Putting Your Corporate Purpose to Work

Putting Your Corporate Purpose to Work

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Making a company purpose come to life is an arduous journey that requires a multi-pronged and sustained approach. Yet as hard as it is, the journey is well worth it and will yield positive transformation not only for the company, but also for the people who work there. And by changing how the company and its people relate to customers, suppliers, shareholders, and communities, that transformation radiates well beyond the organization itself. The author presents five steps for turning a company purpose into reality, using both the head and the heart.

Most business leaders agree that a company’s purpose should be about more than just making money. While plenty of time and energy is spent defining and communicating company purposes, only 42% of respondents in a recent McKinsey survey reported that their company’s stated purpose translated into impact — that’s excluding the 38% whose organizations had no stated purpose at all.

In my experience, the problem isn’t a lack of conviction or desire. Most executives know that investing time and resources into defining a purpose, only to have it exist just on the company website and in PowerPoint slides, is pointless. Words alone don’t magically unlock performance or make employees more engaged or customers more loyal. It may well be counterproductive, too, for the dissonance between words and actions is likely to frustrate both employees and customers. The main reason for the gap between intention and reality is that it’s hard to translate the company purpose — however well-defined and inspiring it may be — into how the company operates on a daily basis. So is ensuring it guides everything the company does and drives the expected results.

When I was CEO of Best Buy, we faced this challenge once we had articulated our purpose as “enriching lives through technology.” I’ve learned that it takes a series of steps to turn a company purpose into reality, and that these steps combine head and heart.

1. Make the company purpose the cornerstone of strategy.

Imagine you’re responsible for the strategy of a health and life insurance company. If you think only about the bottom line and shareholders, then your best strategy is to make sure your customers use your services as little as possible. Your customer interaction will focus on collecting premiums and managing claims.

If, however, the company purpose is to make people healthier and enhance and protect their lives, then the strategy changes radically.

This is how Discovery, a global financial services company from South Africa, defined its purpose early on. As a result, its strategy produced Vitality, a business model that turns traditional insurance on its head and serves all stakeholders. Using behavioral economics and clinical science, the company partners with tech companies, grocery and retail stores, gyms, and more to offer a wide range of incentives, games, and events that nudge Vitality members to exercise, eat well, and get their health checked regularly. The business model also allows for a dynamic pricing of risk. The result? Frequent, rewarding interactions with customers keeps them loyal. Healthier behavior improves their lives as well as local communities by reducing health care burden and costs. Resulting profits benefit the company, its vendors, and its shareholders — everyone benefits from this “shared-value insurance.”

What if your company defined its purpose long after it started operating? Best Buy’s new purpose fundamentally changed our strategy and how we did business. It unleashed significant innovation and growth. After several months of intense data analysis, we identified entertainment, productivity, communications, food, security, and health and wellness as the key human needs we wanted to address. These were the areas where we could enrich lives through technology. And we would do it by moving from a business focused on transactions and selling products to one that developed solutions and lasting customer relationships.

Making the company’s purpose the cornerstone of its strategy then requires reviewing what the company offers in light of that purpose. Ask which activities the company should:

  • Stop: For example, CVS deciding to stop selling cigarettes once they opted to emphasize health as their core purpose.
  • Evolve: For a food company this may mean reducing salt and sugar content if they care about the health of their consumers.
  • Start: New activities aligned with the chosen purpose, like what Discovery did in the example above.
  • Continue: Retain the business activities that squarely support the company purpose.

Another fruitful exercise is exploring how to make your chosen purpose come to life by developing and introducing new products/services, expanding into new markets, or realigning how you serve customers, as illustrated in the following matrix.

Had we not firmly anchored our strategy into Best Buy’s purpose, we would not have recognized opportunities now bearing fruit for the company, like offering “total tech support” and deploying in-home advisors. The point is to enrich lives through technology, so Best Buy’s Geek Squad started helping customers with their tech regardless of where they bought it. And in-home advisors make house calls to provide tech solutions that are best designed onsite, not in the store. This helps customers, who can develop a lasting relationship with a pro able to help them make the most of technology. And it helps Best Buy, as finding new ways to help customers brings in new revenues and profit.

