Purpose Driven Leadership (PDL©) Framework– the missing link within the Strategic Planning Processes?

Our article, last week on the topic of PTV+ TRIO, appears to have triggered quite a bit of enthusiasm, not only within the strategic planning circles, but also, within few other professional networking circles – as evident from, both the formal and informal questions, we received from our readers. As we were thinking about the best way to respond to those questions, we quickly came to the realization that there seem to be a missing link within our strategic planning processes i.e. lack of a “customized, inside-out leadership framework”, to better manage the nuances of the strategic planning engagements of the 21st century.

In other words, most experts agree with our assessment, that a customized, inside-out leadership framework, is one of the most important pillars (out of the top three essential pillars listed below) for successfully executing the strategic planning engagements - and hence, we decided to cover that subject within today’s blog – as part of answering our reader’s questions.

• Method in the form of an appropriate strategic view – e.g. our Portfolio-Thread View PTV© with EPP©, CPP© & PIP© frameworks.


• Motivation – in the form of a compelling OD culture driven collaboration/motivation process, energizing the stakeholders to come together for a common cause like strategic planning – e.g. our Power through Collaboration (PtC©) process promoted by Dr. Steve Willis.


• Means – in the form a customized inside-out leadership framework, facilitating the method and motivation pillars of the strategic planning engagement, from start to finish, in a flawless manner – e.g. our Purpose Driven Leadership (PDL©).

With us already have covered the first two essentials with our PTV© and PtC© processes respectively– we thought that it would be appropriate to propose an outline for our “customized, inside-out leadership framework” called PDL© as part of today’s blog. I hear someone asking – why yet another leadership framework? While we agree, that there are plenty of leadership frameworks available within the market place –we feel, that there is a need for a customized, inside-out leadership framework, to tackle the specific nuances of strategic planning engagements of the 21st century, given the fact, PTV© is one of the very few purpose driven strategic planning frameworks available, within the market place today. Yet another inspiration for our work comes from the impressive work done by the OD/Leadership coaching experts like Pete Delisi and Surya Ganduri who rightfully so, also has also placed the OD culture driven leadership framework, at the center of their systemic strategic planning approach.

Defining the multi dimensional concepts like Leadership

First things first - what is leadership? While there are plenty of definitions available, most experts agree that leadership is one of the most difficult concepts to define, partly because of its multi dimensional nature. This is perhaps one of the reasons, most experts still have some difficulty defining the infinite concepts like leadership (& culture, health etc) 100% effectively, for us to understand their fullest meaning. In other words, leadership is a variable concept (like size) and often is expressed, in terms of “more or less” - and so, it cannot be completely defined by the traditional “attribute based models” that are commonly used to define finite things like water or juice. Hence, it is important that we go back to the basics and understand the challenges involved in defining these infinite concepts, before defining what leadership is.

Another approach that is commonly used to define the infinite concepts is the “intention/outcome based model” – which is good in expressing the maximum possible “functional or emotional manifestation” of these multi dimensional concepts; however, they also have a limitation of expressing the outcomes from a just a “point in time” dimension only. This means, that there is always some delta meaning of the concept (fullest meaning – maximum meaning) that cannot be completely expressed in a definition format. This delta (fullest meaning - maximum meaning) varies from definition to definition, time to time, and human being to human being.

With that said, a balanced definition approach, deriving its best features from both attributes and outcomes based definition models, that are threaded together in the form of “leadership causal traits model” seems to be best way to go, given the inherent limitations of attribute and outcome based models. Yet another rationale for us taking a balanced approach is the need for standardizing the leadership traits (i.e. attributes and outcomes) with a common lingo, across both individual and empowered organizations, ultimately fostering the highest levels of leadership styles in the form of a causal thread with the “confidence, commitment, context, caliber and call- to-action” sequence– to help us achieve superior levels of productivity and performance – as explained in detail, later in the article.

PDL©’s Five Leadership Portfolios glued by the Purpose seed within a sinusoidal triangular construct!
With that prelude, let us see, if we can reenact our balanced definition, in the form of few leading questions and group them within a portfolio construct.

