of course, it puts great pride in the excellence of its operation at all levels. In the book Do the Right Thing, Jim Parker, former CEO of Southwest Airlines, however, points out the importance of “why” in leadership’s thinking. In my opinion, that “why” is the company’s Purpose.

As CEO, Parker writes that the company always wanted to remember why it flew airplanes and that it was its customers rewarded the organization for the high level of customer service. At the same time that Parker writes about the many physical things that Southwest Airlines did, he attributes the airlines success to its “soul.”

LensCrafts might be described as a successful retail eyeglass distributor, but LensCrafters’ employees will tell you that they help people see better, one hour at a time. They offer the gift of better sight.

Two years ago, the company built on this sense of Purpose by focusing on how their glasses would also help customers look their best. The extended Purpose reflected a shift in customer wants. It recognized that consumers increasingly want their eyeglasses to reflect their personal taste and style. Strategic plans were not limited to new marketing plans and ads—the organization invested in a new store concept and provided training for associates (and even a new employee dress code combining fashion with professionalism).

In an interview, Douglas Conant, president and chief executive officer of Campbell Soup Company, talked about his company’s Purpose. “It’s hard to get people to think beyond the myriad tasks they are responsible for on a daily basis. We know that we are an economic enterprise, and we exist to create value for shareowners. But to do that, we can’t simply focus on the marketplace. We can’t expect to be sustainably good in the marketplace if we don’t have a superior employment experience in the workplace.” This thinking prompted Conant and his top team to create the Campbell Success Model. It reads: “Maximize shareowner value by both delivering superior business performance (Win in the Marketplace”) and delivering superior employment experience (Win in the Workplace).”

Conant continued, “When you translate strategies into reality, it’s all about execution. But execution depends on a sound corporate culture. This is why creating a high performance culture was mission-critical in reinvigorating Campbell…,” said Convant referring to the state of the company when he joined it six years before. The 160-year-old organization had grown complacent and its whole consumer proposition was suffering.

Significant change was needed, and Conant told the reporters that the establishment of a higher purpose and the winning of the understanding of the organization’s employees enabled him to undertake the significant corporate changes critical to the turnaround of the business.

Southwest Airlines, Campbell’s, and LensCrafters all represent patterns of Purpose my research has identified. Campbell’s could be categorized as “heroic,” whereas Southwest Airlines would fall into the category of “excellence.” LensCrafters, too, falls into the category of “altruism.” Specifically, I’ve found that generally Purpose could be a matter of:

Discovery. This type of Purpose involves a love of the new and innovative, and it animates many technological businesses. This doesn’t mean that the organization is constantly changing course. Rather, once the organization has chosen a course and embarked on it, ideally it should commit itself to pursuit of that course.

Excellence. This Purpose focuses on providing the best possible product or service. Excellence built the great cathedrals of Europe and today’s most successful professional and creative businesses. Apple, BMW, and Warren Buffett’s firm Berkshire Hathaway have all built their identity around the artistry of their endeavors. Organizations that are built around continuing improvement teams also fall into this category.

Altruism. This is the driving force of any organization that exists primarily to help others, like many political parties or most charities. Nordstrom, Hewlett-Packard, and even Wal-Mart have established appeal around the idea that they are, first and foremost, making their customers happy. Here is where you would find Southwest Airlines.

Heroism. This firm sets the standards for everyone else to follow. Heroism resulted in the Roman Empire, Wimbledon champions Serena and Venus Williams, and many spectacular growth companies. Microsoft, ExxonMobil (and its predecessor Standard Oil), and GE have dominated their markets and industries by focusing on their capacity to win every competition.

This issue of Purpose isn’t limited to a matter of strategic planning and strategy execution. Consider the case of Southwest Airlines. If the company’s management limited their reply to the question of what business it was in, they would be describing only the narrow transaction between their business and their customers. By replying “airlines,” they would be thinking of the business merely as a commercial transaction. It wouldn’t allow either the top management or the workforce to consider the all-important role of the “sense” of the business—which is an important factor in the case of Southwest Airlines. In every business, that connection is critical to survival and growth—critical to maintaining the loyalty of current customers and attracting new ones.

This is a critical issue in the face of a potential recession.

Needless to say, companies can have multiple Purposes. However, this adds complexity. Some leaders carry the same Purpose from one business to the next like Steve Jobs who was the living symbol of “Excellence” at apple, NeXt, Pixar, and Apple again.

Before you approach your next round of strategic planning or monitor execution of current plans, you might want to consider your own organization’s Purpose. A significant gap between strategy and execution can be due to a misunderstanding about the company’s Purpose. For instance, if an organization is on the cutting edge and its Purpose is discovery, and both customers and employees see this, then you shouldn’t have a problem selling products to consumers who want to give “new” a chance.

Likewise, you are likely to experience strategy-execution gaps if you built your strategic plans around offering the best possible product or service and yet they aren’t up to the market standard. It may be time to reinvest in product or service offerings, or to rethink your organization’s Purpose and undertake a new round of strategic planning.

Your company is heroic if it dominates its market niche. If it isn’t dominating its niche, it may be that you haven’t supported your belief in your Purpose. If there is a strategy-execution gap, your employees may not have the same confidence in the plans you set around your belief in a Heroic Purpose. It’s time to gather your top management team together and rethink both your Purpose and plans.

When we talk about Purpose, we’re addressing corporate leadership from the perspective of the big picture. It’s about the “why” or strategic leadership, not the “how” or operational leadership. As we read headlines and worry about the direction our economy takes, it will help us if we have built a sound foundation for our organization. Clarifying the Purpose of our organization isn’t solely what we can do but it is something that we should do—and right now.

To be published in Executive Excellence in 2008

Purpose-Led Planning and Strategy Execution

john_byrne

2008-06-23

Businessweek