Sunday, June 13, 2010

Purpose First or Profit First? The Leadership Dilemma

In an earlier blog, I had explained the concept of purpose driven strategy with a seed analogy. Over the weekend, I heard back from some folks - where does leadership fit in to the seed analogy? Well, Leadership is more important than the Fertilizer - for that matter even more important than the seed itself– as leaders are the farmers who manage the whole cultivation process, right from the plantation stage up to the harvest stage and beyond. Hence, leaders have a much greater responsibility of aligning purpose and strategy with an end goal of sustaining the company’s ‘legitimate purpose’ and ‘profit’. Without legitimacy, more profit dollars need to be diverted to achieve sustainability and without profit, legitimate purpose has no relevance.

So, it is one of those things leaders often wrestle with – “Profit first or Purpose first”. While, research is showing that the purpose driven companies have outgrown( 5 times) the ones who do not have a formalized purpose agenda - one can also argue that the higher profits (without investing too much on sustainability based purpose agenda in the near term) in-turn can help companies to afford the sustainability based purpose agendas for the long term. While there is merit in both arguments, it is one of those "right vs. right" type decisions companies have to wrestle with - and come to terms with “doing both” type of mindset - in the words of Inder Sidhu.

Speaking of "doing both" – even most talented leaders today keep tossing and turning - as doing both – demands you to exhibit some key leadership traits more than the other – i.e. what I call the “3E leadership traits” – especially, when you are challenged with these difficult purpose/profit dilemmas.

  • Energize: Hire the right people first and then devise a purpose inspired strategic direction.

  • Empathize: Inspire a collective support for the direction by resolving conflicts (if any) with an empathizing mindset and ensure that every voice is heard and everyone is executing as per the direction.

  • Empower: Set up the process and systems with an empowerment culture that gives the authority for everyone to own the purpose plan as if it is their own plan.


To energize means - literally breathing the energy in to the lives of the people around you. Energizing is - first the act of hiring the right people, followed by generating fresh ideas, vision and passion and finally - instilling the purpose within the DNA of every members of the community. How do you do that? As a Leader, you must be authentic and live an example of the message you are preaching so that people can relate to you. This type of authentic purpose in turn energizes the community to achieve the common purpose driven goals.


To empathize means negotiating – it is putting you in someone else’s shoe and see the world from their vantage point. While it is important to translate the big picture purpose driven strategy in to annual operating plans using an iterative strategic planning process, it is equally important for you to demonstrate empathy to feel the challenges of your team as if it is your own- so that individuals will also start doing the same and own the purpose plans as if it is their own plan (and their money). In other words, as a leader, you must ensure that individual cooperation is achieved by negotiating objectives that are consistent with the big picture - as those individual level objectives are the ones that make purpose and strategy actionable.


Empowering is not a zero sum game. As a leader – you must give all the tools, training and authority needed for all of your employees to achieve the purpose driven objective – and if those tools are not available, they should feel comfortable to speak up and ask you for help. This is very important – as a leader, you must empower the team with proper processes, structures systems, incentives, decision rights and tools to sustain a healthy organization empowered with a high performance culture.

Bottom line: Doing both (Purpose and Profit) – indeed demands you to exhibit this 3E leadership trait on a daily basis - as it is the recipe for maintaining your ability to sustain profit and purpose in the 21st century. By making regular refinement of the purpose agenda along with the 3E leadership traits, you will make your organization a best in class incubator for purpose leaders who not only excel in their leadership skills, but also will be greatly sought after in the industry. Purpose driven decisions on a daily basis increases productivity of the employees, enhances the morale, increases the perceived value to communities, and produces healthy financial results, better stock prices and dividends for your investors and other stakeholders.

Let us keep the conversation going!

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