This post is more of a musing of someone who has had the privilege of working with dozens of prominent companies as a management consultant. I would like to briefly talk about “purpose” and its impact on the success of a business. Let’s start with a question: How do you define the ultimate objective of your company? Most business owners would answer this question by pointing to some derivatives of profitability and market share. Indeed, in absolute terms, a business without profitability is a failed business. However, in my mind, these goals are as limited as they are mundane. What I have learned from working with my clients is that the top executives of the most successful companies in the world do not see profitability as their paramount objective, but rather as a natural outcome of their following a purpose, and implementing a set of values that support this purpose and drive their actions. For example, Microsoft’s core purpose at the inception was to make it possible for every person to have a personal computer. Microsoft has been quite successful in pursuing this purpose, and achieving vast profitability and market dominance as a result.
This presence of purpose has a huge impact on the way a company conducts business, and ultimately on its market success and profitability. When a company has a purpose, it introduces a human factor into its business objectives and conduct. It cares about their customers on a much deeper level than “how do I produce a product that they will buy”. Consciously or not, customers will realize this and reward such an approach by their buy-in and loyalty. By following a purpose, a company becomes much more connected to the real needs of customers and this permeates into its R&D, marketing, sales and HR functions. Workers who share the same purpose are significantly more effective in their jobs that workers who merely follow profitability targets. Profit-sharing mechanisms are somewhat effective in stimulating workers’ creativity and dedication but they don’t come close to the effects of purpose-sharing. To come back to the mundane stuff, when economic benefits are the only motivation, a worker produces “x” units of labor for each “y” units of money. Since there is a point of diminishing returns to the worker, after a certain point the worker’s productivity per dollar starts decreasing. This relationship is not true in the presence of purpose. Next time you have a strategy-planning session, brainstorm about your purpose. It’s a rewarding exercise in life and in business.