Habit 5

Know why you do what you do

How to find an inspiring business purpose

Business and the meaning of life

This habit is about how, and why, you should discover, clarify and explain the purpose that drives your business. Purpose is the most philosophical concept in commercial life – and the most powerful. It’s important because it’s why you do what you do. It’s the simple response to the question: ‘Why does your company exist?’ The answer to this query, or lack of it, is directly linked to how people feel about your business or team. In harness with your values, the response will decide how much passion, energy and creativity employees invest each day. It translates into a powerful motivator that’s stronger than a sense of duty or even a pay packet. It’s why people – just like the apocryphal third janitor – want to get out of bed on a cold Monday morning and come to work.

Awkward question: ‘Why do you exist?’

Your purpose is your ‘Why?’ Whenever I’m invited into a company, one of the first questions I ask is:’ Why does your business exist?’ It’s a simple question but, as I’ve discovered, difficult to answer simply. It normally prompts an awkward silence before people engage with its importance. With luck, it cuts to the chase of what the business is all about. After endless pencil chewing and rewrites, the business’ purpose emerges. This is more about self discovery than creativity: you would hope the purpose was lurking there all along. Here are three generic replies to the ‘Why do you exist?’ question that I’ve heard a lot:

1. We are here to make money for shareholders.
2. We are here for our stakeholders.
3. We are here to make the world a better place.

We are here to make money for shareholders

Until the early 1990s, if you asked pretty much anyone: ‘Why does your business exist?’, the response would be: ‘Duh, what have you been smoking? To make money, stupid.’ The profit motive – called shareholder value by business school boffins – reigned supreme. Anything else was seen as pathetically liberal, hippy and probably disastrously loss-making. Shareholder value was pronounced upon in media interviews by FTSE 100 CEOs and obsessed over in boardrooms across the world. It was also taught as gospel at top business schools. I know this from personal experience. I studied for my MBA at London Business School in the late 1990s and went back to found the Centre for Creative Business within the School in 2004. During my MBA, London Business School treated me and my fellow students to Harvard Business Review case studies. One told the story of a profit machine called Enron, focusing on the energy company’s hyper competitive culture. I recently searched for the Enron case study. Not surprisingly, considering the company’s ignominious collapse less than 18 months later, that case study has been quietly withdrawn from circulation.

As it turned out, the moral and financial bankruptcy of Enron and Worldcom in the early part of the century were just the warm-up act. As we all know, shareholder value as an organising idea for how to do business has hit a few major problems in recent years in the form of the global financial crash. The meltdown was precipitated in no small part by the high priests of the shareholder religion – investment banks. The cost of mopping up after the world financial crisis has come to £7.12 trillion – a £1,779 bill for every man, woman and child on the planet.² Much of what went wrong can be traced back to what those happy-go-lucky investment bankers perceived their business purpose to be: the idea that business is here to make money only in the short term, whatever the long-term cost to society. This idea came close to bankrupting the entire planet.

This fall from grace for the pleasing simplicity of shareholder value has provoked some serious soul searching. Governments, the media, the public, and even some of those in the City of London and on Wall Street, have been asking: ‘Why do banks, business and capitalism exist?’ An example of how the ground has shifted can be gauged by Barclay’s actions since the crash. In 2012, the British bank rewrote its purpose statement as part of ‘Transform’ – its cultural renewal programme.³ Barclays pronounced it was here for: ‘Helping people achieve their ambitions – in the right way.’ A distinct shuffling away from a shareholder value purpose to one linked to the welfare of the wider world.

There’s no doubt rampant creativity has been unshackled over the centuries, in part driven forward by the profit motive. In the late 1990s, thanks to deregulation and other factors, there was an exuberant burst of creativity in the City of London and other financial centres. Complex financial instruments were invented and refined – derivative, options, warrants, swaps. But, as we’ve found to our cost, a significant portion of this creativity was self-serving, greedy and short-term. Occasionally it was downright dishonest; conjuring ‘value’ that never existed.

Being profitable in the long term is obligatory for all businesses. But focusing exclusively on short-term profit does not fire commitment or creativity in people. If the purpose of a business is blind to the needs of the wider world, someone, at some point, will have to pay the piper. Pure creativity often makes people very rich (just ask J.K. Rowling), but it’s not the reason why people are creative in the first place. From John Harrison obsessively refining his groundbreaking 18th-century sea clock; the Wright Brothers taking flight; and a young Bill Gates writing computer code; none of these great inventors and innovators were solely driven by the bottom line. Sir John Hegarty, founder of the global advertising agency Bartle Bogle Hegarty, puts it this way: ‘Creativity is not an occupation, it’s a preoccupation.’ If you want a business in which ideas break the mould in a good way, it’s highly unlikely the motivating purpose will be just about money.

