the success of purpose-driven organizations: a basic conceptual model (first draft)

“If Daddy didn’t go to work, many families wouldn’t be able to fly around the country and be with their loved ones. Without Daddy doing his job, little kids all across the country wouldn’t get to see their grandparents, their aunts and uncles, or any of their cousins. Daddy has to go to work to make sure everyone can be with their families.”
-Southwest Airlines ramp agent, explaining to his children why he works on Thanksgiving⁽¹⁾

Over the last decade, there’s been a lot of interest and activity developing around the concept of “purpose-driven business”⁽²⁾. With good reason: organizations built around purpose-driven concepts (e.g., Southwest Airlines, Apple Computer, Disney) have consistently outperformed their segments (by an average by 6:1) and the market as a whole (by an average of 15:1)⁽³⁾. What has been lacking from the movement are useful descriptive models (which is also the basis for much of the lack of enthusiasm seen until recently in academic and consulting circles⁽⁴⁾). Much of the literature on purpose-driven business has been quiet on the question of “why it works”, focusing instead on the “why you should adopt”.

What follows is my personal strawman on the mechanism behind purpose-driven success, an idea that has been knocking around my head for the last several months. I’m sure this is not the first attempt to describe how purpose-driven enterprises work, and the concepts certainly require additional input and refinement. Hopefully you’ll find the model useful; even more importantly, I would welcome your ideas for improvement.

Please note: as an initial hypothesis, this model is not yet fully researched. You will likely see the model and attributions evolve as it is tested and new ideas are integrated.

Corporate Purpose: the essential definition for corporate purpose comes from Jim Collins and Jerry Portas in their book Built to Last: “Core purpose is the organization’s fundamental reason for being. An effective purpose reflects the importance people attach to the company’s work—it taps their idealistic motivations—and gets at the deeper reasons for an organization's existence beyond just making money.”⁽⁵⁾

Personal Meaning: this is perhaps the most difficult of the model concepts to describe. Everyone has a unique perspective; for that reason a common definition is challenging. From academic literature, personal meaning has been defined as “having a purpose in life, having a sense of direction, a sense of order and a reason for existence”⁽⁶⁾. While there are any number of externalities that drive personal meaning (e.g., religiosity, self-identity, enjoyment of job and personal activities, human relationships), individuals derive a significant amount of meaning from the organizations with which they are affiliated, especially their employers. It stands to reason that people seeking employment are more likely to choose organizations whose purpose sustains their “sense of direction and [a] reason for existence”; and, that employees that work for such organizations are more likely to have their personal meaning sustained and enriched.

(Note: for a deeper perspective on the subject of personal meaning in the workplace, see the recent McKinsey quarterly article "How Leaders Kill Meaning at Work".⁽⁷⁾)

Individual Intention: “A determination to act in a certain way”⁽⁸⁾. While the science in this area is rapidly evolving⁽⁹⁾, there is general agreement that the higher-order behavior of individuals is driven by intention. Research is impacting our understanding of the nature of intention—how much is conscious vs. how much is ingrained and habitual. However, the formation of specific, productive intentions is certainly enabled by a positive, energetic personal meaning.

Collective Action: organizations are well understood as social constructs established for the purpose of fulfilling some need. Holding equal such concepts as composition, role definition and resource allocation, the organizations that function most effectively are those where the intentions of individuals throughout the enterprise are inherently aligned to motivate collective action in pursuit of corporate purpose. Organizations lacking inherent alignment of intentions to motivate collective action spend significant time and effort building and maintaining systems and policies to limit individual intent (consider the example of Kodak, whose engineers were developing significant innovations in digital photography as early as the 1970s, but whose efforts were suppressed by leadership⁽⁹⁾). In lieu of individual intent enabled by personal meaning, extrinsic rewards become the primary mechanism for driving collective action. Such systems can achieve performance results (measured by financial performance) over the short-term, but often result in incentive distortions and misalignment between desired and actual behaviors.

Shared Results: regardless of the outcomes, organizations structured around purpose share in the results produced by collective action. Purpose-driven organizations are, by their nature, learning organizations. Individuals and groups are enabled to develop their ideas and explore new approaches. Successes are celebrated, and failures are embraced as opportunities for growth. It is this collective accountability that makes it possible for the corporate purpose to be questioned, tested, and ultimately reinforced as the foundation for organizational success.

