Align Actions with Noble Purpose

Many business smart leaders align their actions with a strategy or a vision, while functional smart leaders tend to align their actions with execution. But neither action orientation can entirely sustain your inspiration through complexity or challenge you to make bold moves and change the status quo in good times. Based on our work, we have found that wise leaders align their actions with a noble purpose, which confers authenticity and appropriateness.

Understanding changing consumer needs and industry trends, Indra Nooyi, chairman and CEO of PepsiCo, has aligned her actions around a noble purpose: creating value for all stakeholders. Central to PepsiCo’s business strategy is what Nooyi and nearly 300,000 employees call “Performance with Purpose.” It’s the company’s promise to provide a range of foods and beverages for local tastes and needs around the world; to find innovative ways to cut costs and minimize impact on the environment through energy and water conservation and reduction of water volume; to provide a great workplace for the company’s employees; and to respect, support, and invest in local communities where the company operates. And the company is making great progress: making more nutritious products, becoming the first major U.S. food company to eliminate trans fats from cooking oils, leading water conservation programs in water-distressed areas, organizing massive recycling efforts, limiting their carbon footprint in operations, developing and training a diverse global workforce, and supporting local communities through the PepsiCo Foundation. Under Nooyi’s leadership, PepsiCo is focused on multiple stakeholders and is showing how to do what’s good for consumers and deliver returns to shareholders for the long term.

Act with Bold Prudence

While red zone leaders take too much risk since they like to explore all options, blue zone leaders take too little risk because they are too worried about failure. Wise leaders instead take calculated risks. Guided by their noble purpose rather than raw emotions, they act prudently. Rather than reacting in a knee-jerk fashion to external stimuli, they devise an appropriate response and act calmly and thoughtfully. They use discernment when making their judgment calls, especially when confronted with adverse circumstances, and they bounce back from failures with resilience. Ferose at SAP Labs India could have decided to cancel all corporate engagements when the young employee died. But he intuitively decided that a more prudent approach would be to allow the events to take place.

Although wise leaders are careful in their actions, they are not risk averse. In fact, some of their actions may in fact be bold. Take the case of James Parker, former CEO of Southwest Airlines. In the aftermath of the 9/11 terrorist attacks, as consumers stayed away and the industry contracted, many airlines started cutting jobs. Instead of following the trend, which he viewed as not being prudent, Parker took an intuitive and bold action: he announced that Southwest would keep all of its employees and initiated a $179.8 million profit-sharing program for them. Parker’s counterintuitive action was shaped by his belief that although a restructuring would yield short-term benefits, it would irremediably hurt the company’s legendary trust with its employees.¹⁴

Act with Context Sensitivity

Both blue zone and red zone leaders tend to indiscriminately apply the same success formula regardless of the context in which they operate, which can lead to ineffective action and sometimes catastrophic consequences. Wise leaders use discernment to adapt their actions to different contexts.

Ramón Mendiola Sánchez is the CEO of Florida Ice & Farm Co., a leading food and beverage company in Costa Rica.¹⁵ In the mid-2000s, he recognized that his industry context was shifting: customers wanted manufacturers to adhere to environmentally sustainable business practices. Meanwhile, the Costa Rican government wanted to impose some regulations on manufacturers to make their supply chains sustainable.

Heeding the shift in the industry context, Mendiola decided to enshrine sustainability in his firm’s core business model. He recognized that the triple-bottom-line approach of striving to add value simultaneously to shareholders, society, and the environment was the best course of action for his organization.¹⁶ As a result, he implemented a set of key performance indicators (KPIs) that measure how well the company is improving its triple bottom line. As an incentive, Mendiola tied these KPIs to senior management compensation: 50 percent or more of their pay is linked to their meeting or exceeding the KPI goals (65 percent of his own compensation is linked to achieving these goals). Adherence to these KPIs helped shift the perspective of all Florida Ice & Farm employees, from senior executives to factory workers and delivery truck drivers. They realized how everything they did had a broader social and environmental impact. That awareness led each employee to find innovative ways to achieve a sustainable supply chain, like reducing water use or solid waste.

