Tag Archives: purpose

Getting Back to Measuring What Matters

GUEST POST from Greg Satell

“Not everything that can be counted counts and not everything that counts can be counted,” is a quote often attributed to Albert Einstein, which I think aptly sums up the past 40 years. Since the 80s, we’ve been laser-focused on numbers and missed the underlying math. We’ve become finance-obsessed but lost track of economics.

Consider Jack Welch, who Fortune magazine named “Manager of the Century.” In the article explaining why he deserved such an honor, it lauded the CEO’s ability to increase the stock price and deliver consistent earnings growth, but nowhere did it refer to a breakthrough product or impact on society.

There’s a good reason for that. As NY Times columnist David Gelles explains in, The Man Who Broke Capitalism, Welch increased profits largely by firing workers, cutting investment and ‘financializing’ the firm. During his 20 year reign, innovation faltered and the company produced less, not more. Clearly, we need to reevaluate what we consider valuable.

What’s The Purpose Of A Company?

In a famous 1937 paper, Ronald Coase argued that the economic function of a firm was to minimize transaction costs, especially information costs. For example, it makes sense to keep employees on staff, even if you might not need them today, so that you don’t need to search for people tomorrow when important work needs to be done..

In 1976, Michael Jensen and William Meckling built on Coase’s work in their groundbreaking paper entitled The Theory of The Firm, which asserted that the purpose of the firm was to make money for its owners. They further argued that there is a fundamental principal-agency problem between managers and owners because their interests are not perfectly aligned.

These were brilliant works of economic theory, but as reflections of reality they are somewhat absurd. People start businesses for all sorts of reasons, profits being just one motivation. That’s why we have public benefit corporations and socially responsible investment funds. Heirs such as Abigail Disney have spoken out strongly against corporate greed.

There is simply no basis for the notion that owners of businesses care only about profits, much less the stock price over a given period. Yet during the 1970s and 1980s there was a growing conservative intellectual movement that argued that managers had a moral responsibility to increase shareholder value at the expense of pretty much everything else.

Today, many portray the conservative movement behind the nation of shareholder value as evil and greedy. Most of the evidence indicates that its leaders thought they were doing the right thing. It seems that there were more fundamental errors at play.

Management By Algorithm

In the 1920s , a group of intellectuals in Berlin and Vienna, became enamored by an idea that came to be known as logical positivism, that human affairs should be subjected to the same logical rigor as physical sciences. It failed miserably and, when Kurt Gödel published his incompleteness theorems in 1931, it was completely discredited.

Yet the strain of thought that arose in the 1970s that gave rise to Jack Welch’s brand of capitalism was essentially the same thing. It was, in effect, management by algorithm, in which human agency was eschewed and decisions were boiled down to a single variable to be optimized. Pretty much everything else could be blissfully ignored.

Does a particular action further the mission of the enterprise? It doesn’t matter as long as the stock price goes up. Will a merger of two companies undermine market forces and restrain trade? Unless regulators can prove that prices will go up, they have no right to step in. What should govern relations between nations? They should simply pursue their interests.

These ideas failed for the same reason that the original theory of logical positivism did. The world is a messy place, with lots going on. You can’t simply boil complex problems down to a single variable—or even a limited set—and not lose important information in the process. The notion that you could was naive and reckless.

The Cost Of Carelessness

To understand why the Welch era went so badly, let’s look at one common practice that took hold in the 1980s and 90s: Offshoring. From a shareholder value perspective, it has an intuitive logic. You move your factory from high wage countries such as the US to low wage countries such as China and pocket the savings. You lower costs and increase profits, at least in the short-term.

Yet that analysis omits some important factors. First of all, it undermines trust among employees, suppliers and other partners when relationships are treated as purely transactions. Also, a Harvard study found that moving the factory floor thousands of miles away from R&D reduces knowledge transfer and has a negative effect on innovation.

Looking back, it’s easy to see how this played out at GE. The company became more profitable, but less productive. For decades, it failed to innovate. Its last major invention was the CT scanner, which came out in the 1970s, before Jack Welch took the helm. Today the company is worth about $60 billion, roughly the same as back in the 90s.

The results for society are just as clear. Our economy has become markedly less productive, less competitive and less dynamic. Purchasing power for most people has stagnated. Life expectancy in the US has decreased in a number of years over the past decade. Anxiety and depression, which have been rising for a while, accelerated during the pandemic.

Creating Mission-Driven Organizations

The statistician George Box famously said, “All models are wrong, but some are useful” and that’s especially true of economic models. When Ronald Coase argued that the “nature of a firm” was to reduce transaction costs, he didn’t mean that was the only purpose of an enterprise. To argue that there is a principal-agent problem between owners and managers should not imply that it only applies to profits.

In fact, as Andrew Winston and Paul Polman explain in their book Net Positive, many practices that aren’t sustainable depress profits in the long run. Running an enterprise that dismisses the interests of customers, partners and communities is destined for trouble. Sooner or later, there will be a reckoning.

In the final analysis, the purpose of an enterprise is its mission. When we think of great founders such as Henry Ford, Sam Walton and Steve Jobs, they had vastly different purposes in mind, but it was fulfilling that purpose that drove profits. Ford was passionate about the power of transportation. Walton was fanatical about serving the customer. Can you imagine what Steve Jobs would have said about an ugly product that could make him a lot of money?

That’s what we’ve gotten wrong over the last 50 years. We’ve been counting the wrong things. Economics should serve people, not the other way around. The success of a society needs to be measured by the well-being of those who live in it. If companies profit, but our people are impoverished, our air and water are more polluted, our children less educated, we live unhappy lives and die deaths of despair, what have we really gained?

— Article courtesy of the Digital Tonto blog
— Image credit: Unsplash

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Purpose Has Transformative Power

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Purpose Has Transformative Power

GUEST POST from Greg Satell

Wherever I go in the world to speak and advise organizations, I always get the same question: “How can I get people to listen to my ideas?” The truth is that no one wants to listen to your ideas unless they solve a problem that is meaningful to them. So many initiatives fail because leaders get so focused on their passion for an idea that they fail to communicate it effectively.

People already have enough going on in their lives with their own responsibilities, ambitions and dreams. They have families to take care of, friends that they want to spend time with and their own ideas that they want to pursue. The status quo always has inertia on its side and never yields its power gracefully.

The truth is that good ideas fail all the time. In the two decades I have been researching and advising leaders about transformation, what I have found is that few have trouble coming up with new concepts. The hard part is to get others to buy in and work together towards a common purpose. That can only be done in the context of shared sense of values and mission.

Why Occupy Not Only Failed, But Could Never Succeed

On September 17, 2011, #Occupy Wall Street took over Zuccotti Park, in the heart of the financial district in Lower Manhattan. Declaring, “We are the 99%,” they captured the attention of the nation and then the world, eventually growing to encompass protests in 951 cities across 82 countries.

The protesters were angry and rightly so. A global economic elite had bilked us out of trillions and then gotten off scot-free. However, despite all of the self-righteous indignation, they offered no alternate vision of how they wanted things to be. There were no proposals for legislation, alternative business models or anything else really, just anger and frustration.

As Joe Nocera noted in the New York Times, the Occupy movement “had plenty of grievances, aimed mainly at the ‘oppressive’ power of corporations,” but “never got beyond their own slogans.” It’s never enough to merely point out what you don’t like — you need to put forward a clear idea of what you want instead.