Implications

Though I’ve been focusing primarily on the process to date, some implications are beginning to take shape. Most significant is the potential to move beyond post hoc identification of purpose-driven organizations. The usefulness of a descriptive model is in its ability to enable more consistent comparisons of heterogeneous organizations, as well as to provide a basis for temporal comparisons. As more is understood regarding each of the model components, it will become possible to define appropriate methods to measure performance (e.g., interview and survey techniques to measure personal meaning, observation and survey techniques to measure individual intent, correlation analysis among components).

Ultimately, the model should evolve to provide business insight through the identification of best practices for the creation and stewardship of corporate purpose, and for organizational support and nurturing of success within each component step of the model. Equipped with this information, leaders and managers who see the value of the purpose-driven approach would be much more likely to take action for the benefit of their organizations.

Notes

⁽¹⁾Spence, Roy, and Haley Rushing. It's Not What You Sell, It's What You Stand For: Why Every Extraordinary Business Is Driven by Purpose. New York: Portfolio, 2009. Print.

⁽²⁾Not to be confused with the recent personal faith / self-improvement following that has developed around The Purpose-Driven Life by Rick Warren.

⁽³⁾Collins, James C., and Jerry I. Porras. Built to Last: Successful Habits of Visionary Companies. New York: HarperBusiness, 1994. Print.

⁽⁴⁾Kiechel, Walter. The Lords of Strategy: The Secret Intellectual History of the New Corporate World. Boston, MA: Harvard Business, 2010. Print.

⁽⁵⁾Collins & Porras, 1994

⁽⁶⁾Reker, G.T. "Personal Meaning, Optimism, and Choice: Existential Predictors of Depression in Community and Institutional Elderly." The Gerontologist 37 (1997): 709-16. Print.

⁽⁷⁾Amabile, Teresa, and Steven Kramer. "How Leaders Kill Meaning at Work." McKinsey Quarterly. McKinsey & Company, Jan. 2012. Web. 18 Mar. 2012. <https://www.mckinseyquarterly.com/>.

⁽⁸⁾"Intention." Merriam-Webster. Merriam-Webster. Web. 18 Mar. 2012. <http://www.merriam-webster.com/dictionary/intention>.

⁽⁹⁾Mendes, George. "What Went Wrong at Eastman Kodak." Publication. St. Andrews: Strategy Tank, 2006. Print. (PDF version downloaded from: http://strategytank.awardspace.com/articles/What%20went%20wrong%20at%20Eastman%20Kodak.pdf on 03/19/12.)

⁽¹⁰⁾Eagleman, David. Incognito: The Secret Lives of the Brain. New York: Pantheon, 2011. Print.


Purpose-Driven Organizations: a Basic Conceptual Model by Steven Beauchem is licensed under a Creative Commons Attribution-ShareAlike 3.0 Unported License.

innovation demands continuous renewal

Recently published on Slideshare: John Woodworth from 3M presents the case for building the open, creative enterprise. The presentation is an excellent summary of the key principles and value drivers for moving enterprise competitive advantage from a focus on productivity to one focused on innovation. While much of what he covers is familiar to innovation and collaboration practitioners, it's fascinating to see this message presented as a renewal mandate to an organization (3M) that many of us view as synonymous with innovation. As John points out in the presentation, the competitive landscape is more dynamic than ever. Even leading organizations have to continually challenge themselves to stay at the forefront, or risk being quickly overtaken in a market that is becoming ever more idea-driven.

Creativity Is The New Productivity

View more PowerPoint from John Woodworth

social technologies for enterprise open innovation

Excellent visualization of the social technologies that businesses are leveraging to drive open innovation. Source: McKinsey Quarterly (Wiring the Open Source Enterprise, 01/2012).

a consultant's non-objective response to Kony 2012

"And a child shall lead them." - Isaiah 11:6

I'm struggling to write this post, as it's difficult to find the right entry point. So I'm just going to dive in and sort it out later. Earlier today, two of the most important roles I play in my life intersected, and the results nearly floored me. I wanted to get this experience captured quickly because it really struck a chord with me. I hope you find it meaningful as well.

In my career role, I'm a consultant, currently focusing on the Digital Strategy and Social Enterprise domains. I like to think I'm pretty good at it; my clients keep asking me back, so I must be doing something right. Besides having the prerequisite knowledge and skill, I also love the work. Some of the details I could do without (e.g., the long hours and travel), but I am excited to get up in the morning knowing that the opportunity exists for me to have a positive impact on my client organizations and the humans that come together to make them work.

