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| The Power of Purpose |
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| Written by Jill Rose |
| Sunday, 31 May 2009 23:00 |
 “We didn’t realize it at the time, but we started to become attracted to organizations and companies that had a fundamental belief about making a positive difference in people’s lives,” said Spence of the Austin-based company he founded with a group of friends in 1971. Over the years, Spence and his team observed the fantastic benefits derived by purposed-based companies. “If you have a purpose and articulate it with clarity and passion, then everything makes sense and everything flows,” he writes. “You feel good about what you’re doing and clear about how to get there. You’re excited to get up in the morning, and you sleep easier at night.” High performance, innovation, employee and customer engagement, easier decisionmaking, and personal fulfillment top the list of reasons for becoming a purpose-driven company (or rediscovering your purpose). These alone are a compelling argument, but today’s economy makes Spence’s case even stronger. “I believe when the dust settles after this economic Armageddon, the only people left standing will be the people who stand for something,” said Spence. “If you’re anchored in purpose, you will not be grasping for straws. It will be tough, but at least you know why you get up and go to work every day.” Those still not convinced have only to look at those entering the workforce. “The young talent in this country, and around the world, want to be engaged with something meaningful,” Spence explained. “If you’re not wanting to build a company that is making a difference and improving lives, and making money doing that, you’re not going to attract the best talent.” Purpose, mission, and vision Many executives confuse mission or vision with purpose," Spence said. “That’s why their mission statements read like War and Peace.” Purpose, he said, is a definitive statement of the difference you’re trying to make. “For example, Southwest Airlines is in the business of giving people the freedom to fly. Sam Walton was in the business of saving people money so they could live better. AARP is in the business of providing a quality of life for everyone who ages.” Mission is the tactical plan for achieving that purpose. Southwest Airlines’ mission, for example, is to keep costs down so it can keep fares down. Vision is how you see the world after you’ve executed your purpose. “Southwest Airlines sees a time when everyone has the ability to go and see and do things they never dreamed of,” said Spence. “When the company started in 1971, only 15% of Americans had flown. Today, 80% of Americans have flown.” This begs the question of whether all companies have a purpose, something Spence said is a “raging debate” within his company. His belief is that any organization that has survived and thrived over time had a purpose initially, one it may be able to go back to. He gives the example of Charles Schwab, who saw his company’s purpose as the democratization of wealth. The company’s no-fees/no-commissions policy supported that purpose, and when Schwab stepped back from the company and the fees started creeping in, the company lost its way. Schwab is a great example of a purpose-based leader, something Spence says is a dealbreaker. “If you have a purpose-based leader who is in the business of fulfilling the purpose, protecting the troops, and improving lives, that is the key ingredient. You can have a great organization and insert a non-purpose-based leader, and it can go down in a couple of years,” he explained. That’s one reason employees should be wary of new leaders coming in saying they plan to “tweak” the company’s purpose. “You can change your positioning—for example, Southwest Airlines is in the freedom business, which now means free from fees—but your purpose never should.” True inspiration Employee and customer feedback are critical to keeping purpose-driven companies on track, says Spence. It’s accepted wisdom that if you treat your employees right, they will treat your customers right. Spence says companies with a strong purpose take that idea one step further, making sure employees understand the purpose of the company and are engaged. “All the team-building and motivational speeches you can muster won’t make up for working for an organization that doesn’t make any perceptible difference to anyone,” he writes. “If you have a genuine purpose, you won’t need to manufacture silly tactics to try to inspire people to come to work.” Similarly, most companies do a good job of requesting and digesting customer feedback. The difference, Spence said, is that purpose driven companies are quick to change the things customers don’t like. He cites Sam Walton as an example. “I would travel with him, and he would get down on one knee with a very high-tech yellow tablet and ball-point pen. He would ask customers what they thought about the store, the prices, the items. If four or five customers told him they thought a certain t-shirt was ugly, he would go to a Friday morning meeting and say, ‘I want all of those shirts out of the stores by Monday.’” This is not to say that purpose is merely a nice-to-have strategy designed to make employees and customers feel good about the company. Rather, it’s a way to avoid becoming a commodity, said Spence. “Does anyone miss Linens & Things? The Sharper Image? We loved these companies when they started. But sooner or later, consumers vote on whether or not companies have a purpose.” Purpose also drives profits. Again, Spence uses Southwest Airlines as an example. “Southwest is in the business of keeping costs down so they can democratize the skies. In doing so, they have posted a profit every quarter for more than 36 years,” he said. “Purpose will drive everything, if you let it, including greater performance than your competitor.” Staying true to your purpose is essential, of course. Spence described a time when Southwest considered purchasing new jets rather than staying with their older, slower 737s. Many senior executives were for making the move, but the CEO at that time, Herb Kelleher, vetoed the notion. “Kelleher said changing to new aircraft would mean tripling Southwests training costs because pilots would have to be trained on both aircraft. He said: ‘We are not in the business of adding cost.’ If you have a purpose, front and center, all decisions can revolve around that. You’re enabled to make money because you’re fulfilling your purpose.” Given the plague spreading through US businesses today, the ideas in Spence’s book may serve as an antidote. Indeed, he said the current economic ills can be seen as an opportunity to redirect your company. “As the president of Tulane University put it: When a tsunami hits your life, you can do nothing, you can rebuild what you had, or you can build what you should have been building,” said Spence. “I think for organizations that are anchored in purpose, this economy will set them free to start building what they should have been building. Those organizations will make money by making a difference.” |