When General Stanley McChrystal sought to transform military operations in Iraq, his mantra was “it takes a network to defeat a network” and he built his strategy for change around that one basic principle. Lou Gerstner pulled off one of the most extraordinary turnarounds in history by refocusing his organization from its proprietary “stack” of products to its customers’ “stack” of business processes.

A sense of grievance is never enough to bring change about. You need to put forward an affirmative vision of tomorrow.

How the Mission Drives Your Strategy

We usually think of strategy as a rational, analytic activity, with teams of MBA’s poring over spreadsheets. We often forget that strategy has to have a purpose and that purpose is almost always personal and emotive. Great strategy starts, not with analysis, but from defining and committing to a mission.

Strategy is never created on an empty canvas. While we can make rational assessments about whether we want to pursue a strategy based on low costs, differentiation or an attractive niche. We can, through investments and divestments, fill in missing pieces on a PowerPoint chart, but the fate of a strategy ultimately hinges on personality and ambition.

The success of Apple can’t be separated from Steve Jobs’ ambition to weave technology and design into products that were “insanely great.” Southwest’s dominance in the travel industry is a direct consequence of Herb Kelleher’s mission of being “THE low cost airline,” which drove everything he did from the planes he bought to which routes he competed on.

As Adam Michnik, one of the key intellectual leaders behind the Solidarity movement in Poland, put it, “Start doing the things you think should be done, and start being what you think society should become. Do you believe in free speech? Then speak freely. Do you love the truth? Then tell it. Do you believe in an open society? Then act in the open. Do you believe in a decent and humane society? Then behave decently and humanely.”

Any vision for the future needs to be rooted in desire and desires are essentially personal. They are deeply entrenched in our sense of self.

The Value of Values

The 2008 financial crisis posed serious challenges for every business. With sales taking a nosedive, companies had to make painful cuts to rein in costs. In the vast majority of cases, that meant layoffs and millions lost their jobs. It’s one of those understandable misfortunes.e No one likes it, but few see alternatives.

The steel giant Nucor, however, had pledged never to lay off employees and it cost it dearly. In 2009, the company lost $294 million dollars. At the time, many saw the move as quixotic and impractical. Yet the results speak for themselves. Today the company is valued more than 30% higher than its closest rival ArcelorMittal S.A., with significantly higher profit margins and twice the return on equity.

In The Good Jobs Strategy MIT’s Zeynep Ton tells a similar story about Mercadona, Spain’s leading discount retailer, when it needed to cut costs in 2008. Rather than cut wages or reduce staff, it asked its employees to contribute ideas. The result was that it managed to reduce prices by 10% and increased its market share from 15% in 2008 to 20% in 2012.

Values are how an enterprise honors its purpose. Yet living up to them involves certain costs. You can’t say you value employees and then lay them off at the first sign of trouble, just like you can’t say you value innovation and obsess about quarterly earnings. You can’t commit to a purpose without making hard choices.

We Need to Start Asking Different Questions

When the Business Roundtable issued a statement in 2019 that discarded the old notion that the sole purpose of a business is to provide value to shareholders, many were dismayed. Some thought it was just another example of misguided altruism by “elites.” Others saw it as a cynical and disingenuous ploy.

The truth is that the whole idea of shareholder capitalism was a cop-out. It gave leaders an excuse for not making choices because it implied that whatever the stock market valued was somehow more relevant than human agency. The anonymous collective of the market was primary, while individual choice was considered to be less consequential.

The ascendant concept of “stakeholder capitalism,” unfortunately, isn’t much better. Surely we can’t value all stakeholders equally. So which communities should we choose to serve? Which consumers do we value over others? Which partners do we choose to get in bed with? What standards should we insist that our suppliers meet?

None of these are easy questions. If for instance, we stop working with suppliers who don’t meet certain environmental or governance standards, we take away jobs from certain communities and run the risk of diminishing our ability to serve our customers. So we need to be thoughtful and offer intelligent standards making tough and uncertain choices

The reason so many organizations find themselves unable to pursue a purpose isn’t because they don’t want to, but because it is hard. Purpose doesn’t begin with a single step, but with a diverging path. We must choose one direction at the expense of another, or stay mired and lost, unable to move forward.

— Article courtesy of the Digital Tonto blog
— Image credits: Dall-E

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Focus your Emotional Energy Purposefully

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Focus your Emotional Energy Purposefully

GUEST POST from Janet Sernack

When I exited my corporate career more than thirty-five years ago, I was privileged to be regarded and respected as the Fashion Direction Manager for the Grace Bros Department Store group, one of Australia’s most senior women in retail management. This launched my global reputation as a fashion and lifestyle marketing innovator. In this exciting role, I was responsible for designing and implementing a company-wide fashion information system for apparel, accessories, homeware, merchandising, and advertising. This required me to focus my emotional energy on researching, analyzing, and conceptualizing global fashion and lifestyle trends and adapting them to suit the Australian consumer lifestyle.

It was a dream role before the invention of the Internet, the implosion of the mass media, and the dominance of fast fashion. It required our team to focus their emotional energy on intensively researching different global and diverse media sources, including yarn, textile, couture, designer, ready-to-wear shows, trade journals, magazines, and seasonal sales data.

Generating creative thinking

Creativity is about connecting things, and in the fashion world, the best designers make the most unlikely connections to produce novel and wondrous creations. As my professional background included graphic and fashion design and marketing, I could further hone my associative (lateral and connective) thinking skills to think creatively and critically in this role. To focus my emotional energy and attention on guiding my intuition, values, and decisions on the needs and wants of buyers, merchandisers, marketers, and customers. To emerge, diverge and converge the key connections and patterns occurring globally in the fashion world and external complex fashion systems. I also learned the importance of being customer-focused and the value and role of being empathic with customers, manufacturers’ value chains and fashion information system users.

It was an incredibly emotional, physical, and stressful role, which required me to travel overseas four times a year to stay current on the different global fashion streams.

This caused my life to melt into being at work, the gym, or the airport.

Stress-induced exhaustion and burnout

This resulted in my first profound encounter with stress-induced exhaustion and burnout, which hit me right in the face one morning when my body refused to move, and I was unable to get out of bed.

I have also noticed that many of my global coaching clients have faced a similar challenge: stress-induced exhaustion and burnout. Fortunately, they can use the coaching partnership to unearth their particular pattern and unresourceful ways of being and learn how to focus their emotional energy to disrupt, dispute, and deviate from it into a more resourceful way of being and acting. However, it has shifted the coach’s role as a healer, making it even more critical in our current environment.

Focusing emotional energy on pursuing mattering, meaning and purposeful work

This ultimately manifests as a crisis and becomes a defining moment. In my case, I made a fundamental choice to focus emotional energy on pursuing meaning, mattering, and purposeful work, which still focuses my full attention and drives me today.

It created a “crack, “or an opening and threshold for making two fundamental choices: to embark on a healing journey to become the kind of person I wanted to be and to find a way to focus my emotional energy on making the difference I wanted to make in the world.

This enabled me to use my knowledge, experience, and skills to establish Australia’s first design management consultancy.

What is emotional energy?

Emotional energy is the catalyst that fuels creativity, invention, and innovation.

Understanding and harnessing this energy inspires and motivates individuals to explore and embrace creative and critical thinking strategies, now in partnership with AI.