Making a well-defined purpose the cornerstone of the strategy is a game changer. Discovery set itself apart from other insurers, and Best Buy’s universe went from the stagnant and increasingly commoditized market of consumer electronics retail to one rich in opportunities.

Note that getting there requires not only a solid strategic analysis but also genuine, empathetic listening to uncover customers’ underlying human needs.

2. Get traction by overcoming key operational challenges.

Adopting a strategy aligned with a new, meaningful, and powerful purpose is likely to require significant innovation and stretching into unknown territories. For Best Buy, it meant venturing into new sectors, like health, and developing a range of new services. Doing this while continuing to operate the business effectively and (hopefully) not missing a beat is not easy and often creates significant operational challenges. For example, how can innovation flourish when employees are focused on running the business? Or unaccustomed to experimenting? How can the company free up time, people, and financial resources?

In my experience, overcoming these challenges requires: 1) Creating new capacity to explore and pursue the potential new activities or markets identified, 2) developing better agility to generate speed and increase throughput, and 3) nurturing a safe environment that tolerates failure.

Creating capacity can be done in a variety of ways. At Best Buy, we set up a dedicated unit — the strategic growth office — tasked with developing, prototyping, piloting, and testing new ideas in line with our strategy. The unit, led by my future successor Corie Barry and staffed with top performers, was free to dream up new projects while the rest of the organization stayed focused on our existing business. To enter the health space, we also made acquisitions to obtain the capabilities we were missing.

In parallel, we increased our speed and throughput by adopting new ways of working through empowered, agile, multifunctional teams. We also pushed decisions down to the lowest possible level, delegating the authority to make decisions. Continuously improving productivity and simplifying our portfolio freed up resources that we could invest in new initiatives.

Third, we worked on creating a greater tolerance for failure. Innovation cannot happen without experimenting and taking risks. This may mean setting aside a budget for investments without unrealistic expectations of an immediate return. It also means creating a safe culture. At Best Buy, I gave “get out of jail free” cards to all our officers to signal that it was OK to fail when trying something new. Don’t get me wrong: The idea isn’t to bet the farm and risk failure on a scale that would jeopardize the entire business. New ideas and pilots can be tested on a small scale so that failures happen early and are contained.

Putting purpose to work is not only about this practical approach to change management. It’s also about winning the hearts and minds of all employees.

3. Enable all employees to write themselves into the story.

Ultimately, a company purpose becomes reality only if employees understand what it concretely means for them and their work, and if they get personally excited about it. This doesn’t mean rushing to communicate and cascade the newly formulated purpose to all employees. Top-down communication won’t produce great results in and of itself.

The process must start from within, and bottom-up. At Best Buy, we first asked leaders who knew the company best to answer a key question: If Best Buy were a person, how would they behave? In other words, what do we look like when we’re at our best? From this work, we settled on the idea that the company, through its sales associates, was an “inspiring friend” who helps customers understand what they want to do and imagines how technology can help them. From this, we defined how that inspiring friend — whom everyone at the company was expected to embody — would behave to deliver on that promise. These were not edicts flowing from the top. Instead, the idea was for each employee to figure out what it looked like for them.

An inspiring friend, for example, is expected to be human and authentic. To highlight what this meant in practice for each of us, we rolled out workshops across all U.S. stores. On a Saturday morning, employees in each store met at 7:30 a.m. for two hours, during which they shared personal stories with each other of how a friend had particularly inspired them, and why.

Once they had experienced being human and authentic among themselves, it became clear how they could relate to customers in the same way. Everyone at the company, including the executive team and the board of directors, participated in these workshops. This allowed us to see how being human and being an inspiring friend could apply to our relationships not just with customers, but with all our stakeholders.

This work is what makes purpose come to life — concretely and on a daily basis. Take the example of a woman who walked into a Best Buy store looking for headphones. She tells one of the store’s salespeople that she’s not sure which ones to choose. The salesperson has a choice. He can either recommend the most sophisticated — and expensive — headphones, or he can spend time understanding what she needs. He starts a conversation. Prompted by his interest, the woman explains that she needs to block off some of the noise in her open-plan office to be able to focus, but she wants to hear when her colleagues need her. Once the salesperson understands her problem, he can recommend the most appropriate headphones, which are not the most expensive. The customer is happy: She found someone who listened and genuinely helped her. And the salesperson feels good as well: His job is not to push headphones. Instead, he made a positive difference in someone’s daily life through technology.