We are here for our stakeholders

A stakeholder value purpose is focused outside your business – in the rest of the world. It’s the philosophy that businesses are here to provide value and livelihoods to a wider group of people beyond those that own the shares: employees, customers, suppliers and the community as a whole. The UK supermarket chain Tesco, for example, states it is here ‘to create value for customers to earn their lifetime loyalty’. At some point, a stakeholder purpose – aimed at employees and customers – becomes something a little grander. Some teeter on the edge between being a save the world clarion call and a stakeholder value purpose. Take the BBC’s famous mission: ‘To enrich people’s lives with programmes and services that inform, educate and entertain’ or IKEA’s motto: ‘To create a better everyday life for the many people.’ You can hear in these words the original authors had become evangelical about making a contribution to the world.

We are here to make the world a better place

A purpose that focuses upon a higher ideal is an attempt to inspire. Here, businesses have the temerity to reach for the stars and break the perception of being self-serving profit-maximisers; they aspire to be purpose maximisers. Larry Page, co-founder of Google, argues that you should: ‘make sure everybody in the company has great opportunities, has a meaningful impact and are contributing to the good of society’. And Page, with his fellow founder Sergey Brin, have made not one, but two, purpose statements famous. The unofficial Google motto is ‘Don’t be evil’, which came from some notes taken during an early discussion around company values in 2000. The official company purpose statement is: ‘To organise the world’s information and make it universally accessible and useful.’ Here are some examples from other businesses and organisations attempting to inspire:

• International Olympic Committee: Contribute to building a better world through sport.
• Disney: To make people happy.
• 3M: Perpetual quest to solve unsolved problems.
• Virgin: Business as a force for good.

Some purpose statements defy categorisation. One of my personal favourites is Nike’s: ‘To experience the emotion of competition, winning, and crushing competitors.’ This will repel some people but inspire others. It helps to position Nike firmly in the hyper-competitive sports world in which it has been so successful. It also differentiates Nike as an employer, saying: ‘We don’t want to attract all types of people; but we want to be loved by some.’

To encourage electric conversations a genuine higher purpose beats shareholder value every time. Apple’s Steve Jobs went one better than Larry Page and Sergey Brin when he said famously: ‘We’re here to put a dent in the universe. Otherwise, why else even be here?’ When Jobs and his small team designed the original Macintosh, in the early 1980s, he urged them to make it ‘insanely great’. He never spoke of profit maximisation or cost trade-offs. At his first retreat with the Macintosh team, he began by writing a maxim on the whiteboard: ‘Don’t compromise.’ He followed up with: ‘Don’t worry about the price, just specify the computer’s abilities.’ The machine that resulted cost too much and led to Job’s ousting from Apple. Even Saint Steve got it wrong from time to time.

But the Mac and its descendants undeniably put a dent in the commercial universe. In the end he got the balance right, going on to oversee the development of a string of smash hit innovative products such as the iPad and the iPhone⁵:

I have never yet worked with a successful creative business that focuses purely on profit. A stakeholder purpose is vital for a creative business. The problem is, on its own, it can be seen as merely pragmatic, rather than inspiring. Instead of making it their sole purpose my clients often mould this essential stakeholder duty to employees, customers, suppliers and the general population into a wider business philosophy and culture. In my role as critical friend and change consultant, I unashamedly nudge leadership teams to uncover an aspirational higher purpose: a pithy statement, which briefly describes what the company can contribute to the world. It’s the big idea customers can rally around, and employees can keep in the back of their mind on those cold Monday mornings when you just want to stay in bed.

A creative purpose: When the world zigs, zag

When you enter the London HQ of the ad agency Bartle Bogle Hegarty (BBH), there are sheep everywhere. Sheep stencilled on glass, sheep made from ceramics, sheep on desks. There is even a life-sized stuffed sheep in the office of the company co-founder, Sir John Hegarty. BBH’s iconic image – a black sheep going one way while hundreds of white sheep walk in the opposite direction – speaks volumes about their business purpose: ‘When the world zigs, zag.’

