Saturday, June 12, 2010

Purpose Driven Strategy

Strategy without Purpose is like kicking the ball to the goal post without knowing where the goal post is. In other words, if strategy is the compass, then purpose is the guiding light. At best, strategy is just a set of smart paths to a destination, whereas purpose is the journey in it by itself. Purpose is something that we need as part of our DNA; purpose is what drives us, ignites our passion and gives us the hope and reason for our existence. Strategies are about the means and they cannot be an end in itself. The challenge today is that many corporations are not lacking strategies, they lack a reason for existence–they lack ‘purpose’.

Having a strategy is a must, but not sufficient…. You need to have a purpose driven strategy for the journey… and …its purpose is that brings meaning and life to the journey. The question is - does your corporation’s strategy have a purpose?

I would use a seed analogy - and equate the “Seed" to "Purpose”. The purpose seed, in my mind has four components -

• Vision (what the firm aspire to be)
• Mission (why does the firm exist/what does it stand for)
• Values (the intangible instruction part)
• BHAG (goals/expectation)

Together, these four invisible instructions, tell the purpose seed to take a deeper root called ethical capital (the cornerstone) prospering eventually in to a healthy crop called the corporation. Seeds have invisible instruction(s) inside them – a corn seed turns in to a corn crop whereas the wheat seed in to wheat crops and so on and so forth. Similarly, words that clearly depict the aspiration, values and goals of a corporation are the seeds for purpose - Purpose then becomes the seed for growth. In other words, a company that embed the right type of invisible instruction(s) within the Purpose statement (seed) will definitely grow in to the crop (corporation) the invisible instructions tell it to grow.

So, within this seed analogy – where does strategy fit in? Extending the analogy little further – the healthy soil, fertilizer and water all can be equated to economic capital, strategy and execution respectively. Strategy is more of a fertilizer as it helps the seed to grow faster to its fullest potential very much like how business model strategies help the company to make money faster and efficiently.

Speaking of business models – vanilla business models are usually created by reshaping the capitals and/or resources within the value chain and/or by shuffling the activities within the value chain whereas purpose driven business models go one step further and redefine the purpose (including the ethical capital) of a corporation as well. I call these purpose driven business models as Purpose Models. Purpose models are the revolutionary game changing business models that not just reinvent the business of the firm, but also mutate the DNA of the brand and the firm -alike at the nucleus level from top to bottom. In other words, business models usually shuffle the value chain activities of the firm within the four walls of the firm (or at the maximum within the industry vertical) whereas purpose models go deep – apart from shuffling the value chain activities –they also repurposes the vision/mission/value/BHAG of the firm within the context of the cross border industry boundaries with an externality/internality/actuality based purpose mindset.

Bottom line : The sooner you understand the difference between these vanilla business models and purpose models and the importance of purpose driven strategic mindset, the better strategic decisions you will make to move your corporation from good to great - as the statistics shows purpose driven corporations have always outgrown the ones who do not have a formal purpose agenda.

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