Organizational Development & Leadership Guest Memo: Finding 'Purpose' is Key to Organizational Development and Leadership

From the Natural~Specialty Foods Memo Editor's Desk: Research from the fields of social psychology and organizational behavior demonstrates that individual human development and organizational development go hand in hand. In other words, it's very difficult to enhance, improve and further develop an organization such as a corporation unless those who make up that organization or business also are working to improve and develop themselves. You really can't have one without the other.

And, organizational development can't occur without a key ingredient: leadership.

Regarding organizational development and leadership, a key element of leadership is purpose: Why the company or other type of organization is doing what it's doing. Why it's making the decisions it's making. And why it's created the particular strategies it is implementing, for example.

Purpose also is where organizational development and leadership intersect, as it's the leader of an organization who ultimately determines its strategic direction and reason for being, beyond just making a profit in the case of a corporation or other form of business, such as food and grocery manufacturing or retailing companies.

Nikos Mourkogiannis, a strategic leadership consultant and author, discusses the intersection of organizational and human development, leadership and strategy in a recent essay on his website NIKOSONLINE. The essay, titled, "The Search for Purpose," is reprinted below:

June 21, 2008
The Search for Purpose
By Nikos Mourkogiannis, NIKOSONLINE.COM

For many years, I worked for one of the world’s leading strategy consultancies. On any typical assignment, watching CEOs evaluating the pros and cons of our recommendations, I would always find myself wondering, “What is really determining their decision?”

With the best chief executives, those at the helm of the most effective companies that we advised, I knew that there was something more driving their decisions than simply the need to make immediate profits. Some advice was deemed a natural fit; some, even though it would be difficult to execute, was taken on as part of a long-term strategy. And some “slam-dunk” options were dismissed immediately, often with a comment like, “This is not what we are trying to do here.” I came to recognize that the more consistent this type of reaction was, the more successful the leadership team, because its members knew where they were going. In other words, while strategic alignment and execution were always essential to success, the most successful leaders were those who knew which strategy to pursue.

All leaders, not just top CEOs, face difficult strategic decisions throughout their careers. The single factor that helps them make these decisions correctly is an understanding of what their organization is really trying to do: its Purpose. That’s because the Purpose of the organization— the shared recognition of the reason why it exists—is the context that determines whether a decision is the right one to make at any particular time.

Purpose does not mean making money. It does not even mean producing goods or services, satisfying shareholders or paying taxes and contributing to society. Those are all the things that an organization must do in order to fulfill its Purpose. The Purpose is a moral conviction: a rationale that explains why a particular group of talented people—leaders and employees—should spend their valuable time working together in this particular organization doing these particular things. For example: Are we here to discover new inventions? To increase people’s happiness? To create beauty and quality? To control the direction of our industry? Or for some other reason?

When a Purpose appeals to the moral conviction of employees, then they are capable of acting with conviction and self-determination, without being micromanaged. When the strategy of a company is aligned with its Purpose, then its moves will make sense, whether in the short or long term. When companies operate over time with a clear and well-aligned Purpose, then they become great and influential.

THE FOUR PURPOSES

For today’s global companies, based on my research, there are four moral traditions on which a successful Purpose can be based:

1. Discovery centers on the search for the new. Discovery put America on the map, men on the moon and the dot-coms in business. Sony, IBM, Google, and many technologically based companies have succeeded by making innovation and exploration the center of their effort.

2. Excellence 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.

3. Altruism is built on compassion. Altruism 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.

4. Heroism 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.

To be sure, Purpose is not monomaniacal. Wal-Mart beats the competition; Nordstrom provides excellent service; and IBM has had its heroic moments. But the underlying rationale for the decisions made by these companies becomes clear when you study their histories, which always have to do with fulfilling an idea, often set in place by a leader or a leadership team, about “what we are really trying to do here.”

Companies do not adopt such Purposes by accident; they are deliberately chosen by the leaders, often with original forms of expression. Thomas Watson, Sr., didn’t say “our Purpose is discovery.” He put signs reading “Think” in everyone’s office. In doing so, he was making it clear that discovery was the essential constant at IBM, and every other action people took, including financial security, was secondary. The adoption of a Purpose, and the alignment of corporate strategy with that Purpose, is the single most important job that a leader has to perform. And most CEOs know it: “Purpose” is what they most want to talk about, though they do not always call it by that name.

PURPOSE AND CORPORATE STRATEGY

Corporate strategy is a highly complex business—witness the range of articles and books published on the subject, the number of professors who teach it at business school, and the legions of consultants who make a living from it.

However, at its heart is a very simple idea: to enjoy competitive advantage is to be able to generate more wealth than other companies in the same industry year after year. Not all companies are driven to achieve this, but most public companies need to do so, if only to continue appealing to shareholders.

