The Purpose Question
If questions are powerful and in fact a prerequisite for innovation, then the biggest question we can ask is the “purpose question”. Keith Yamashita asks What is our company’s purpose on this earth?. This is a bold & powerful question and one which is very hard to answer. Yamashita explains how we go about finding the purpose.
To arrive at a powerful sense of purpose, Yamashita says, companies today need “a fundamental orientation that is outward looking”–so they can understand what people out there in the world truly desire and need, and what’s standing in the way. At the same time, business leaders also must look inward, to try to clarify their own core values and larger ambitions.
As a leader one of your first steps should be to think about your organisation’s purpose. It is key to good strategy. So how does one go about doing it. Writing the purpose of an organisation is not simple nor straightforward. It is also a team sport. Cynthia Montgomery in her book “The Strategist” (which I highly recommend) suggests that purpose is very important for success and highlights the importance of a “clear and compelling” purpose multiple times. She defines it as “who we are and what makes us distinctive”. If this is so important, how do we go about creating a purpose? I found the “theory of the business” framework by Drucker as a useful way to answer that question. Drucker suggested that every organisation has a theory of its business.
A clear, simple, and penetrating theory of the business, rather than intuition, characterizes the truly successful entrepreneur.
A theory of the business has three parts. First, there are assumptions about the environment of the organisation: society and its structure, the market, the customer, and technology. The assumptions define what an organisation is paid for. Second, there are assumptions about the specific mission of the organisation. The assumptions about mission define what an organisation considers to be meaningful results - they point to how it envisions itself making a difference in the economy and society at large. Third, there are assumptions about the core competencies needed to accomplish the organisation’s mission. Core competencies define what an organisation must excel in order to maintain leadership.
When we answer these three questions: the external environment and what we see as the biggest problems or as Yamashita says “What does the world hunger for? What are the big challenges?”. Our values will determine the kind of mission we choose and what we want to change in the environment and lastly if this has to be true what should our core competencies be to achieve this? This troika needs to be consistent with each other and then we can answer the question of “our purpose”. There is actually a more simpler and straightforward way to think about purpose. What is the one thing in all this discussion which is important? Is it the resources we have, our values, the market, the customer or the amazing technology or change process we have? Drucker suggests a simple definition: The purpose of a business is to create a customer.
…business purpose and business mission, there is only one such focus, one starting point. It is the customer. The customer defines the business. A business is not defined by the company’s name, statutes, or articles of incorporation. It is defined by the want the customer satisfies when he buys a product or service. To satisfy the customer is the mission and purpose of every business.
At first glance, this is not intuitive but my experience has been that this is a powerful way to think about your business purpose. In the social change space, satisfaction is about creating change. What matters is this: Are you creating value for the customer? Yamashita says:
“In the end, as a human being or an institution, you have to understand why you were put on this earth,” he says, “and what actions you’re going to take to deliver on that purpose.”