The importance of the sense of company purpose – London Business School BSR


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Successful companies define their purpose in 4 different ways. But does this effort of defining a purpose translate in better financial performance? Also, do employees generally engage with a company's purpose?

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The importance of the sense of company purpose – London Business School BSR

  1. 1. PURPOSE A sense of purpose is increasingly recognised as essential for business and personal success.© Copyright 2012 London Business School
  2. 2. Purpose, defined by Douglas Ready and Emily Stecker Truelove is “the company’s reason for being;why it exists; its core mission as an enterprise”.BUSINESS STRATEGY REVIEW 1
  3. 3. Nikos Mourkogiannis, author of Purpose: The Starting Point of Great Companies says successful companies define purpose in one of four ways. 1 2 3 4BUSINESS STRATEGY REVIEW 2
  4. 4. Discovery - This type of purpose involves a love of the 1 new and innovative, and it animates many technological businesses. Seeking the new does not mean constantly changing course.BUSINESS STRATEGY REVIEW 3
  5. 5. Excellence - Excellent businesses prefer to turn away2 customers than compromise their quality standards.BUSINESS STRATEGY REVIEW 4
  6. 6. Heroism - Think of Henry Ford’s creation of his world-3 changing motor company or Bill Gates’ Microsoft.BUSINESS STRATEGY REVIEW 5
  7. 7. Altruism - This purpose could take the form of4 personal service beyond that normally expected, delivering products at affordable prices, or using technology and ideas to improve lives.BUSINESS STRATEGY REVIEW 6
  8. 8. Purpose in numbersBUSINESS STRATEGY REVIEW 7
  9. 9. A strong, strategically coherentand well communicated corporatepurpose is associated with up to17% better financial performance.IMD/Burson Marsteller Corporate Purpose Impact Study 2010BUSINESS STRATEGY REVIEW 8
  10. 10. Only 10% of managers take purposefulaction — a powerful combination ofenergy and focus. Meanwhile, 30% ofmanagers procrastinate, 20% showdetached behaviour and 40% exhibitdistracted behaviour.Sumantra Ghoshal and Heike Bruch BUSINESS STRATEGY REVIEW 9
  11. 11. “Management was, is, and always will be the same thing: the art of getting things done.” Bob Eccles and Nitin Nohria, Beyond the Hype.BUSINESS STRATEGY REVIEW 10
  12. 12. Only 40% of employees understandtheir organisation’s strategy.Accenture High Performance Workplace StudyBUSINESS STRATEGY REVIEW 11
  13. 13. 88% of highly engaged employeesbelieve they can positively impactthe quality of their organisation’sproducts; only 38% of disengagedemployees think so.Towers Perrin 2008BUSINESS STRATEGY REVIEW 12
  14. 14. “You cannot foster true innovationwithout engaged employees.”Julian Birkinshaw, MLab and London Business SchoolBUSINESS STRATEGY REVIEW 13
  15. 15. Only 4% of UK workers exhibit thehighest level of engagement withtheir work.Corporate Leadership CouncilBUSINESS STRATEGY REVIEW 14
  16. 16. “The purpose of business is to create a customer.” Peter DruckerBUSINESS STRATEGY REVIEW 15
  17. 17. 40% of a company’s reputation is determined by its purpose and 60% by performance. Burson Marsteller/Penn, Schoen & Berland, 2008BUSINESS STRATEGY REVIEW 16
  18. 18. This report was part of Business Strategy Review, Volume 22 – Issue 3 2011 Visit our website STRATEGY REVIEW 17