So how do you generate more wealth than other competitors? In the 1980s and 1990s, many companies assumed that efficiency was the key, but they soon discovered that their competitors could easily make the same changes to their operations (for example, through outsourcing or streamlining).When productivity equalized, they were all competitively back where they had started from, but with lower margins. Companies then realized that the key is not efficiency per se (although this is of course essential to any successful business), but differentiation.

Michael Porter expressed this idea most cogently in his influential 1996 Harvard Business Review article, “What is Strategy?” Competitive strategy means “deliberately choosing a different set of activities to deliver a unique mix of value”; and different positions require “…different product configurations, different equipment, different employee behavior….”

But anyone reading Porter—and certainly anyone wanting to implement Porter—is bound to wonder just how this fit between a position and all the activities supporting it is to be achieved. Even more importantly, how can it be achieved so that others are reluctant to try to imitate it? One could argue that Porter’s answer to this is rationalist: in most cases a company can make a strategic decision because it enjoys distinctive strengths or a position in the industry well suited to that decision. Indeed, companies do not all start from the same place, and the additional costs and difficulties of moving to a strategic position will vary from firm to firm.

However, in practical, day-to-day experience, the difference in strengths and position from one company to the next can rapidly change, depending on the capabilities and commitment of the people involved. The underlying crucial issue is building those capabilities and solidifying that commitment. In any company, those depend on a flow of ideas and a web of routines and relationships. Some routines and relationships are formal—like the budgeting procedures or the innovation management procedures that some firms adopt, or the allocation of decision-making authority. Some are informal—the personal networks that allow individuals to access knowledge across and beyond the company or to assemble teams on an ad hoc basis, or to influence the way decisions are made and so move events forward.

Whether formal or informal, the single most important factor shaping these routines and relationships is the organization’s Purpose: they all rest on a set of shared understandings among everyone involved. If the organization’s Purpose is mere expedience (making as much profit as quickly as possible, or solving problems with the least effort and cost), people will tend to do things and have contact with people to gain only short-term advantage. If the organization’s Purpose is Discovery, Excellence, Altruism, or Heroism, then people will tend to be guided, consciously or not, by those values when doing regular tasks and building relationships at work. And when it comes to the introduction of new ideas, nothing helps people overcome the fear of adopting them more than the shared understanding that they thus serve a higher Purpose (for instance, saving people’s lives).

These shared understandings then underpin all kinds of internal organizational strengths—motivated employees, effective teamwork, knowledge sharing, efficient factories, creative product development teams, good brand management, a spirit of co-operation, flexibility and so on.

PURPOSE AND DECISION MAKING

It was many years before I understood why, when presented with a series of strategic options, some leaders always seemed to make the right decisions and some leaders always seemed to make the wrong decisions. The most successful leaders understood that the best option is the one that the organization will act on most effectively—in other words, the one that fits best with the Purpose.

So, if you are a leader within a company that seems muddled in its strategic direction, spend some time thinking about what drives you and your organization. Perhaps there is a divergence between the two. Perhaps your organization needs to discover or rediscover its Purpose. Ask yourself which leaders and which organizations you most admire. Then ask yourself what drove them to success. Was it Discovery, Excellence, Altruism, or Heroism?

Could that Purpose be the driving force in your own organization?

You can read more of Mr. Mourkogiannis' writing at his website here.

Leadership & Management Memo: America 2.0: The Creative Imperative

Editor's Note: Andrew Razeghi is an adjunct associate professor at the Kellog School of Management at Northwestern University and the author of the book "The Riddle: Where Ideas Come From and How to Have Better Ones" (Jossey-Bass/Wiley, February, 2008). Mr. Razeghi also is an advisor to corporations and organizations on creativity, innovation and leadership. His clients have ranged from Pepsico and World Kitchen, to General Electric, Motorola and Darden Restaurants, among others. Fast Company magazine recently selected "The Riddle" as one of its "Smart Books for 2008."

In his essay below, Rezeghi says America needs an overhaul in leadership--from Washington D.C, and the country's statehouses, to it's corporate boardrooms and elsewhere. More importantly though, Rezeghi argues this new leadership--America 2.0--needs to be fueled by a creative imperative. It's this creative spark that's needed to create a new leadership style and new leaders.

This creative imperative requires a jump from America 1.0 thinking to America 2.0 thinking, while drawing on the original creative leaders, like the founding fathers, to go "back to the future" in a sense, the author suggests. In order to achieve America 2.0, the U.S. needs more modern day dabblers or dilettantes like Benjamin Franklin, the polymath who not only invented bifocal eye glasses and the lightning rod, but created America's first fire department and public lending library, while still managing another couple dozen innovations on the side. He even found time to get himself put on the $100 bill, after all.