The highly motivated employees also encouraged suppliers and distributors to adopt ecofriendly practices to reduce the carbon footprint and save water. This increased awareness and support among all members of Florida Ice & Farm’s extended value chain helped the company dramatically cut water use from 12 liters to 4.7 liters per beverage and increase productivity. Its operating income grew at a compound annual growth rate of 6 percent from 2008 through 2011, to a total of $140 million. This contributed to a compound annual growth rate of 25 percent between 2006 and 2010, twice the industry average. In 2012, Florida Ice & Farm became “water neutral”: it returns every drop of water it uses to the community through conservation and provides clean water to communities in Costa Rica.¹⁷ As Mendiola notes, “Rather than optimizing our performance for short-term gains we started managing our business for long-term value. In doing so, we successfully eliminated the trade-off between sustainability and profitability.”¹⁸

Maintain Equanimity—and Have Fun

Many business smart leaders work hard to produce results and can have a difficult time enjoying their work. They tend to focus more on the results than the effort itself. Because of their attachment to outcome, they can be overwhelmed by emotions. Functional smart leaders in general focus on execution, and as long as they don’t have to pay attention to the big picture, they feel that there are few emotional entanglements. They tend to experience work and play differently and don’t generally mix them.

Wise leaders both enjoy what they do and maintain their perspective. They avoid the trap of an emotional roller coaster, remain poised, and maintain equanimity. For instance, whenever we met Ford’s CEO Alan Mulally, we always found him to be cheerful, energetic, and level-headed.¹⁹ He was always well prepared for meetings and rarely allowed interruptions, and he always appeared to be in a good mood—even in the midst of what most leaders would consider as stressful circumstances. He peppered our meetings with him with self-deprecating jokes. Humor is an essential part of his presentations, and he tends to extemporize even when giving public speeches. For example, when Mulally was invited to give a formal talk to students at Stanford Business School, he opted instead to engage students in a lively case discussion about Ford.²⁰

Heed Intuition

Once you internalize your noble purpose, you no longer crave validation because your self-esteem is not dependent on outside sources, and that reflects in your actions. You intuitively do the right thing and don’t care how others judge you. For instance, Steve Jobs was so aligned with his noble purpose that he often disregarded the opinions of investors, analysts, the media, and even customers—anyone, for that matter, who tried to judge or question his bold actions. Jobs always followed his intuition.

We think that intuition is not the same as either instinct or vision, though many people don’t seem to see the difference between instinct and intuition.²¹ When we operate in the blue zone, we tend to rely on our instinct: it gives us signals and guides our decisions based on our accumulated experiences, both good and bad. When we are in the red zone, we can envision the future and act according to our vision. Wise leaders, however, do not operate out of either their instinct or their vision. They are guided by their intuition, which is facilitated by mindfulness: the ability to fully experience the present moment with total awareness and without judgment.²² Hence, their intuition is anchored fully to the present moment even though it may be influenced by past instincts and visions of the future.

Act with Integrity

Integrity relates to completeness or wholeness. The Sanskrit expression for integrity—trikarana suddhi—denotes the alignment of our words, actions, thoughts, and feelings. We would add an element to this definition: the alignment between who we are—that is, our essence or being—and what we do.²³ A leader with integrity stands out in the crowd and has character. Integrity helps to differentiate one person from another with similar backgrounds, experiences, and competencies. A leader who does not act with integrity appears inauthentic and can lose the trust of employees and shareholders.

We have observed a lack of integrity in many leaders whose actions are not aligned with their thoughts or feelings, let alone with their essence. In contrast, wise leaders tend to rely on an innate moral compass to guide their actions. Hence, their actions are infused with a high degree of integrity. Mahatma Gandhi, who ended British colonial rule in India and guided the country toward independence, was advised by many people on what actions to take. As a wise leader, he listened to them and reflected on what they said, but ultimately he let his inner voice or intuition determine what actions would be appropriate. For example, when Gandhi returned to India from South Africa in the early 1900s, the Indian National Congress, India’s oldest political party, was merely seeking home rule. But after traveling across the country to observe the living conditions of ordinary people, Gandhi believed that only total independence from the British would enable India to progress as a nation. Gandhi spoke and acted in alignment with his noble purpose and his observations and reflections, and he persisted for many years: India became an independent country in 1947.