A staff booklet, derived from the thoughts of BBH’s co-founders John Hegarty, John Bartle and Nigel Bogle, explains the zig-zag idea in more detail: ‘If there was one sentence that defines BBH, this would be it. It comes from the first print ad we produced for Levi’s in 1982. Zagging is our way of thinking and acting. It means challenging convention, questioning the status quo, finding new answers, new solutions. Zagging isn’t about being contrary for the sake of it. We believe differences create space, and space creates opportunity for growth.’ ⁶

BBH is a great example of how a creative outfit offers meaning and purpose to what they do by elevating the sheer importance of human imagination. One of their beliefs is: ‘All roads lead to the work.’ They expand upon this as follows: ‘Our business model depends entirely on the quality of the work we produce. If the work is working: building fame, reputation and sales for our Clients then we attract more business and so our business grows too. So we need a culture across the whole company that believes in creativity. That supports it, nurtures it, defends, respects and champions it.’ This obsession with the importance of the work can take colourful forms. Rose Arnold, deputy executive creative director, BBH London, had the nerve and tenacity to handcuff herself to a client on a pub crawl. She wouldn’t let him go until the client had bought the idea the agency was trying to sell. Purpose works in mysterious ways.

When purpose goes wrong

All businesses have to hold their nerve when inevitably they prove to be less than perfect in reality. When they fail to live up to their save-the-world pretensions accusations of tax evasion, corruption, child labour or shoddy customer service tend to knock the shine off an idealistic philosophy. But purpose offers clarity and redemption if it is a genuinely held passion. Business is a complicated place. Change tumbles through like the crashing waves around a white-water raft. A purpose is like a North Star – there to guide a business in what it should do, and not do in good times – and when life gets turbulent and complicated.

Purpose from top to bottom

Purpose weaves its motivational magic in the gut reaction of employees. It creates passion when people just ‘get it’. Put yourselves in the shoes of a Wikipedia employee. It’s your first day in the online encyclopedia business. As part of your induction, you’re asked to have a chat with the founder, Jimmy Wales. Jimmy puts his coffee down, looks you in the eyes, and says: ‘Imagine a world in which every single person is given free access to the sum of all human knowledge. That’s what we’re doing. And we need your help. Our vision is to create and distribute a multilingual free encyclopedia for every single person on the planet in their own language.’ Wouldn’t that inspire you to try to think of a few good ideas to help?

But employees can’t be expected to keep such high-blown concepts front-of-mind every day. Creative businesses need to go further. Purpose needs to be baked into the very bones of the company from top to bottom. It starts with the story of why the business exists, but then needs to be brought back down to earth for every employee. So, how do you successfully land these 20,000-feet ideas – and weave them into the fabric of the everyday life in your business?

To do this creative leaders become experts at seeking out challenging and difficult work: a kind of higher purpose at project level. The trick is then to match the right people with the right projects. This approach is supported by a global survey, which concluded, the more labyrinthine, ambiguous and tough the project, the better in terms of sparking creativity. It turns out that, for higher order jobs, people prefer hard work that makes them think a little.

As well as the enjoyment of creative problem solving, people know harder work will offer opportunities for self-development. Creative people are more engaged when they feel like the project they are working on is important and will lead to the further growth in their skills. People naturally want to build their capabilities to go on to tackle even more challenging and difficult projects in the future.

Lightning conclusion

Purpose can manifest itself in an infinite number of ways: an eternal quest like Google’s mission to sort out all the data on a planet; a challenge like President Kennedy’s thrown gauntlet to the US science community; a beguiling, curiosity-fuelling question such as Virgin’s ‘How can business be a “force for good”?’

But the ‘purpose of a purpose’ is that it supports everything else that happens in a business. It is a kind of philosophical infrastructure – the load-supporting steel skeleton of your organisation. When you live your business ‘why?’, your organisation becomes a lightning conductor for electric conversations and the sparks of good ideas.

1 Afshar, V., 2013. 100 Tweetable Business Culture Quotes from Brilliant Executives [online]. Available at: <www.huffingtonpost.com/vala-afshar/100-tweetable-business-cu_b_3575595.html>.

2 Conway, E., 2009. IMF puts total cost of crisis at £7.1 trillion. Telegraph [online]. Available at: <www.telegraph.co.uk/finance/newsbysector/banksandfinance/5995810/IMF-puts-total-cost-of-crisis-at-7.1-trillion.html>. 8 August.

3 Barclays Transform Programme. Barclays purpose and values’ [PDF]. Available at: <http://group.barclays.com/about-barclays/about-us/transform/values>.

4 From a quote by Nilofer Merchant, Silicon Valley CEO and author.

5 Isaacson, W., 2012. The real leadership lessons from Steve Jobs. Harvard Business Review, April.

6 BBH staff booklet. Some things that matter to us. Bartle Bogle Hegarty.