When a person’s emotional energy has contracted, it results in constrained, negative, pessimistic, and even catastrophic thinking habits, which have a toxic impact on the person’s identity and emotional and physical well-being.

This means there is no space, doorway, or threshold to take on anything new, novel, or different. Nor can they imagine what might be possible to evolve, advance, or transform their personal or professional lives in an uncertain future.

Emotional energy catalyses and directs your intrinsic motivation, conviction, hope, positivity, and optimism to approach your world purposefully, meaningfully, and differently.

When you are true to your calling or purpose, you will make extra efforts to be healthier, positively impact your well-being, and improve your resilience.

How does this apply to leadership in uncertain times?

“I think leaders need to remember that they are in the energy management business,” says Halsey. “Their role is to keep people focused, energized, and positive about themselves and their work. They may be unable to change external circumstances, but they can create a safe, nurturing, and empowering work environment. By setting clear goals, diagnosing individual needs, and providing the right leadership style, leaders can help their teams thrive—even in uncertain times.”

People want work to be less of a job and more of a calling.

According to Martin Seligman and Gabriella Rosen Kellerman in their book Tomorrowmind, a US-based research study that included two thousand employees of all ages, industries, tenures, and incomes, revealed that people craved more meaning at work regardless of sector or position. Everyone wanted work to be less of a job and more of a calling and gave their current jobs a rating of 49, which suggests that their “meaning cups” are only half full.

This search for meaning, mattering, and being of service to humanity in a different and value-adding way enables innovators, entrepreneurs and intrapreneurs to cultivate the emotional energy and develop the agility required to drive their creativity, invention and innovation endeavors.

It is the most critical ingredient that motivates, empowers, enables, fuels and sustains innovators, entrepreneurs, and intrapreneurs to adapt, survive and thrive on the innovation roller coaster.

Channeling emotional energy meaningfully and purposefully

From my leadership training and coaching experience, I have learned that most people desperately want their lives to make sense and be meaningful and to know that who they are and what they do matters. It is possible to link meaning and mattering to being intentionally motivated and directed by your core values to make a difference and a contribution that provides value and significance to someone, a community, or society.

Being purposeful

Being purposeful focuses your emotional energy, guides your life decisions influences your behaviors, shapes your goals, offers a sense of direction, and creates meaning. Rather than engaging in shallow, empty, or pointless activities, it gives you agency.

In our uncertain, volatile and disruptive world, it is crucial to think about your “purpose in life.” Be like an Entrepreneur and link your purpose as a guidepost to help you deal with uncertainty, navigate it better, mitigate the damaging effects of long-term stress, and become psychologically resilient.

People with a strong sense of purpose direct and focus their emotional energy on what really matters to them. They tend to be more agile and adaptive, hardier and resilient, and more able to refocus and recover quickly from adverse and catastrophic events.

According to McKinsey & Co.’s article “Igniting individual purpose in times of crisis,” purposeful people also live longer and healthier lives and are essential to employee experience. This results in higher levels of employee engagement, more substantial organizational commitment, and increased feelings of well-being. Like many entrepreneurs, people who find their purpose congruent with their jobs tend to get more meaning from their roles, making them more productive and more likely to outperform their peers.

How can you add more meaning, mattering and purpose?

Meaning is an outcome of purpose, and many people, due to their experience of the pandemic and hybrid workplace in a chaotic and uncertain world, are seeking to re-engage with their work and workplaces by focusing their emotional energy on improving their well-being and creating more purposeful, balanced, and meaningful lives.

This is a short section from our new book, “Conscious Innovation – Activating the Heart, Mind and Soul of Innovation”, which will be published in 2025.

Please find out more about our work at ImagineNation™.

Please find out about our collective learning products and tools, including The Coach for Innovators, Leaders, and Teams Certified Program, presented by Janet Sernack. It is a collaborative, intimate, and profoundly personalized innovation coaching and learning program supported by a global group of peers over 9-weeks. It can be customized as a bespoke corporate learning program.

It is a blended and transformational change and learning program that will give you a deep understanding of the language, principles, and applications of an ecosystem-focused, human-centric approach and emergent structure (Theory U) to innovation. It will also up-skill people and teams and develop their future fitness within your unique innovation context. Please find out more about our products and tools.

Image Credit: Unsplash

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Purpose Matters Because …

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GUEST POST from Greg Satell

Yet the primacy of shareholder value is hardly a well-established economic principle. The concept does not appear even once in Adam Smith’s seminal treatise, The Wealth of Nations. In fact, it is a relatively recent idea and when the economist Milton Friedman first proposed it in 1970, it was considered radical, even subversive, certainly not to be taken as gospel.

It has also been tremendously unsuccessful. Since Friedman’s essay we have become less productive, not more. One reason for the poor results is that Friedman and others like him failed to recognize that our economy is made up of people, not inanimate pieces of data that make up economic charts, and these people search for meaning and purpose in their lives.

Failed Cartesians

Often regarded as the father of modern philosophy, Rene Descartes was obsessed with human fallibility. Cursed with imperfect senses and emotions that can warp logic, he sought to build a new intellectual foundation based on cool, rational thought. “I think, therefore I am,” he wrote, proving that at least one thing could be known without referring to the use of the senses.

Descartes’ ideas led to the Rationalist school of philosophy as others tried to build on his work. The idea that, through pure reason, we could see truths with greater clarity held enormous attraction for intellectual giants such as Gottfried Leibniz and Baruch Spinoza. Unfortunately, other than in the field of mathematics, little was achieved.

That didn’t stop others from trying though. In the early 20th century, the Vienna Circle arose in response to the work of Ludwig Wittgenstein and others in order to create a logical system to guide human affairs. Wittgenstein himself would later disown it and Gödel’s incompleteness theorems would eventually expose the whole exercise as a failure.

Undeterred by centuries of failure, business consultants have tried to sell the same idea to executives. Yet despite fancy names like scientific management, financial engineering and six sigma, these didn’t fare any better. One study found that of 58 large companies that announced Six Sigma programs, 91 percent trailed the S&P 500 in stock performance.

Still, many remain undeterred. The idea of an infallible technocracy is just too tempting for many to resist.

The End Of History And The Washington Consensus

In 1992, Francis Fukuyama published The End of History to great acclaim. The Cold War had ended and capitalism was triumphant. Communism was shown to be a corrupt system bereft of any real legitimacy. It seemed that, as many philosophers had predicted, we had reached an end point in which human sociocultural evolution was complete.

A new ideology took hold, often referred to as the “Washington Consensus,” that preached fiscal discipline, free trade, privatization and deregulation. The world was going to be remade in capitalism’s image. Countries that hit hard times would be offered aid from multilateral institutions like the IMF and the World Bank in return for favored policy reforms.

Many pointed out that international bureaucrats were mandating policies for developing nations that citizens in their own countries would never accept. Strict austerity programs led to human costs that were both significant and real. In a sense, the Soviet error was being repeated. Ideology was being put before people.

Yet Fukuyama’s message had been misunderstood. His book was not meant as a prophecy, but as a warning. He pointed to the ancient Greek concept of thymos, a spirited blend of dignity and pride, to caution against rationalist explanations for human behavior. Given a choice between a well trod path and one less certain, he predicted that many will “set their eyes on a new and more distant journey.”

