This summer, 181 American CEOs of the Business Roundtable signed a “Statement on the Purpose of a Corporation.” For over twenty years, the Roundtable’s Principles of Governance have declared that “corporations exist principally to serve shareholders.”
The revised statement replaces the single-minded shareholder focus with “CEOs who commit to lead their companies for the benefit of all stakeholders — customers, employees, suppliers, communities, and shareholders.”
Finally! Some CEOs just might be catching up with the people they lead — at least in words. Decades of research prove that purpose is an extremely powerful motivator for all stakeholders. Clearly, good companies are changing the world and everyone profits. Purposeful leadership is even more critical for younger generations.
Millennials are Generation Why.
Millennials are Generation Why. They want to know why companies exist. The companies they invest in, deal with, or work for must align with their values or lose them.
This fall’s Harvard Business Review adds to the growing research on the strategic power of purpose. “Put Purpose at the Core of Your Strategy,” concludes, “many companies consider purpose merely an add-on to their strategy, but the most successful companies put it at the core, using it to redefine the playing field and reshape their value propositions.”
We heartily agree with the authors’ point that leaders can define their organization’s purpose, but these often become “nothing more than nice-sounding words on a wall.” During culture-building leadership team retreats, we regularly see executive teams confuse well-written with well-lived when developing or revising their vision, values, purpose/mission. Many fall headlong into the trap of wordsmithing hell.
Is purpose at the core of your strategy?
The authors found you must answer yes to all of these questions:
- Does purpose contribute to increasing your company’s growth and profitability today?
- Does purpose significantly influence your strategic decisions and investment choices?
- Does purpose shape your core value proposition?
- Does purpose affect how you build and manage your organizational capabilities?
- Is purpose on the agenda of your leadership team every time you meet?
Do you reason why? Are you leading on purpose? What would the people in your team/organization say if they could answer candidly and anonymously? How do you know?