purpose driven growth | product-market resonance | brituals | leading from within

 

the purpose of our corporate existence

Published by Business Mandate – A Journal of Madras Management Association (MMA) – Chennai

It is often assumed that the purpose of any business is to make profits. So everything else from HR to Marketing to Customer Service is defined as a means to achieve this business purpose. But we need to closely look at this fundamental assumption.

One of the fundamental unquestioned assumptions about a corporate business entity is its purpose of existence. Many people strongly believe that there is one and only indisputable purpose and that is to "make-money" and "maximize-profits".

If we define the purpose as “maximizing profits”, then consumers, employees, suppliers and even shareholders are treated as a means to achieve this objective. So as per the existing paradigm “money” is the objective and “people” are the means. This underlying unquestioned assumption, might be the cause of many of the financial scandals, social tensions, and environmental degradation that business corporations world over are accused of. But that could be a subject matter for a separate article.

If we carefully look at the real underlying reason why people come together to create organizations and business enterprises and the reason why society allows business entities to exist and relate with each other – it is to “fulfill people’s needs”. Here the word people includes not only employees, but all people who are an essential part of the economic value chain, whether they be customers, suppliers, partners, or investors. Money and profits are very essential and important elements in the functioning of the value chain. But Money can only be the means not the objective.

From Money is the Purpose, People are the Means - To People are the Purpose,  Money is the Means

So we first agree that the ultimate purpose of any business organization is to fulfill the needs of People – People who are Customers, Suppliers, Partners, Employees and Investors. We then say that money and profits and growth are all means to achieve our purpose. We also need to say that the purpose has to be achieved by making best use of available resources and technology.

A Market Approach to maximizing Fulfillment of People

When we go about defining “fulfillment of people’s needs” as the primary business objective, we also have to keep in mind the constraints imposed by the market.

The key constraint that will be imposed on the business corporation by the market is that the corporation has to pursue its primary objective of fulfilling the needs of people, subject to the obligation that it provides “market-rate returns” to investors who invest directly or indirectly in their company.

The term market rate of return does not mean any ad hoc rate fixed by anyone, but a truly market determined rate which could mean different rates for different companies depending on the risk profile, size and potential of each business. This is already the norm in today’s financial markets. In today’s world, money has become a commodity and Financial vendors are managed like suppliers.

If all the industries and corporations, redefined their purpose of existence as mentioned above, then their growth strategy will not be “Maximization of Profits” but “maximizing the Impact the business has on People across the Value chain – subject to the  constraints of available resources and subject to the obligation of providing market rate returns to its financial suppliers.

The impact on HR Function

If HR function is about the development and growth of people, and there are people in all the 360 Deg directions of a business (Suppliers, Customers, Employees, Partners, Investors), then the role of HR will be elevated to its rightful place – a leading position in Corporate Strategy and Direction.

HR will be tightly integrated with Marketing and Business Strategy, because ultimately the purpose of the business is to fulfill the needs and aspirations of people, grow and develop them. The people centric goals of the business across the Value chain, will become the starting point of any business strategy and the financial goals will become a subset of them.

Soon the line between HR Professionals and Business Leaders will blur. The line between employees, channel partners and consumers will also blur. HR Professionals and Business Leaders will feel responsible for the development and growth of – not only - their employees, but also their consumers, suppliers and partners who are closely involved with the business in "co-creation" and "pro-sumption".

Benefits

Defining the purpose of business correctly (in a people centric way) instead of defining it wrongly (in a money centric way) has many other benefits.

First and the most important direct benefit, is the happiness, involvement, commitment, passion and dedication with which people will engage themselves in a purpose driven organization – important attributes that we need in our people, that money has never been able to buy.

Second, it can deliver equitable benefits to all the stakeholders of a business across the value chain.

Third, Maximizing the no of people the business impacts, will become an important growth strategy and the “Bottom of the Pyramid” markets will start looking more attractive and viable.

Fourth, the entire corporate and business world will start becoming socially responsible entities. It will have a far larger impact on social equity, economic growth, poverty eradication and environmental protection, than what any single government can ever achieve using subsidies and laws.

Sample Statement of Purpose - 1

The purpose of our Company is :

To fulfill the needs and aspirations of our customers, partners and employees

- by maximizing the Impact our business creates on them
- by maximizing the no of people our business impacts
- by making the best possible use of available resources
- by exploiting present and future technologies

while being obliged to provide "market rate" returns to investors and suppliers

Sample Statement of Purpose –2

We are in business for growing people..…to build meaning and significance in individual lives

We are in business for serving people……people who are our customers, partners, vendors and investors

Sample Statement of Purpose - 3

We want to be an organization that people love to work for and it is hard to lure them away. We want to be an organization that is sought after by all people such as employees, customers, partners, vendors and investors.

Closing Remarks

I would like to end this article by quoting Robert K Greenleaf, a leading visionary and advocate of Servant Leadership. He wrote this more than 50 years ago, but it is more relevant today than ever. – Please see Annexure:

Reference :

Robert K Greenleaf ( (1977 ) Servant Leadership – 25th Anniversary Edition Magna Publishing Co Ltd (2003) pp 154-160

Annexure

What are you in business for?  Excerpts from “Servant Leadership”  - by Robert K Greenleaf

I have confidence that a new business ethic will emerge...There are many parts of the total business ethic that need attention, but the one I will deal with seems the most basic...

..Looking at the two major elements, the work and the person, the new ethic, simply but quite completely stated will be.. "The business exists as much to provide meaningful work to the person as it exists to provide a product or service to the customer". The business then becomes a serving institution - serving those who produce and those who use. At first the new ethic may put these two on par. But as the economy becomes even more productive.. the new business ethic of service to those who produce, may rise in priority, above service to those who use and the significance of work will be, more the joy of doing rather than the goods and services produced. There must, ofcourse, be goods and services at some level, but in an era of abundance, they need not be the top priority...

… In an overcrowded industrial society… where most people spend their working lives, [business institutions need to ] adopt an ethic in which meaning and significance are the goal - at least on parity with other goals. And to bring it to parity, it must, for a while at least, be the primary goal... Its accomplishment rests on the ability of institution builders and leaders to move these institutions (while keeping them intact and functioning) from where they are, with the heavy emphasis on production, to where they need to be, with the heavy emphasis on growing people. And they have to do this while meeting all the other performance criteria that society imposes for institutional survival…

.. The process has already started in some businesses, with the effort to accommodate the very able young people...who have a clear, individualistic style that they are determined to preserve and who need the excitement of a dynamic purpose…

…Motivation then becomes what people generate for themselves when they experience growth. Whereas the usual assumption about the firm is that it is in business to make a profit and serve its customers and that, it does things for and to employees, to get them to be productive, the new ethic requires that "growth" of those who do the work is the primary aim, and the people then see to it that the customer is served and that the ink on the bottom line is black. It is "their" game. The art of course is how to do this in a firm that employs many thousands..

…When the business manager who is fully committed to this ethic is asked "What are you in business for..?", the answer may be " I am in this business for growing people" - people who are stronger. healthier, more autonomous, more self-reliant, more competent [and more happy]. Incidentally we also make and sell at a profit things that people want to buy, so we can pay for all this. We play that game hard and well and we are successful by the usual standards, but that is really incidental... We manage the business about the same way we always did.  We simply changed our aim. Consequently, as an institution we are terribly strong. In fact we are distinguished. How do I know we are distinguished? Because the best young people want to work for us.. and once they are inside, they never want to leave. Any business that can do that is a winner…

End of Annexure