The Silicon Valley Myth

I was working on Wall Street in 1995 when the Netscape IPO hit like a bombshell. It was the first big Internet stock and, although originally priced at $14 per share, it opened at double that amount and quickly zoomed to $75. By the end of the day, it had settled back at $58.25 and, just like that, a tiny company with no profits was worth $2.9 billion.

It seemed crazy, but economists soon explained that certain conditions, such as negligible marginal costs and network effects, would lead to “winner take all markets” and increasing returns to investment. Venture capitalists who bet on this logic would, in many cases, become rich beyond their wildest dreams.

The conditions for increasing returns, however, only apply to a narrow swath of businesses, mostly limited to software and electronic gadgets. Nevertheless, entrepreneurs and their investors became convinced that they could apply the Silicon Valley model anywhere, leading to high profile failures like WeWork and Theranos.

That’s the Silicon Valley myth, that the rational logic of code can be applied to any problem. It’s the same fantasy that has been repeated throughout history, handed from Cartesians to logical positivists to “scientific” managers and now to the software engineers, puffed up with stock options who can’t seem to understand why everyone else doesn’t “get it.”

The costs have been substantial. Evidence suggests that the billions wantonly plowed into massive failures are crowding out real businesses. Productivity has been depressed for half a century. The Facebook papers revealed a culture that has lost its way, so single-mindedly focused on optimizing engagement it lost sight of the humanity it was supposed to engage.

Identity, Dignity And Purpose

If you believe in a rational Cartesian universe, a business is little more than a set of transactions. The nature of the firm, in this view, is simply to minimize transaction costs and skilled managers should focus on maximizing bargaining power among stakeholders in order to build a sustainable competitive advantage. Yet the world doesn’t actually work that way.

Consider the ultimatum game. One player is given a dollar and needs to propose how to split it with another player. If it is accepted, both players get the agreed upon shares. If it is not accepted, neither player gets anything. If the world was completely rational, the second player would accept even a single penny. After all, a penny is better than nothing.

Yet decades of experiments across different cultures show that most people do not accept a penny. In fact, offers of less than 30 cents are routinely rejected as unfair. It offends people’s dignity and sense of self. For many of the same reasons, there is increasing evidence that financial targets don’t motivate employees. No one wants to be a cog in someone else’s wheel.

That is the value of purpose. It bolsters, rather than undermines, our identity. When people feel that they are part of a common project, they feel a sense of ownership, that they are ends in themselves rather than means to an end. It uplifts, rather than demeans, us. It fortifies, rather than undermines, our spirit.

What separates great leaders from mediocre managers is that the leaders do more than calculate, they provide meaning to an endeavor that makes it more than merely a common enterprise. It becomes a collective mission.

— Article courtesy of the Digital Tonto blog
— Image credits: Unsplash

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Six Key Habits of Great Leaders

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Six Key Habits of Great Leaders

GUEST POST from David Burkus

In a world of growing complexity and seemingly constant crisis, we need great leaders more than ever. But when you look at the stories in the press or check the staggering numbers of burnout and disengagement in surveys, it seems like fewer and fewer leaders are rising to the challenge. It starts to seem like becoming a great leader is too complicated and nearly impossible.

But when you survey people on what makes them appreciate and follow leaders, it turns out there are just a few simple habits that set great leaders apart. Simple, but not necessarily easy.

In this article, we will explore what great leaders do across six key habits that make them influential and their teams successful.

1. Promote Purpose

The first habit great leaders do is to promote purpose. Great leaders understand the importance of connecting the larger organizational purpose to specific projects and tasks. They are able to do more than regurgitate the mission statement of the organization. They can draw a connection between the organizational purpose and the work of their specific team. In doing so, they inspire their team members to see the bigger picture and understand how their contributions align with the overall goals. Furthermore, great leaders shift the conversation towards “who” benefits from the work and promote pro-social purpose. This helps team members feel a sense of fulfillment and motivation in their work, knowing that they are making a positive impact.

2. Clarify Vision

The second habit great leaders do is to clarify vision. A clear vision is crucial for the success of any organization, and great leaders excel at explaining what success looks like and where the organization is heading. They are able to paint a vivid picture of the world or the specific people the organization serves and what it will look like when the vision is achieved. Even when plans change, great leaders provide a clear vision of what a good job looks like. They use the concept of “commander’s intent” to communicate the vision of a successful mission, ensuring that even in constant turmoil, everyone understands the desired outcome and can align their efforts accordingly.

3. Create Accountability

The third habit great leaders do is to create accountability. Great leaders understand the importance of holding people accountable to their jobs and calling them up to a higher standard. They ensure that individuals are held accountable to the result, not just the tasks. By providing the necessary resources for individuals to achieve their goals, great leaders empower their team members to take ownership of their work and deliver exceptional results. Leaders provide autonomy to team members, allowing them to decide how the work gets done. But they’re also reminding everyone on the team that autonomy means greater accountability to the team, not less. They are leaders who hold their team to a higher standard and encourage them to perform even greater.

4. Provide Fair Feedback

The fourth habit great leaders do is provide fair feedback. Feedback is a crucial tool for growth and development, and great leaders excel at providing fair feedback. They tailor their feedback to the individual’s situation, skills, resources, and accountability goals. Great leaders give feedback that is in equal proportion of positive to negative, focusing on building upon the great things. Poor leaders often spend most of their coaching time on constructive criticism—which can be demotivating and decrease performance. Instead, great leaders create a balance between appreciation and constructive criticism to motivate and improve performance, ensuring that team members feel valued and supported in their professional growth.

5. Build Safety

The fifth habit great leaders do is to build safety, as in psychological safety. A psychologically safe environment is essential for fostering innovation and growth, and great leaders understand this. They provide feedback in a way that does not blame individuals for things outside of their control, encouraging transparent and honest conversations about failures to extract lessons and improve. By establishing a culture of safety, great leaders create an atmosphere where team members feel comfortable taking risks and learning from their mistakes. This leads to increased creativity, collaboration, and ultimately, success.

6. Develop Oneself

The final habit great leaders do is to develop themselves. Great leaders recognize the importance of continuous learning and self-improvement. They take responsibility for developing themselves as well as others. With a growth mindset, they actively seek out new information and skills, constantly striving to become better leaders. Great leaders understand that they need to develop themselves in the areas that their team needs in order to be better leaders. By investing in their own growth, they set an example for their team members and inspire them to also pursue personal and professional development.

The habits discussed in this article are what make great leaders worth following. They’re simple, but not necessarily easy. And they need to be done on a regular basis. But great leaders understand the importance of these habits and strive to incorporate them into their leadership style. By promoting purpose, clarifying vision, creating accountability, providing fair feedback, building safety, and developing oneself, leaders can inspire their teams to do their best work ever.

Image credit: Pixabay

Originally published on DavidBurkus.com on August 21, 2023

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Five Secrets to Being a Great Team Player

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Five Secrets to Being a Great Team Player

GUEST POST from David Burkus

Our world requires collaboration. Just about every job now requires collaborating on teams and every employee’s calendar is full of evidence of collaboration. In one study, up to 85% of participants’ work weeks were spent working in direct collaboration or a result of collaboration with a team.

But it can be difficult to collaborate with people whose perspectives, preferences, and personalities are different from our own. Still, getting what you want from your work and career requires being a great team player. And if you want to be a leader, you’ll need to be a great team player first. (And really…that will never stop…even leaders often lead in teams.)