At home, I'm Dad to my 12-year old son, Matthew. Compared to being a consultant, I love fatherhood immeasurably more and understand it considerably less. I am amazed, frustrated, impassioned, frightened and more every day as a parent, sometimes all within the span of a minute. Still, every day I go to bed looking forward to the next.

What brought these roles together? Matt came home from school this past Friday having seen the Kony 2012 video at school. Obviously, I was aware of it--I had seen a few clips and had fully internalized the volumes of expert opinion on the Invisible Children movement as yet another watershed moment in social media history. So when he asked about it, we were able to have an informed discussion (although a bit awkward: I still struggle with explaining why there is so much pain in the world). And I thought that was the end of it.

On Sunday morning the ground shifted. The family (Susan, Matt and me) and cats were enjoying weekend reading on the sofa, when Matt pulled Susan and I out of our books to say "I want to show you something." The three of us sat quietly for 25 minutes while the Kony 2012 video played, then we proceeded to talk about the things we could do to help in this cause: look for additional information to improve our understanding, call or write our elected representatives, donate to this group and others, tell friends and acquaintances (on & offline), stay connected. Matt had self-enlisted, and then invited us to participate. I was proud of him for his compassion for others, and for his courage to share it with us.

Invisible Children: inexperienced or insidious?

This is as good a point as any to address the controversy around the Kony 2012 video, and my struggle to write this. I'm well aware of the human and organizational flaws inherent in the Kony 2012 movement. To summarize the key concerns:

1. The video is overly simplistic in its response and can be emotionally manipulative;
2. The sponsoring organization (Invisible Children) spends too much on awareness and not enough on solving problems "on the ground';
3. Invisible Children receives funding from sources whose motives are considered questionable by some external observers.

Regarding the first point, I would say that Invisible Children has accomplished for Joseph Kony what every single CPG company is paying a fortune to do for their products: build awareness. In an environment where ideas have become "productized", Cause Marketing is no different than traditional Product Marketing. You can't solve a problem / sell a product until people know of the need; you have to make people aware. It's overly optimistic on the part of critics to assume that, in this media saturated environment, people are going to sit still for the details before you've given them a frame of reference. Today, you have 70 million people who now have a reasonably accurate (if not fully complete) understanding of the situation. That's 70 million more than yesterday. And, like any engagement funnel, some portion of them will be looking for more detail.

From this, it follows that it costs money to build awareness. There is a misconception among many that social media makes things happen for free. The costs are different, and often less, than traditional marketing campaigns, but they don't zero out. While I agree that the percentage of funds raised actually benefiting the cause is low at this time (30%), some back-of-envelope calculations indicate that their current spending per "conversion" is more efficient than "for profit" industry benchmarks. Like with any startup (as good a description as any for Invisible Children) expense ratios are high at launch (when revenue is low) and trend downwards as success is realized. It would be interesting to see their marketing expense per dollar contributed (a valid metric for this discussion) in comparison to more traditional non-profits who rely heavily on traditional cause marketing tactics (e.g., American Red Cross, Sierra Club).

A response to the third item is entirely personal--there's no objective good answer. However, any organization that solicits contributions in the social domain receives money from people and organizations across the belief spectrum. People choose the cause; the cause doesn't choose the people. Maybe I'm being too lenient on this topic. I do know that if they were working to save my son, I'd be a lot less concerned where they were passing the hat. I would also suggest that if we wait for the perfect opportunity to donate, we'll be waiting a long time.

Why is all this important? Speaking for myself as a consultant (and for many others in the profession), we have a tendency to prize objectivity. We're valued for our ability to step into an environment, make dispassionate assessments, and provide recommendations that will change things for the better. In this focus on objectivity, we sometimes lose sight of emotion, of purpose. We know the benchmarks, the best practices, the methodologies; but we fail to connect with the human stories that slow or interfere with precision. It is the messiness of the human narrative that creates engagement.

There is so much going on with the viral success of Kony 2012 that could be (and already has been) intellectually dissected by a cadre of experts. As a consultant, my mind is already cranking out ideas about how the virality of this cultural phenomenon will shape my future work. However, when we focus on the mechanics and metrics ("wow, more than 71 million viewings!"), we overlook the collective human stories that make the numbers possible. We miss out on the meaning inherent in family sharing time together on a Sunday morning, embracing the possibilities offered to engage with shared purpose in a global effort for good.

