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Successful companies define their purpose in 4 different ways. But does this effort of defining a purpose translate in better financial performance? Also, do employees generally engage with a company's purpose?
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© Copyright 2012 London Business School
PURPOSEA sense of purpose is increasingly
recognised as essential forbusiness and personal success.
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Purpose, defined by Douglas Readyand Emily Stecker Truelove is
“the company’s reason for being;why it exists; its core mission as an
enterprise”.
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Nikos Mourkogiannis, author ofPurpose: The Starting Point of
Great Companies sayssuccessful companies definepurpose in one of four ways.
1 2 3 4
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Discovery - This type of purpose involves a love of thenew and innovative, and it animates manytechnological businesses. Seeking the new does notmean constantly changing course.
1
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Excellence - Excellent businesses prefer to turn awaycustomers than compromise their quality standards.2
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Heroism - Think of Henry Ford’s creation of his world-changing motor company or Bill Gates’ Microsoft.3
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Altruism - This purpose could take the form ofpersonal service beyond that normally expected,delivering products at affordable prices, or usingtechnology and ideas to improve lives.
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Purpose in numbers
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A strong, strategically coherentand well communicated corporatepurpose is associated with up to17% better financial performance. IMD/Burson Marsteller Corporate Purpose Impact Study 2010
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Only 10% of managers take purposefulaction — a powerful combination ofenergy and focus. Meanwhile, 30% ofmanagers procrastinate, 20% showdetached behaviour and 40% exhibitdistracted behaviour.Sumantra Ghoshal and Heike Bruch
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“Management was, is, and alwayswill be the same thing: the art ofgetting things done.”Bob Eccles and Nitin Nohria, Beyond the Hype.
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Only 40% of employees understandtheir organisation’s strategy.Accenture High Performance Workplace Study
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88% of highly engaged employeesbelieve they can positively impactthe quality of their organisation’sproducts; only 38% of disengagedemployees think so.Towers Perrin 2008
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“You cannot foster true innovationwithout engaged employees.”Julian Birkinshaw, MLab and London Business School
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Only 4% of UK workers exhibit thehighest level of engagement withtheir work.Corporate Leadership Council
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“The purpose of business is tocreate a customer.”Peter Drucker
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40% of a company’s reputation isdetermined by its purpose and60% by performance.Burson Marsteller/Penn, Schoen & Berland, 2008
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This report was part of Business Strategy Review, Volume 22 – Issue 3 2011
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