In this article, we’ll outline the five (5) essential qualities needed to become a great team player—and offer a few ways to develop those qualities and get them noticed.

1. Capable

The first quality is that great team players are capable. This is a fundamental quality of anyone working, really. You must have the necessary knowledge, skills, and abilities to do the tasks being asked of you. But on teams, it’s just as important to be seen as capable by the other members of your team. The team needs to know they can rely on you—and that when you say you’ll have something completed it will be completed on time and as you said.

Working with teams, the way you demonstrate your capability is two-fold: Do what you say you’re going to do, and don’t say something you don’t know to be true. Over time, keeping these two commitments will demonstrate that you can be relied on—because you are capable.

2. Humble

The second quality is that great team players are humble. While great team players are capable, they also don’t think too highly of the skills and knowledge they have. Great team players don’t think little of themselves, they just understand that the needs of the team come before their own. Humble teammates aren’t fighting for their ideas to be heard all the time or seeking to dominate in debates. Instead, they use their voice to amplify others and contribute the bigger, team-wide wins.

Working with teams, humility is often inferred based on behavior in meetings, whether in-person or virtual. Humble teammates aren’t trying to be the lead role in the meeting, instead they’re often acting as a facilitator ensuring every teammate has a chance to speak. And when they do speak, it’s often to build upon others’ ideas instead of constantly insisting on their own.

3. Helpful

The third quality is that great team players are helpful. The best way to put capabilities and humility into practice is by helping others on the team—not constantly trying to convince others to help you. Great team players are the ones in meetings thinking about what they can contribute and how they can help others get unstuck. At the same time, it’s important to be careful not to over-help and lose the needed time to complete your own commitments.

Working with teams, the easiest way to assess your helpfulness is to audit your calendar. Look at everything scheduled on your calendar last week and compared the appointments that furthered your personal goals versus the appointments that helped others hit their goals. You don’t want helpful appointments to dominate, or even be half and half. But if 25 percent of your calendar is spent helping others, then it’s a safe assumption that they see you as helpful.

4. Flexible

The fourth quality is that great team players are flexible. As teams work to complete projects, changes will happen—pivots are required. All work requires flexibility. But often in the face of change many people respond by becoming more stubborn and insisting even more on their original ideas or plan of action. Great team players serve the team by reading the changes in the environment and helping the plan pivot quickly.

Working with teams, the most common changes that require flexibility often happen around priorities. New tasks get added to the team’s list, or environmental changes reshuffle what is urgent. When that happens, taking the lead to check-in with the team and discuss how changes affect priorities can keep the team more productive and keep you seen as a flexible, but high performer.

5. Purposeful

The fifth quality is that great team players are purposeful. All great teams have a sense of purpose behind their work—they know why their work matters and that keeps them bonded together and motivated to achieve more. Great team players amplify this purpose by becoming a source of supporting stories and constant reminders about that purpose. This includes not just talking about why the work that team does matters, but also how it fits into the larger mission or vision of the organization and why that matters.

Working with teams, the easiest way to reinforce purpose is to share gratitude on a regular basis. But not just any old thank you note. Purposeful gratitude expresses appreciation for the effort someone else put in, but also includes a reminder of how that effort helped serve the purpose of the team. Regularly done, it not only builds camaraderie amongst the team, but it also enhances motivation.

As you review this list, one or two qualities probably stood out as ones you already embodied—but one or two probably stood out as ones you need to work on. That’s true for nearly everyone, and it creates a great plan of action. Get started improving where you need to—and get started getting noticed where you already shine. That will help you not only raise your own performance, but help support everyone else on the team as they do their best work ever.

Image credit: Unsplash

Originally published at https://davidburkus.com on April 10, 2023

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The Shareholder Value Myth

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The Shareholder Value Myth

GUEST POST from Greg Satell

The Business Roundtable, an influential group of almost 200 CEOs of America’s largest companies, a few years ago issued a statement that discarded the old notion that the sole purpose of a business is to provide value to shareholders. Instead, it advocated serving a diverse group of stakeholders including customers, employees, suppliers and communities.

The idea is not a new one. In fact, Jack Welch once called shareholder value the dumbest idea in the world. Nevertheless, The Wall Street Journal opinion page immediately pounced, suggesting that the move was just an attempt to “appease the socialists” and that it would undermine financial accountability.

It’s hard to see how acknowledging accountability to stakeholders other than investors would undermine accountability to investors. Shareholders, after all, have the power to fire CEOs. Even more importantly though, the notion that performance can be reduced down to a single metric is foolhardy and dangerous. Managing a business is simply tougher than that.

The Principal-Agent Problem

Every business seeks to make a profit. Ones that do not achieve that basic requirement do not stay in business for long. However, that doesn’t mean that the only reason a business exists is to make money. Clearly, in order to earn a profit over the long term, you need to provide value for others. Anybody who has ever run a business knows this.

Yet a large corporation is very different from an ordinary business in that there is what’s known as a principal-agent problem. The shareholders are a dispersed group that have relatively little information, while the managers of the business are a small group with an asymmetric informational advantage.

So you can see how the concept of shareholder value can be attractive. If you can reduce performance down to a single metric, such as stock performance, then the principal-agent problem is solved. Shareholders, as principal owners of the company, can hold managers, as their agents, accountable.

Yet this is a fantasy. There are many things that a manager can do, such as reducing investment or making a lot of sexy acquisitions, that can increase short-term financial performance, but hurt performance in the long run. So the concept of shareholder value has always been a murky one.

From Value Chains To Ecosystems

For decades, the dominant view of strategy was based on Michael Porter’s ideas about competitive advantage. In essence, he argued that the key to long-term success was to dominate the value chain by maximizing bargaining power among suppliers, customers, new market entrants and substitute goods.

Yet there was a fatal flaw in the notion that wasn’t always obvious. In an industrial economy, where technology is relatively static, value chains are stable. However, in a fast moving information economy, firms increasingly depend on ecosystems to compete. That drastically changes the game.

Ecosystems are nonlinear and complex. Power emanates from the center instead of at the top of a value chain. You move to the center by connecting out. So while an industry giant may possess significant bargaining power, exercising that bargaining power can be problematic, because it can weaken links to other nodes in the ecosystem.

So the increased emphasis on stakeholders is not merely some newfound socialistic altruism, but a realistic strategic shift. In a networked-driven world you need to continually widen and deepen links to other stakeholders within the ecosystem. That’s how you gain access to resources like talent, technology and information.
Building Power Through Gaining Trust

In a famous 1937 paper, Nobel Prize winning economist Ronald Coase argued that the function of a firm was to minimize transaction costs, especially information costs. For example, it makes sense to keep employees on staff, even if you might not need them today, so that you don’t need to search for people tomorrow when a job comes in.

Another way to minimize transaction costs is through building trustful relationships. If the stakeholders within ecosystems that you operate trust you, you gain greater access to information and decrease the amount of resources you need to spend on enforcing formal and informal norms. In fact, a study from Accenture Strategy recently found that building trust with stakeholders is increasingly becoming a competitive advantage.

In The Good Jobs Strategy MIT’s Zeynep Ton found that investing more in well-trained employees can actually lower costs and drive sales in the low-cost retail industry. While the sector is often thought of as highly transactional, her research indicates that a dedicated and skilled workforce results in less turnover, better customer service and greater efficiency.

