A sense of Purpose

“What is the purpose of my company?” I was asked this unsettling question at a recent meeting of CEOs, gathered together to learn about how to manage our businesses better.

Our speaker was trying hard to get us to focus on our purpose. And of course, he has a point; if we don’t have a purpose, how do we know we are doing the right thing? The alternative is to just float about and not bother about a purpose, never know if we are doing anything of value, and make essentially arbitrary decisions if we want to. Daft, right?

Well, if you say it that way, it sounds daft, but if you call it ‘flexibility’ it starts to sound more sensible. It is often said that most new businesses don’t end up doing what they first started out to do, making flexibility a core survival behaviour in such organisations. Certainly in my own career, I started as a young man with lots of plans, and although I have achieved a lot over the years and had a successful career, I can’t say any of it actually happened as planned.

For me, this means the ability to change your mind, adjust your direction and rethink your plans. Whatever I come up with for a purpose, it has to fit into this scheme somehow. It has to be something to give direction and focus whilst still being flexible.

So what is the purpose? One of our group had asked his mother, who had formed her business with his father many years ago. Simple and elegant, her answer was they formed the business to ensure their family was secure, protected from the vagaries of external influences, and had a steadily improving quality of life. I was bowled over – beats the hell out of “achieving a £10m EBITDA by 2020”, which was my first offering.

I was already uncomfortable about my financial approach because it was inherently unsatisfying – I knew it was not the reason I had started the business. I barely knew what EBITDA was when I started the MRN, and if you had asked me before this exercise I would have mumbled on about making sure everyone had a good salary and an eventual return as well as achieving my own personal goals.

I got to thinking about it more fully. I realised I had a ‘heads down’ approach to this question, which meant I had limited horizons, context and analysis – just staring at my feet really, in mental terms – what I needed was a heads up view – see the bigger picture. I had to start with the question, what is the purpose of ANY company?

Classic capitalist dogma says using the motivators of individuals to look after themselves will promote growth for all and a healthy economy for all, whereas now we can see that unfettered greed can severely damage an economy. Every man for himself is powerful of course, because it needs no social controls to work, and has worked in the past. However it isn’t perfect, and when risk is unlinked from a return, it can be extremely damaging.

Digging further into the concept of purpose I then come to all the stakeholder statements. These feel like they are more on the right track because they are multidimensional. They explicitly recognise there is more to a company than shareholders, and that there are other investments people make in a company that are not financial, but they still don’t explain anything. The concept is unbounded which makes it useless – too broad and it loses any discernment as to the views of the stakeholders and too narrow and it loses balance and fails to represent the full community it should represent.