• Is it something we have it inside of us that is manifested in the form of a confidence creating trait? - Attribute based trait


• Is it something one exhibits during some of the difficult seasons of life or business? - Attribute based trait


• Is it something one exhibit to embrace each other unconditionally? - Attribute/Outcome combination trait


• Is it something we recognize when we see? – Outcome based trait


• Is it a tangible thing one can reap and experience? - Outcome based trait
  

As part of our attempt to define these attribute/outcome based traits in a balanced manner, we have grouped the attribute/outcome traits into five portfolios, and have chosen a sinusoidal trio construct (sinusoidal wave that is overlaid on top of the triangular construct - see picture above) – to better pictorially represent the nuances of these attribute/outcome based traits. We have also reversed the triangular construct of the framework for an important reason of aligning two of its base vertices to the two upper crests of the sinusoidal construct, with a goal of communicating an important message, that these leadership traits are governed by the seasonality principle, very similar to how PTV is governed by the seasonality principle, to resolve its six macro dilemmas.

As we can clearly see from the table above, that the leadership traits that are grouped under Faith and Hope Portfolio are mostly “attribute traits”, whereas, the traits within Love portfolio have the characteristics of both attributes and outcomes. On the other hand, Service portfolio (service) and Value portfolio (value) are mostly outcome traits – yet, all five of them are bound together, beautifully by the invisible glue (or instruction), called the purpose seed.

Yet another point that deserves our attention here is that – Faith and Love Portfolio traits are placed on top of the two crests of the sinusoidal wave (& hence the two bases of the triangle), whereas the Hope Portfolio traits are placed on the trough (& hence the vertex of the triangle) of the sinusoidal construct – to communicate another important message of aligning leadership traits with business seasons. In other words, exhibiting right type of leadership trait for the right moment is more important than exhibiting the vanilla leadership traits themselves - and rightfully so, PDL© encourages leaders to exhibit the Hope portfolio traits (more than the other portfolio traits) during those turbulent trough times of the business life cycle, and Faith/Love portfolio traits during the crest times of the business life cycle.

Another interesting aspect of PDL© is the emergence of seasonality driven sinusoidal wave pattern within PDL©’s purpose driven leadership journey. Like our personal lives, most businesses, also start their journey on a higher ground (or the crest) by exhibiting the Faith Portfolio traits, however, sooner or later, they invariably end up going through those trough times - and this is where PDL© encourages, leaders to exhibit Hope portfolio traits, so that they can pull their businesses out of the trough seasons quickly, and move onto the next crest experience exhibiting the Love portfolio traits - which then, is followed by Service and Value Portfolio traits - as outlined in the picture on top of the page.

While this sinusoidal wave pattern is the typical path for most businesses, history is also filled with examples, where some businesses, get stuck on the trough zone for an extended period of time, partly because of the failure on leaders’ part, to exhibit those optimistic Hope portfolio traits. Granted, trough or valley situations are bound to happen in most business journeys, but what is more important is, leaders steering the businesses, to come out of those trough times quickly. This is the reason, PDL© framework is designed with a sinusoidal construct to stress the need for leaders to equip themselves with a balanced set of five Portfolio traits, so that they can apply their intuitive judgment, and use the right portfolio trait, for the right moment, thus minimizing, the so called trough seasonal impacts. In other words, the means by which leaders achieve the end, is equally important as that of the end itself - as we learn from the three prime time, servant leaders of all times - Nehemiah, Omar Bin al-Khattab and Krishna - who exhibited the Hope portfolio leadership traits, during some of the difficult seasons of their leadership missions.

PDL©’s five Leadership Threads Enabling the Transformational Change leadership!
Now that we have laid out the leadership traits of PDL© in a portfolio format for easy understanding – the next important thing is, highlighting how the framework comes to life, in a real world leadership situation. One of the acid tests for leaders (per most experts) is how they handle the transformational change leadership, that is very much in demand needed to transform the 21st century businesses, where, the transformational/change leader is not only expected to exhibit the purpose driven versatile leadership, but also, be able to adapt to new conditions, open to innovative ideas, and be prepared to deal with both expected and unexpected events – all simultaneously, as echoed by fellow strategists like Gerald Nanninga and Ali Anani.