For example, when the recession hit in 2008, Mercadona, Spain’s leading discount retailer, needed to cut costs. But rather than cutting wages or reducing staff, it asked its employees to contribute ideas. The result was that it managed to reduce prices by 10% and increased its market share from 15% in 2008 to 20% in 2012.

In other cases, competitors collaborate to improve their industrial ecosystems for customers. So it is should not be surprising that firms are increasingly investing in structures that are focused on ecosystems, such as Internet of Things Consortium, Partnership on AI and the Manufacturing Institutes. Again, power in an ecosystem resides at the center, not at the top, so to compete you have to connect.

Clearly, it could be argued that by investing in these partnerships, business are increasing shareholder value. However, to do so would be to essentially argue that investing in stakeholder ecosystems and pursuing shareholder value are equivalent, which reduces the debate to one of semantics rather than substance.

Manage For Mission, Not For Metrics

Perhaps one of the most interesting lines in the Business Roundtable statement was the assertion that “each of our individual companies serves its own corporate purpose,” because it acknowledges that the notion of purpose can’t be reduced to a single concept or metric.

Historically, the lines between industries were fairly clear-cut. Ford competed with GM and Chrysler. Later, foreign competition became more important, but the basic logic of the industry remained fairly stable: you produced cars and sold them to the public through a network of dealers.

Today, however, industry lines have blurred considerably. A company like Amazon competes with Walmart in retail, Microsoft, IBM and Google in cloud computing, and Netflix and Warner Media in entertainment. The company itself is much more than simply a bundle of operations competing in different value chains, but a platform for accessing a variety of ecosystems of talent, technology and information.

In much the same way, automobile manufacturers are making investments to transform themselves into mobility companies. To do so, they are building ecosystems made up of technology giants, startups and others. They are not seeking to “maximize bargaining power,” but rather to prepare for a future that hasn’t taken shape yet.

That’s why today, business leaders need to manage for mission, not for metrics. Building trustful relationships among a diverse set of stakeholders may not be as simple or as clear cut as “maximizing shareholder value,” but it’s increasing what profit-seeking businesses need to do to compete.

— Article courtesy of the Digital Tonto blog
— Image credit: Pixabay

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Attracting the Best

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How Purpose Becomes Your Talent Magnet

Attracting the Best - How Purpose Becomes Your Talent Magnet

GUEST POST from Art Inteligencia

In the relentless war for talent, organizations often compete on a transactional level: salary, benefits, and perks. While these are certainly important, they are no longer the decisive factors for top-tier professionals, especially for the younger generations entering the workforce. As a human-centered change and innovation thought leader, I am here to argue that the most powerful, sustainable, and effective talent magnet is not compensation, but **purpose**. In a world where meaning and impact are highly valued, a clear and authentic purpose is what separates a good company from a great one. It’s what moves an organization from a place where people simply work to a place where people are compelled to belong.

The modern workforce, particularly top talent, is looking for more than a paycheck. They seek alignment between their personal values and the mission of their employer. They want to know that their work contributes to something bigger than a profit margin. They are driven by a desire to solve meaningful problems and make a tangible difference in the world. When an organization can clearly articulate its purpose—its “why”—it creates a compelling narrative that resonates with the hearts and minds of potential employees. This isn’t about crafting a slick marketing campaign; it’s about embedding purpose into the very DNA of the company, from its core strategy to its daily operations. The result is a self-selecting talent pool of motivated, innovative, and deeply committed individuals.

The Four Pillars of Purpose-Driven Talent Attraction

Building an organization that attracts talent through purpose requires a commitment to four key pillars:

Authenticity and Integrity: Purpose must be genuine, not a performative facade. It must be reflected in the company’s actions, its products, and its leadership decisions. Hypocrisy is a powerful repellent for today’s talent.
Clear Communication: The “why” must be simple, inspiring, and consistently communicated to both internal and external audiences. It should be a constant theme in recruitment, onboarding, and internal communications.
Mission Alignment: Every role, from the factory floor to the executive suite, must be connected to the company’s purpose. Employees need to see how their specific contributions advance the larger mission, creating a sense of ownership and meaning.
Tangible Impact: Purpose must translate into tangible, measurable impact. Whether it’s a social, environmental, or technological impact, showing concrete results of the company’s purpose makes the mission feel real and achievable.

“You can rent a person’s hands with a salary, but you can only earn their heart with a purpose. And in the innovation economy, hearts are the most valuable asset.”

Case Study 1: Microsoft’s Transformation from “Know-It-Alls” to “Learn-It-Alls”

The Challenge:

In the early 2010s, Microsoft was a technology giant struggling with a stagnant culture. Employees were highly competitive, often working in silos, and the company was seen as a “know-it-all” culture. This environment made it difficult to attract top talent who were looking for collaborative, growth-oriented workplaces. CEO Satya Nadella’s vision for a new Microsoft was centered on a new purpose: **to empower every person and every organization on the planet to achieve more**. 🚀

The Purpose-Driven Solution:

Nadella didn’t just write a new mission statement; he fundamentally shifted the company’s culture. He focused on a **growth mindset**, encouraging employees to become “learn-it-alls.” This new purpose created a compelling narrative for potential hires, who were no longer just joining a software company but a mission-driven organization. Microsoft’s purpose became a powerful filter for talent, attracting individuals who were passionate about making a global impact through technology.

Talent Attraction: The new purpose helped Microsoft attract a new generation of engineers, designers, and leaders who were drawn to the company’s commitment to social and technological empowerment. This included talent from outside the traditional tech space, as the company’s mission resonated with a broader group of people.
Talent Retention: The growth mindset and a sense of shared purpose significantly increased employee engagement and retention. By linking individual roles to a global mission, employees felt a deeper sense of value and belonging, reducing the high turnover that had plagued the company in the past.
Innovation: The cultural shift led to a surge in innovation, as employees were encouraged to collaborate and experiment without fear of failure. Products like Microsoft Teams, which became a cornerstone of remote work, were born from this more open and purpose-driven environment.

The Result:

By shifting its core purpose and culture, Microsoft successfully revitalized its talent pipeline. It became a magnet for top talent, proving that a compelling mission can be a more powerful draw than just a high salary. The company’s market value soared, demonstrating that purpose and profit are not mutually exclusive but can, in fact, be mutually reinforcing.

Case Study 2: Warby Parker’s Vision for a Socially Conscious Business

The Challenge:

When Warby Parker launched in 2010, the eyewear market was dominated by a few large corporations, and a single pair of glasses was often prohibitively expensive. Co-founders Neil Blumenthal and David Gilboa’s purpose was to create a company that was both a successful business and a force for good. Their purpose-driven mission was simple: **to offer designer eyewear at a revolutionary price while leading the way for socially conscious businesses**. 👓

The Purpose-Driven Solution:

Warby Parker’s “Buy a Pair, Give a Pair” program was not just a marketing tactic; it was the core of their business model. For every pair of glasses sold, a pair was distributed to someone in need. This clear and compelling purpose became an instant talent magnet.

Talent Attraction: Warby Parker attracted talent who were passionate about making a difference. The company’s mission resonated with professionals who wanted to use their skills in retail, design, and technology to address a global health issue. They received a flood of applications from individuals who saw their work as a means to a greater end.
Culture of Purpose: This purpose permeated every aspect of the company’s culture. Employees were regularly involved in “giving trips” where they could see the direct impact of their work. This connection strengthened their commitment to the brand and its mission, creating a powerful sense of community.
Brand Loyalty: The purpose-driven model not only attracted top talent but also built an incredibly loyal customer base. This loyalty, in turn, reinforced the company’s mission and its value proposition to employees, creating a virtuous cycle of purpose, talent, and business success.

