This month I thought I'd share an update to an article that I wrote back in 2014.

When we started working in this space we would spend a huge amount of time talking about and working with executives on developing purpose for organisations because of its importance as a part of the strategic narrative. That's still as true today as it was when I wrote about it... but we've learned that having Purpose has far greater importance to motivation than we'd ever really considered before.

Many organisations understand the importance of having a purpose that is beyond making money, but far fewer take the next step and ensure that their employees understand how their role contributes to that purpose and how their role has significance and meaning. Fewer still actively explore how to make the work they ask people to do more meaningful.

What's more, we're creating a self-fulfilling cycle where we think the people in our companies only come to work for money and don't really care about their work and to balance this we create ever more complicated control frameworks (rules and policies) and we try to streamline processes to make them fool proof and error free. The effect though is not better outcomes but demeaning and demoralising work for many people. It results in people not going the extra mile, not being proactive, not exercising sound judgement... there's no room for that in many companies.

I often like to think that we're focused on what's current and relevant in the workplace, our work on Happiness is absolutely that... but when I read this quote by Adam Smith, and written in 1776...

"The man whose life is spent in a few simple operations... has no occasion to exert his understanding, or to exercise his invention in finding out expedients for difficulties which never occur. He naturally loses, therefore, the habit of such exertion and generally becomes as stupid and ignorant as it is possible for a human being to be"
You see, what Adam Smith could see - despite his work often being regarded as the inspiration for industrial scale management change (like Ford's early production line) - is that people's lack of opportunity to innovate, problem solve, and indeed to exercise judgement in the execution of their work would result in them no longer innovating, problem solving or executing judgement.

It could almost have been written in 2016!

Anyway, here was my original article on Purpose - still true and important but only half of the story...

I had a really interesting conversation with some recent graduates a few weeks ago in which I was explaining some of the techniques Stonepoint & Partners uses with leaders to help improve the effectiveness of their strategy execution.

One of the most important things to get right for successful execution of strategy is being really clear about the organisation’s purpose and it was this that prompted the most meaningful discussion. Faced with the question "why does any business exist?" Or "what is its enduring purpose" most of my audience headed in the same direction as the more rationally oriented business minds – ‘to make money’... That's right isn't it? Well, as it happens, I disagree... Quite materially!

So we know that no business can survive for long if it doesn’t make money – and having started this business back in the middle of the recession I know exactly how hard it can be when investment in building or running a business outstrips revenue – it is critical, however, to understand that money is the outcome of what we do, not the reason we do it.

During this particular conversation, my arguments about a strong purpose being the source of great employee engagement and decision alignment were succeeding with some but I was really struggling with others – fortunately, one of the graduates told a story of her fathers business - a shoemaker.

At a recent pitch the two principals of the business were presenting their shoes to a prospective client, in this case a large retailer. The first of the two (her father) presented the very best shoes they had to offer where the margin was smaller than on other lines - his belief being something like “we exist to make the best quality shoes accessible to all". His partner presented another range of shoes that they have made elsewhere. These shoes retail at the same price but carry a much larger margin and are apparently noticeably lower quality - his belief representing something like “we exist to make money by selling low cost shoes". Now, I haven’t asked either of the two principals whether these statements are indeed their beliefs but in the context of the conversation we concluded they were probably reflective of the sentiment.

Now one might argue that they had offered the prospect some options but in reality they succeeded only in presenting a slightly confused picture of what they stood for and as a result failed to win this new contract.

The decisions we make about what we say and do in pursuit of our strategy will always be different depending upon how we see purpose. If your business exists to make money or profit, in my experience you will always be more susceptible to short-term thinking, arguably more likely to encounter the kinds of behaviour that result in reputational damage and at very least will have a much greater challenge controlling the execution of your strategy – this is at the heart of every board of executives biggest challenge; “how do we make what we want to happen, happen?”

For larger organisations the importance of having a clear purpose is even more stark, as the US Chairman of PwC said last week “millennials don’t only demand to know the organization’s purpose — its reason for being — but are prepared to leave the firm if that purpose doesn’t align with their own values”

Whilst we all know that a strong purpose is not enough on its own to make an organisation a better place to work, to guarantee that it makes better decisions or prevent mistakes but we can almost certainly all agree that having a shared belief in something more meaningful that making money alone is very good starting place.

A strong purpose provides a source of inspiration for why we do what we do, it helps to provide a reference point for tough decisions, and serves as an engagement vehicle for employees… the list goes on.

In the case of the shoemakers, I suspect aligning themselves on why they exist as a business would help with all of their future decisions but in the meantime, I remain grateful for the perfectly timed example to illustrate the power of a clear, shared purpose.