Moments like these help me bring humility to my work as a consultant: remembering that we don't create connectedness and social good with our work. The talented architect doesn't make a home; she designs with intent and honesty based on her understanding and intuition of the future occupants' dreams and wishes, and hopes for their fulfillment. The best we can accomplish is to create rich opportunities for people of purpose to come together, and to participate fully in what emerges.

crowdsourcing: the knowledge worker is dead! long live the knowledge worker!

I rediscovered the site 99designs.com this past weekend. If you haven't taken a look, you should: it's a pitch-perfect application of crowdsourcing principles. And, as you browse the folios of some of the designers, you come to realize that there's a ton of design talent out there that's not attached to an agency or other enterprise.

It got me thinking about my employer (which--no surprise--derives a significant chunk of revenue from design services) and disruption curves. What prevents our clients (primarily F1000 companies) from crowdsourcing their interactive needs? What determines how quickly crowdsourcing approaches to a given knowledge worker job become "good enough" for enterprise use? How soon do my colleagues and I need to start thinking seriously about hanging their own virtual shingle? While I haven't yet looked closely at the data or done the math, I get the sense that there are three (3) key variables that impact the rate of change to a crowdsourcing approach for a given job / business capability. Now I just need to find the effective data to prove my hypothesis:

Specialized Knowledge (positive correlation with rate of change): Take a look at the career disciplines that are trending more quickly towards croudsourcing: visual design, legal work, contract research, programming, writing / editing. They all require deep expertise, both to perform the work and to effectively evaluate work opportunities for fit. In addition, the knowledge worker "goods" they produce are created independently or with limited acquirer involvement, making crowdsouring models attractive for both the provider and the acquirer.

Knowledge work requiring lower levels of expertise (e.g., formal customer support, process fulfillment) has followed a separate path out of the enterprise, via outsourcing and offshoring. While there is definite movement towards decentralization of these jobs (e.g., work from home customer support), and solutions are beginning to emerge to enable task distribution and resource matching (e.g, Amazon's Mechanical Turk), the business infrastructure hasn't evolved to the point where these activities can be effectively crowdsourced at scale (my ballpark estimate: 2-4 years to inflection).

Personal Capital Investment (negative correlation with rate of change): I'm writing this post on a sub-$1000 laptop. Along with my mobile phone, I have all the tools I need to produce my knowledge "goods". From a capital investment perspective, mine is an easy job to crowdsource. A nuclear physicist, on the other hand, needs lasers and colliders and magnetic bottles to do their work. (Sidebar: why aren't more physicists evil supervillians? Money! It takes serious cash to build planet-obliterating particle beam satellites. But who wouldn't want to own one, even if your downfall at the hands of the debonair secret agent were assured? I digress...) Interestingly, when it comes to sciences, it's beginning to look like certain aspects of life science may have a shorter runway to crowdsourcing, given their nascent DIY movement (see yesterday's announcement about Petridish and today's NY Times piece regarding the rapidly decreasing costs for gene sequencing).

Perceived Value / Risk of crowdsourced "good" to the acquirer (negative correlation with rate of change): To date, the jobs / business capabilities exhibiting a faster rate of change to crowdsourced fulfillment are already being outsourced. Put another way, the aqcuiring organization already has an understanding of the value and risk associated with sourcing the "good" from its extended enterprise. 99designs.com is a good reference case: visual design services have been migrating out of the enterprise for decades: crowdsourcing is simply accelerating the movement by providing a newer, more efficient sourcing channel.

Of course, the counterargument to this claim serves up examples like P&G's "Connect + Develop" or the Open Innovation platform Innocentive, where the crowdsourced goods produced are integral to key business processes. While companies building virtual R&D capabilities are realizing significant value, the domain risk / value function is generally well understood: they've been leveraging contract research entities for years. At the same time, successful case studies like P&G lower perceived risk within the domain as market followers justify adoption as a means to maintain competitive position. Real risk diminishes in parallel, as the business and legal structures clearly defining responsibility and ownership are formalized.

My opinion is that there's something fundamentally human about the crowdsourcing ethos. Enough has already been said about the compromises and limitations of legacy work structures that evolved over the last century. Ironically, these structures serve neither the employees that live them nor the enterprises that enable them very well. Today's crowdsourcers are returning concepts of accomplishment and value realization to the individual, where they belong.

More updates as I dig into the dig into the data. Feedback welcome!