“The sole purpose of business is to generate profit for shareholders”
Milton Friedman, Capitalisation and Freedom, 1962.
Even at the time this was a widely disputed view, and in response, Kenneth Mason (CEO of Quaker Foods) said this was “A dreary and demeaning view of the role of business in our society. Simply making a profit is no more the purpose of a corporation than getting enough to eat is the purpose of life. Getting enough to eat is a requirement of life; life’s purpose, one would hope is somewhat more challenging. Likewise with business”
Almost 50 years on, as some global mega-companies have become more powerful than many nations, the needs for businesses to have Purpose, Vision and Values beyond profit, is more important than ever.
Not only does this also apply to small businesses as well as large organisations, but it is also actually more relevant to them…A Harvard Business Review survey concluded, “an aspirational reason for ‘being,’ which inspires and provides a call to action for an organisation, is attracting talented employees and fuelling rapid growth in small and even start-up companies“.
So what is Purpose?
“The sense of being part of something greater than yourself can lead to high levels of engagement, high levels of creativity and the willingness to go beyond normal day to day roles, all of which are hugely powerful.” – Harvard Business School.
It answers those questions “Why does the business exist?” and “What is the positive effect we have on others?”. An effective purpose is clearly defined, succinct, authentic, memorable and inspiring. Innocent© (Our home grown smoothie start-up) purpose is to “Make natural and delicious food and drink that helps people live well and die old.”
A few years ago, whilst telling me that “this was a load of b@ll@cks”, the owner of a small struggling building firm said with genuine passion, “I am not going to stop until I prove to the people of Leeds that there are small building firms they can trust.”
Once the power of this Purpose was pointed out, and sunk in, it went on to influence everything the company did, gave the team a genuine cause beyond the pay packet, fundamentally affected how they worked, who they employed, which customers they worked with (and those they wouldn’t), their route to market, how much they charged and when they got paid.
That company is now an amazing success story, and profit was never mentioned once.
What is a Vision?
Purpose has a relationship with Vision. Vision is the long-term future destination, a compelling vivid, positive picture of your “ideal” future, typically at least ten years away. Innocent© describe their vision as “Natural, delicious food and drink available to everyone, everyday”. So you can see it should be audacious, even outrageous. While it should be stretching, there should be a tantalising sense that “it might just be possible!. As a rule of thumb, if you know now more than 50% of how you are going to achieve it, then it’s not stretching enough…
Keep it punchy, meaningful and memorable. After all, we want this to inspire and energise everyone in the organisation. Finally, Vision should flow from your purpose, as this is the ultimate expression.
Values
“Company values are what people do when no one is looking, and no one will ever know what happened next” – Herb Kelleher, Southwest Airlines.
Values guide the delivery of Purpose today and everyday along the journey from today to the distant future state described in your Vision.
Values describe the behaviours that are, and are not acceptable. They are the moral compass for the business and should be practical enough to both support and challenge the behaviour. Innocent© live by the following five values: Natural – Commercial – Entrepreneurial – Generous – Responsible.
Although every organisation has values, if they are not right they can often hold you back from the progress you want to make. Defining values to uphold, then bringing them alive in the business, is a critical task for any great leader.
So why is it still rare for small businesses to articulate a clear Purpose, Vision and Values?
Firstly, Purpose and its mirror image Vision are intensely personal, and they can be difficult to define and communicate clearly. While they are deeply held, instinctive and emotion-based in the main, these challenges can be overcome.
Secondly, Purpose, Mission, My Why, Vision and Values can all blur together and feel like a game of corporate “B@llsh!t Bingo”. It can all feel intangible and theoretical. “Fluffy nonsense” is a challenge I have heard on several occasions.
We use the following framework to develop and relate Purpose, Vision and Values with the businesses we work with:
And finally, Purpose Vision and Values are mainly overly wordy and used in isolation. So their potential impact is lost. Too often once they are in place no one knows what to do with them, everyone is relieved to see them slide into obscurity. For us this is why the relationships between these elements are so important. They need to inter-relate. Purpose flows from today into the future Vision. Values guide the journey from today to that specific future Vision.
I am confident that any and every business can uncover and articulate genuine Purpose, Vision and Values. Once these three fundamental elements ‘click’ together they are business rocket fuel.
Try it for yourself. We would love to hear how you get on Andrew.Hartley@ascentisllp.co.uk
Other Articles in our Rescue, Recovery, Reinvent Series:-
Article 1 – Businesses That Plan Do Better
Article 2 – Business Strategy, Why Bother?
Article 4 – How to Predict the Unpredictable