The Result:

Warby Parker successfully built a highly engaged and motivated workforce that was passionate about the company’s mission. Their purpose became a critical part of their recruitment strategy, attracting a wave of socially conscious professionals who were eager to contribute to a brand that aligned with their values. It proved that a clear purpose can attract, motivate, and retain top talent in a way that traditional incentives cannot.

Conclusion: Purpose is Not an HR Initiative, It’s a Strategic Imperative

In the new talent economy, purpose is no longer a “nice-to-have” or an HR initiative; it is a fundamental strategic imperative. The best talent is looking for more than a job; they are looking for a cause. They want to be part of an organization that is making a positive impact on the world, a brand they can be proud to work for and contribute to.

As leaders, our challenge is to move beyond the superficial and to truly embed purpose into the heart of our organizations. We must be authentic in our mission, transparent in our actions, and committed to showing the tangible impact of our work. By doing so, we will not only attract the most talented and innovative people but also build a more resilient, successful, and human-centered business. Your purpose isn’t just your north star for strategy; it’s your most powerful talent magnet.

Extra Extra: Futurology is not fortune telling. Futurists use a scientific approach to create their deliverables, but a methodology and tools like those in FutureHacking™ can empower anyone to engage in futurology themselves.

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Building a Culture of Purposeful Innovation

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Engaging Hearts and Minds

Building a Culture of Purposeful Innovation

GUEST POST from Art Inteligencia

In the high-stakes game of corporate strategy, innovation is often treated as a pure business function. We measure it with metrics like Return on Innovation Investment, patent counts, and new product launches. We manage it with processes, frameworks, and a sterile, bottom-line focus. While these tools are certainly necessary, they are far from sufficient. As a human-centered change and innovation thought leader, I am here to argue that the most transformative, lasting, and impactful innovation isn’t just about what you create; it’s about why you create it. The future belongs to organizations that have successfully engaged the hearts and minds of their employees and customers by building a culture of purposeful innovation.

Purposeful innovation is the strategic integration of a company’s mission and values into every stage of the innovation process. It moves beyond simply solving a market problem to solving a human problem—one that resonates with a deeper sense of meaning and social impact. When innovation is driven by purpose, it stops being a task and starts being a calling. It elevates the work from a mere job to a meaningful contribution, which in turn unlocks a level of passion, commitment, and creativity that no financial incentive alone can ever generate.

The Three Pillars of Purposeful Innovation

Building a culture of purposeful innovation requires a shift in mindset and a commitment to three core pillars:

1. A Shared “Why”: The first step is to clearly articulate and communicate the organization’s purpose. This isn’t just a mission statement on a wall; it’s a living, breathing set of values that guides every decision. Leaders must connect the day-to-day work of innovation to this larger purpose, helping every employee see how their contributions make a difference in the world.
2. Human-Centered Empathy: Purposeful innovation is rooted in a deep understanding of human needs, not just market trends. It requires teams to move beyond data points and financial models to truly empathize with the people they serve. This involves engaging with customers, listening to their frustrations, and understanding their aspirations.
3. Measurable Impact: While purposeful innovation isn’t just about profit, it is not an exercise in altruism without results. The most successful organizations measure their innovation not just in terms of revenue, but also in terms of social, environmental, or human impact. This dual-purpose metric provides a more holistic view of success and reinforces the “why” for the entire organization.

“Profit is not a purpose; it’s a result. When a company’s purpose is to improve lives, profit naturally follows as a measure of the value it has created.”

Case Study 1: Patagonia – The Purpose-Driven Pioneer

The Challenge:

For decades, the outdoor apparel industry was driven by a focus on performance and profit. Patagonia, a brand that began with rock-climbing gear, faced the challenge of competing in a crowded market without compromising its core values. Their “why” was not just to sell products, but to save our home planet.

The Purposeful Innovation Response:

Patagonia has integrated its purpose into every aspect of its business, making innovation a means to an end. Instead of innovating just for new features, they innovate for sustainability. For example, their Worn Wear program is a brilliant example of purposeful innovation. Instead of encouraging consumers to buy new products, they actively encourage them to repair, reuse, and recycle their gear. This program is not just a marketing gimmick; it is a fundamental part of their business model that directly aligns with their environmental purpose.

The Innovation: The Worn Wear program, which includes repair services, a marketplace for used gear, and a fleet of repair trucks.
The Purpose: To reduce consumption and keep products in use for longer, directly contributing to their mission of environmental stewardship.
The Impact: The program has reduced the company’s environmental footprint, built an incredibly loyal customer base, and created a new revenue stream, proving that doing good can also be good for business.

The Result:

Patagonia’s purposeful innovation has made it a leader in its industry and a gold standard for purpose-driven brands. By consistently aligning their business decisions with their core values, they have built an unshakeable level of trust and loyalty with their customers. Their innovation isn’t just about creating a new jacket; it’s about creating a better world, and their employees are deeply engaged in that mission.

Case Study 2: TOMS – The “One for One” Model

The Challenge:

In the early 2000s, TOMS Shoes entered a highly competitive footwear market. The challenge was not just to create a comfortable and stylish shoe, but to stand out in a way that resonated with a new generation of socially conscious consumers. Their “why” was to create a business that could address a social problem at its core.

The Purposeful Innovation Response:

TOMS’s innovation was not in its product design, but in its business model. They pioneered the “One for One” model, a simple yet powerful purpose statement: for every pair of shoes purchased, a pair would be given to a child in need. This model became the brand’s primary reason for being and the engine of its growth.

The Innovation: A direct-to-consumer business model that intertwined sales with social impact.
The Purpose: To provide shoes and, later, other essential goods (like clean water and eye care) to people in developing nations.
The Impact: The model has resulted in millions of pairs of shoes being given away and has inspired countless other companies to adopt similar social impact models. It engaged not only customers but also employees who felt a deep sense of purpose and pride in their work.

The Result:

TOMS’s success proves that a powerful purpose can be the ultimate engine for innovation and brand loyalty. By making its social mission the central focus of its business, TOMS created a community of customers and employees who were not just buying a product, but participating in a movement. While the company has faced challenges and evolved its model, its legacy as a pioneer of purposeful innovation remains a powerful case study for any organization looking to connect its work to a higher purpose.

Conclusion: The Future is Purpose-Driven

In a world where products are increasingly commoditized and customer attention is a fleeting commodity, a strong purpose is the ultimate differentiator. It is the north star that guides innovation, inspires loyalty, and engages every member of an organization, from the leadership team to the newest employee. Purpose is not a nice-to-have; it is a strategic imperative for long-term growth and resilience.

Leaders must stop treating purpose as a standalone initiative and start embedding it into the very DNA of their innovation process. We must empower our teams to ask not just “What should we build?” but “Why does this matter?” By engaging the hearts and minds of our people and connecting their daily work to a meaningful cause, we will not only unlock unprecedented levels of creativity and passion but also build a better world in the process. The era of purposeful innovation is here, and it is the only path to a future that is both profitable and profoundly human.