“Work is love made visible,” wrote poet Khalid Gibran. That’s why we need a bottom-up, inside-out approach when putting purpose to work.

4. Align management practices.

Adjusting management practices to make sure they align with the company purpose is also essential to making that purpose real. In practice, this may mean resetting how you spend your time and interact with others. What gets more attention or gets discussed first signals what is most important.

At Best Buy, for example, I adopted the practice of starting monthly business reviews and board meetings by first discussing employees, then customers, before getting into financials. Even during Best Buy’s turnaround, when the company’s survival was at stake, we spent more time focusing on people and how we could fix the business than on financials. Does it mean we ignored the bottom line? Of course not. A business cannot survive if it doesn’t make money. But we viewed profit as what it is: an outcome, not a purpose.

Best Buy’s Holiday Leadership Meeting, which brings together store managers from all over the country to kick off the crucial holiday season, provides another illustration of how management practices can (and must) evolve. This annual gathering always kicks off with charitable activities, such as building computers for disadvantaged kids, to remind everyone that the company purpose is about enriching lives through technology — not financial results. The last meeting I attended didn’t focus primarily on how to maximize holiday sales, but instead started with front-liners’ and managers’ personal stories about what inspires them. The stage was at the center of the room, not at the front, and the CEO did not speak until day two.

We also change management practices by changing metrics. Key performance indicators should measure progress against the company purpose and how it relates to each stakeholder. There has been considerable work on this topic, including by some of my colleagues at Harvard Business School. Tools to measure how well purpose is embedded in a company’s practices are beginning to emerge. Instruments to measure progress serving all stakeholders have also multiplied over the years, from employee surveys and net promoter scores measuring customer experience, to carbon footprints and diversity achievements. Accounting standards are being developed to incorporate considerations like environmental impact.

Here are examples of indicators measuring how the company is doing with stakeholders:

  • Employees: Engagement; turnover; diversity, equity, and inclusion metrics; employee ratings and social media comments; best employer status.
  • Customers: Net promoter score; customer experience, acquisition, and retention; brand love; metrics related to purpose coming to life; progress of specific strategic initiatives.
  • Partners: Fair trade metrics; health of relationships (e.g., growth of relationship).
  • Community/environment: Carbon footprint; community health (e.g., education, health, status of social issues).
  • Shareholders: Total shareholder return (TSR) over time; relevant non-P&L or balance sheet economic items.

Measures assessing progress in implementing the company purpose are not perfect. In fact, defenders of the shareholder-primacy approach often use this argument to criticize the purpose-driven, multi-stakeholder approach for its inherent lack of accountability.

My response to them is, as William Bruce Cameron once said, that “not everything that can be counted counts; and not everything that counts can be counted.” In any case, imperfection is no excuse for inaction. The journey to develop and adopt better, more balanced, more broadly accepted measures of performance needs to continue.

5. Create a fertile ground for the company purpose to flourish.

Ultimately, a company purpose can only take root and flourish in an environment that inspires, enables, and supports all employees to give their very best — what I call unleashing “human magic.” This is not about carrots and sticks. It requires a fundamental revamp of the company’s culture, from the inside out. In my experience, five essential ingredients (which I discuss in detail in The Heart of Business) are needed to create and maintain such an environment:

  • Understanding what drives each individual and explicitly connecting it with the company purpose
  • Developing authentic human connections within the company
  • Encouraging autonomy
  • Fostering mastery at all levels, largely through individualized coaching and continuous learning
  • Creating a growth environment

Even with the best possible seeds and enough water, nothing can grow in barren soil. Nourish and tend to the environment, and everything becomes possible.

* * *

Making a company purpose come to life is an arduous journey that requires a multi-pronged and sustained approach. Yet as hard as it is, the journey is well worth it and will yield positive transformation not only for the company, but also for the people who work there. And by changing how the company and its people relate to customers, suppliers, shareholders, and communities, that transformation radiates well beyond the organization itself.

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