‘PURPOSE IS AN EXISTENTIAL TOOL’
Ranjay Gulati, whose research spans the breadth of senior leadership management practices, shares his insights
TO RANJAY GULATI, the Paul R. Lawrence MBA Class of 1942 Professor of Business Administration at Harvard Business School, the concept of purpose and performance go together. Gulati, whose book, Deep Purpose: The Heart and Soul of High-Performance Companies, released earlier this year, goes as far as to say that purpose drives performance in an interview with Business Today. Edited excerpts:
Most companies have a grand vision statement. How different is that from purpose?
Any business has tactics or day-to-day actions and then there is strategy, which is long-term. Then, there is a vision followed by values and behaviour forming the bit on culture and honesty. On top of all this is purpose or, rather, why we exist. To me, this is a forcing mechanism to contemplate the future and look at key issues such as our place in the world. Simply put, it is just having a more expansive view of the business.
It brings to mind my interactions with a few small companies that were slowing down after a period of intense growth and getting serious funding. I asked them what the problem was and they said, “We have lost the energy.” That really set me thinking. Then, in an interesting conversation with Satya Nadella (Microsoft’s Executive Chairman & CEO), he said, “We need a compass called purpose. Strategy will keep changing.” I then realised it is purpose that creates the energy within the organisation. Today, every company needs to think of its stakeholders—its employees and consumers, too. That is what purpose does by being a forcing mechanism. Purpose is not some management tool. In fact, it is more than that, an existential tool. Dharma in Sanskrit is the word that encompasses all of this.
Why does one hear so much about purpose today?
Credit must go to Larry Fink (BlackRock’s CEO), when he asked companies to think of purpose. Also, there is growing pressure where companies need to get involved in areas such as sustainability, inequality and a whole bunch of issues around what one sees socially. Today, we see a growing level of transparency where customers are boycotting companies. That means companies need to act by getting involved, and sitting on the fence is not an option. Besides, having a purpose is a strong talent magnet.
Are there industries where having a purpose is a lot easier? At what point do they need to start thinking?
Yes, one could say it should be obvious in food and healthcare but they, too, don’t always have a purpose! From a larger perspective, we see BP has gone beyond petroleum and was the first one to pull out of Russia.
A business has many roles to play and it must think beyond the obvious. In terms of when an organisation needs to think, I will take the example of start-ups, where they need to come up with an elevator pitch. For some entrepreneurs, it is an idea, while others say, “I want to change something.” It is this approach that signifies ambition and a greater understanding of the space. That said, it is never too soon to articulate your purpose.
Is there data or research to suggest that a purpose-driven organisation has a positive disposition among its stakeholders?
That is not definitive yet, since measuring purpose is not easy. Look at highgrowth companies and then identify what is the common story and one of them is purpose. Companies are slowly trying to measure their own purpose.