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The Purpose-Profit Paradox

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Why Doing Good Leads to Doing Well

The Purpose-Profit Paradox

GUEST POST from Art Inteligencia

For decades, the business world has often operated under a perceived fundamental tension: the Purpose-Profit Paradox. The conventional wisdom dictated that a company had to choose—either pursue maximum shareholder profit, or sacrifice some of that profit to “do good” through corporate social responsibility. These two forces were seen as pulling in opposite directions. As a human-centered change and innovation thought leader, I am here to declare that this paradox is not merely false; it is a dangerous fallacy that is holding organizations back. In today’s interconnected, values-driven economy, **doing good isn’t a cost center; it’s a profound competitive advantage that directly leads to doing well.**

The landscape has shifted dramatically. Customers, employees, and investors are no longer content with companies that merely extract value. They demand organizations that *create* value for society, for their communities, and for the planet. A genuine, deeply embedded purpose—one that extends beyond quarterly earnings—is becoming the most powerful driver of innovation, talent acquisition, brand loyalty, and, ultimately, long-term financial success. It’s not about making a profit and then dedicating a slice to charity; it’s about making a profit *because* you are doing good.

Why Purpose is the Ultimate Profit Driver

When purpose moves from a mission statement on a wall to a guiding principle woven into the fabric of your operations, it unlocks a cascade of powerful business benefits:

Enhanced Brand Loyalty and Customer Engagement: Consumers, especially younger generations, are increasingly choosing brands that align with their values. A clear, authentic purpose resonates deeply, fostering emotional connections and building a loyal customer base willing to pay a premium.
Attraction and Retention of Top Talent: Today’s workforce, particularly millennials and Gen Z, seeks meaning in their work. Companies with a strong, authentic purpose are magnets for top talent, who are more engaged, productive, and less likely to leave.
Fuel for Innovation: Purpose provides a powerful North Star for innovation. When teams are driven by a desire to solve meaningful societal problems, they are more creative, resilient, and focused on developing solutions that truly matter. This leads to breakthrough products and services that stand out in the market.
Increased Resilience and Trust: In times of crisis, purpose-driven companies are often more resilient. Their strong relationships with stakeholders (employees, customers, communities) provide a buffer, and their authentic commitment to doing good garners trust, which is invaluable.
Long-Term Shareholder Value: Numerous studies, including those by Harvard Business Review and BlackRock, demonstrate that purpose-driven companies consistently outperform their peers financially in the long run. They attract more sustainable investment and navigate market volatility more effectively.

“Purpose isn’t a nice-to-have, it’s a must-have. It transforms a company from a mere economic entity into a force for positive change, driving both impact and income.”

Embedding Purpose for Sustainable Success

Transitioning from a profit-only mindset to a purpose-driven organization requires more than just marketing rhetoric. It demands genuine, systemic change:

Define Your Authentic Purpose: This isn’t just about what you sell, but the positive impact you aim to have on the world. It should be aspirational, unique, and deeply felt across the organization.
Align Operations with Purpose: Ensure your supply chain, product development, HR policies, and even waste management practices reflect your stated purpose. Authenticity is key; performative purpose will be quickly exposed.
Empower Employees to Live the Purpose: Train and empower employees at all levels to understand how their daily work contributes to the larger purpose. Give them autonomy to innovate within that framework.
Measure What Matters: Go beyond traditional financial metrics. Track your social and environmental impact (e.g., carbon footprint reduction, community engagement, employee well-being) and report on them transparently.

Case Study 1: Patagonia – A Pioneer of Purpose-Driven Profit

The Challenge:

In a highly competitive apparel market, particularly for outdoor gear, companies often face pressure to cut costs, accelerate production, and encourage consumption. Patagonia, from its inception, chose a different path, deliberately challenging this norm to create a business model that prioritizes environmental and social responsibility above short-term profit maximization.

Purpose as the Core Strategy:

Patagonia’s purpose is “to save our home planet.” This isn’t a marketing slogan; it’s deeply embedded in every aspect of their business. They actively encourage customers to repair their gear rather than replace it (“Don’t Buy This Jacket” campaign), use recycled and organic materials, invest in sustainable farming practices, and donate 1% of sales to environmental causes (1% for the Planet). They even offer repair services for their products.

Product Innovation: Their purpose drives innovation in sustainable materials and durable designs, which often come at a higher initial cost but offer long-term value and reduce environmental impact.
Customer Loyalty: Their authentic commitment resonates deeply with a growing segment of environmentally conscious consumers, building fierce brand loyalty that transcends price sensitivity.
Talent Attraction: Patagonia consistently attracts passionate employees who are committed to the company’s mission, leading to a highly engaged and dedicated workforce.

The Result:

Despite their counter-conventional business practices, Patagonia has achieved remarkable financial success and sustained growth. Their purpose-driven approach has allowed them to command premium prices, build an almost cult-like following, and maintain profitability while actively contributing to environmental solutions. They didn’t trade profit for purpose; they achieved profit *through* purpose, proving the paradox false.

Case Study 2: TOMS – The One-for-One Model and Its Evolution

The Challenge:

When Blake Mycoskie founded TOMS shoes, he wanted to create a business that did more than just sell products. The challenge was to integrate social impact directly into the business model in a way that was scalable, sustainable, and genuinely appealing to consumers.

Purpose as the Business Model:

TOMS famously pioneered the “One-for-One” model: for every pair of shoes sold, a pair was given to a child in need. This simple, powerful purpose became their core differentiator and their marketing strategy. It immediately resonated with consumers who wanted their purchases to have a positive impact.

Customer Engagement: The “One-for-One” model created a direct emotional connection with customers, transforming a transactional purchase into an act of giving. This fostered incredible brand recognition and loyalty, particularly among purpose-driven consumers.
Scalable Impact: As TOMS grew, so did its social impact, demonstrating that purpose could scale alongside profit. They later expanded this model to other products, addressing issues like eyesight and safe water.
Driving Innovation: While the model gained immense popularity, TOMS later evolved, realizing that simply giving shoes wasn’t always the most effective long-term solution. They adapted their giving model to include local manufacturing and community-based health initiatives, demonstrating an agile, human-centered approach to social impact, proving that purpose-driven companies must also innovate how they ‘do good’.

The Result:

TOMS experienced explosive growth and became a household name, demonstrating that a clear, measurable social purpose could be a massive profit engine. While they faced criticisms and later evolved their giving model (a testament to their learning and adaptability), their initial success fundamentally altered consumer expectations and proved that consumers are willing to pay for purpose. Their journey highlights that purpose-driven businesses must also continually innovate *how* they deliver on that purpose to ensure lasting, meaningful impact alongside profitability.

Conclusion: The Era of Integrated Value Creation

The perceived Purpose-Profit Paradox is a relic of an outdated business mindset. In the modern economy, the most successful organizations understand that doing good and doing well are inextricably linked. Purpose is not a philanthropic afterthought; it is a strategic imperative that drives innovation, attracts and retains talent, builds fierce customer loyalty, and ultimately delivers superior, long-term financial performance.

As leaders, our challenge is to move beyond mere rhetoric and genuinely embed purpose into the heart of our organizations. This means defining an authentic reason for being, aligning every operation with that purpose, empowering our people, and measuring true impact. The future belongs to companies that create integrated value – value for shareholders, value for customers, value for employees, and value for the planet. Embrace the purpose-profit synergy, and you will not only build a more resilient and innovative organization but also contribute to a better world.

Image credit: Pexels

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