In his essay below, Andrew Razeghi offers a smart and timely argument for what it just might take to make the transition from the end of America 1.0 to the creative and successful new era--America 2.0. You can learn more about Andrew Razeghti here. We thank the author for his essay.

America 2.0: The Creative Imperative

By Andrew Razeghi

Outsource high-wage jobs to lower-wage nation. Check.

Extend homes loans to people who can't afford them. Check.

Wage conventional war on unconventional enemies. Check.

How did we do? Let's see: 7.7 million people unemployed, 2.2 million foreclosure filings issued by banks and lenders (a 75 percent increase over 2006), and 3,974 U.S. servicemen and servicewomen reported dead in Iraq (up from 139 since President Bush declared "Mission Accomplished" on May 1, 2003).

The dollar's weak. Bankruptcies are strong. And Rambo is back in theaters.

Sure we need hope to deal with all of this, but mostly we need creativity. We need a new Eureka moment like the one we had on July 4 - 232 years ago.

As the economic spotlight fades and flickers on the U.S. economy and the balance of power finds its new fulcrum point between the Middle East and China, now is America's chance to reinvent itself. Now, while no one is looking, is our chance not only to elect new leaders, but to create new leaders - leaders who are enlightened, broadminded, and able to offer unconventional solutions to unconventional problems. The challenge however is this: Somewhere between the late 18th century and today, all of the great dilettantes died and those who espoused their beliefs have been deemed dabblers - not serious professionals with serious opinions. If history is any guide, however, it will not be the experts, but rather the dabblers who help reinvent America.

Consider the success of America 1.0 and one of its master architects, Benjamin Franklin. Franklin's resume reads like a Denny's restaurant menu: activist, author, diplomat, inventor, philosopher, printer, publisher and scientist. Today, we'd likely accuse Franklin of being indecisive in his career choices. "Ben, when are you going to settle down?" we would likely ask. However, consider Franklin's achievements. He invented bifocal glasses, the lightening rod, swim fins, the glass harmonica, and the Franklin stove. He published Poor Richard's Almanac, promoted colonial unity, founded the first American fire department, and created the first lending library. If that were not enough, he brokered the French alliance that helped make the American Revolution possible and then went on to serve as the postmaster general under the Continental Congress. He died an abolitionist. Oh, and somewhere along the way he became fluent in five languages. And we wonder how Benjamin Franklin was so very good at thinking outside the box.

Franklin lived broadly. The only reason that history holds out Benjamin Franklin as an outlier - a lone genius in a sea of mediocrity - along with Sir Isaac Newton, Thomas Jefferson, and most of the enlightened leaders of the Enlightenment is that today we believe you must find your interest and dedicate your entire life's work to it. Don't dabble. Become an expert.

We like our leaders to be experienced, educated, and - when possible - tall. Focus: that's what we value. And focus is what we get.

We can outsource (jobs), pass the buck (subprime paper), and fight wars with intense concentration. After all, it's what we were trained to do. Focus. Execute. Do whatever it takes to get the job done. Whatever you do, just don't dabble.

If you want to be a serious politician or business leader, why waste your time as a radio broadcaster or a Hollywood actor (Ronald Reagan)? Why split rails or get lost among the pages of Aesop's Fables (Abraham Lincoln)? Why become a lawyer when you could be fighting for peace (Mohandas Ghandi, who, by the way, was nominated five times, but was never a recipient of the Nobel Peace Prize. Martin Scorsese: you're in good company.)

History's greatest leaders were also history's greatest dabblers. They were great problem-solvers not only because of how they thought (big) but how they lived (broadly). In order to nurture a brave new world of creative problem-solvers, we need to train leaders who can think "sideways" (across conventional boundaries and between the lines). We need creative leaders not experts. The only effective way for America to remain relevant in the 21st century is to reinvent itself through creativity and innovation. The mandate for America 2.0 is a creative imperative.

Where to start?

First, we need to go back to school - not the institution, rather the mentality. The origins of the word "school" meant "serious activity without the pressure of necessity". In ancient Greece, this manifested itself in schools as places where students had the opportunity to read, to contemplate, and to bask in knowledge from a variety of disciplines. Today, schools have become vocational training grounds - graduating specialists instead of generalists, technicians in lieu of leaders, and managers instead of creators. We desperately need a return to broad-based education - programs that educate the whole child, not just help to promote his or her natural strengths.

Second, we need to give people more time and space to think. That involves unshackling our corporate leaders from the death knell of quarterly earnings calls, increasing our funding of basic science, and encouraging a spirit of entrepreneurship that made America 1.0 the killer application of 19th and 20th century governance.

And finally, we need to encourage innovation that creates more than cool gadgets like iPhones and flat-panel televisions (although, Apple, please don't stop, we love you), but innovation that also improves how we govern, how we teach, and how we lead. In search of the next Eureka moment for America, we need to bring back the dilettante.