18 Oct Dr. Bob’s Reads: Using Purpose as Your North Star
We strongly encourage the organizations, leaders and teams we work with to (1) define your why / purpose and (2) use your why / purpose as your “North Star.” Be intentional – use your purpose to guide your journey. Factor your purpose into every decision you make.
Our experiences and results concur with the key points shared in a recent HBR article entitled “Put Purpose at the Core of Your Strategy.” The article is based on conversations with senior leaders of 28 companies (based in Europe, India and the United States) that had an average compound annual growth of 30% or more for the last five years. Some key takeaways from the article:
- Purpose clarifies what a company stands for and provides an impetus for action
- Many companies consider purpose to merely be an add-on (check-the-box) to their strategy
- The most successful companies have moved purpose from the periphery of their organizational strategy to its core
- A purpose-driven strategy helps companies overcome the challenges of slowing growth and declining profits by redefining the playing field and reshaping the value proposition
- Purpose helps with the people-related aspects of running a business, which is so often prove to be the undoing of leaders
- Defining and using purpose as your “North Star” often involves a bold, multi-year transformation of the organization’s structure and culture
- Mini case-studies shared in the article:
- Neste, a Finnish oil-refining firm founded in 1948, realized 2009 they could no longer survive solely focusing on the crude oil “playing field.” Their new purpose would be to develop sustainable sources of energy that would help reduce emissions. Everything they did going forward would be guided by a simple idea: “Creating responsible choices every day.” This bold transformation took 7 years. The most important investment Neste made? Engineering a fundamental change in the company’s culture. By 2015, Neste had established itself as the world’s largest producer of renewable fuels derived from waste and residues. A year later, its comparable operating profits from renewables would surpass those of its oil-products business.
- In line with its purpose of “contributing to a safer society,” Sweden’s Securitas AB, a security company with 370,000 employees, has traditionally offered physical guarding services. In response to emerging trends (globalization, urbanization, increasing cost of labor, decreasing cost of technology, etc.) the company decided that it could no longer “simply sell man-hours.” In 2010, the company began to explore new ways of using electronics to provide security. From 2012 to 2018 the company’s sales of security solutions strengthened client relationships, significantly increase margins and generated 20% of Securitas AB’s total revenue.
- Mars Petcare used its purpose (“A better world for pets”) to expand beyond the pet-food market (a market that they focused on for 75 years) into the pet-health market (veterinary services) and pet activity monitoring market (“smart” collars). Mars Petcare has become Mars Inc.’s largest and fastest-growing business division.
Bottom-line: Many high-growth companies are using purpose as their “North Star” to deepen ties with their stakeholders, stay relevant in a rapidly changing world and to generate sustained profitable growth.