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

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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?

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 4 BUSINESS 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 away 2 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 of 4 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 numbers BUSINESS STRATEGY REVIEW 7
  9. 9. A strong, strategically coherent and well communicated corporate purpose is associated with up to 17% better financial performance. IMD/Burson Marsteller Corporate Purpose Impact Study 2010 BUSINESS STRATEGY REVIEW 8
  10. 10. Only 10% of managers take purposeful action — a powerful combination of energy and focus. Meanwhile, 30% of managers procrastinate, 20% show detached behaviour and 40% exhibit distracted 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 understand their organisation’s strategy. Accenture High Performance Workplace Study BUSINESS STRATEGY REVIEW 11
  13. 13. 88% of highly engaged employees believe they can positively impact the quality of their organisation’s products; only 38% of disengaged employees think so. Towers Perrin 2008 BUSINESS STRATEGY REVIEW 12
  14. 14. “You cannot foster true innovation without engaged employees.” Julian Birkinshaw, MLab and London Business School BUSINESS STRATEGY REVIEW 13
  15. 15. Only 4% of UK workers exhibit the highest level of engagement with their work. Corporate Leadership Council BUSINESS STRATEGY REVIEW 14
  16. 16. “The purpose of business is to create a customer.” Peter Drucker BUSINESS 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, 2008 BUSINESS STRATEGY REVIEW 16
  18. 18. This report was part of Business Strategy Review, Volume 22 – Issue 3 2011 Visit our website www.london.edu/bsr BUSINESS STRATEGY REVIEW 17

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