With that said, the natural follow-on question is how PDL© inherently helps one to be a successful transformational change leader? The answer lies in the important insight that transformational change leadership is not an event, but an ongoing process (or one can call it as a movement to be precise) – which means, each stage of that transformational change movement, has different business characteristics, and hence, need different set of leadership traits, to address the nuances of those characteristics.

As it turns out, every one of the leadership traits from PDL©’s five Portfolios, happen to form five unique threads, to meet the leadership expectations of transformational change experience, in alignment with the seasonality driven sinusoidal/triangular pattern, as outlined below, and on the picture on the top of the page. It is interesting to note that each of these threads, not only act as the stepping stone for the next thread, but also, map1:1 to PTV’s principles and frameworks, in a sequential manner, as outlined in the summary table below.

PDL©’s Five Leadership Threads in Action

Now that we have learned that the transformational change is an ongoing process or movement, it brings up yet another differentiating point about PDL©, that PDL© is an “inside out” framework as opposed to the “outside in” model used by most of the other popular leadership frameworks. What do we mean by that? PDL© handles the five stage transformational change process, first by creating the confidence within the hearts and minds of the leaders and followers alike, which then triggers them to voluntarily to do great things, as opposed to the other popular frameworks, that encourage leaders to exhibit the “call to action” leadership traits from the outside-in. This is one of the reasons, we suggest our readers to experience the five stages of transformational change process in a real word assignment (business, charity and/or society), so that they can better exhibit these five “inside out” leadership traits in the threaded sequence listed below.

Interestingly enough, these five threads, also align perfectly with the inherent meanings of our five fingers and so, we suggest our readers, to imprint these threads into their respective finger prints. Please note that our PDL finger printing sequence starts from the thump finger, followed by the small finger, and then the ring finger, middle finger and finally the index finger. In other words, PDL's fingers print sequence is– Thump-Small-Ring-Middle-Index.

1. Confidence creating "faith-hope-love thread", led by the Thump finger, that is known for its asserting power, confidence and will power – and rightfully so, this thread happens to be the foundational leadership thread that sets the right tone for the leadership, where all the other activities derive their strength from, as without confidence there is no leadership. Having the confidence on the part of leaders and followers alike, gives the assurance to the stakeholders that the organization can do what it is set out to do. Confidence usually starts with the faith – i.e. believing in the organization’s purpose when there is nothing substantial to believe in – as faith is substance of things hoped for and evidence of things not seen – which by the way, brings up our next attribute called hope, within this thread. While faith might be the starting point, hope is the thing that actually brings life to that faith, even on situations, when an organization is going through some of its worst difficult times. Hope may be the only thing, those organizations, may have to hold onto, during those darkest moments– as there is always a mountain top experience after the valley experience – which brings up our next portfolio called love that is supposed to be exhibited as part of those mountain top experiences. While some question the relevance of manifesting love portfolio traits within business environments, we choose to differ, and would even argue that love is one of the key traits, that needs to be exhibited in a business setup, as long as it is mixed in the right dosage with other portfolio traits.

2. Commitment producing "trust-aspiration-empathy" thread, led by the Small finger, that is known for its intuitive trust, energy and empathy– As the saying goes, confidence without commitment has no meaning - and rightfully so, confidence producing faith at times might fail us, whereas, the commitment producing trust will never. This brings up the need for the next stage of leadership, where the confidence created in the earlier thread manifests itself as the action with a “trust-aspire-empathy” mindset. In other words, within PDL©’s causal chain; if “faith-hope-love” thread is the cause, then “trust-aspire-empathy” is the effect.

3. Context creating "mindset-body space-heartbeat" thread, led by the Ring finger, that is known for setting the context for the relationship (creativity, expression and love) –rightfully so, this thread sets the right context for the leadership, as the text without context is the pretext and so, we cannot stress the importance of this stage of leadership anymore, given the fact, leadership always needs a context to operate. Context, in his case means, understanding stakeholders’ heartbeat, mindset and body space within their day-in-the-life cycle. Without this context, our prior threads of confidence and commitment have no relevance at all – and so, success of PDL leadership lynches on this ring finger thread called context. As it turns out, this thread of leadership is also stressed by the WestPoint leadership framework and interestingly, our context creating thread traits aligns perfectly with the “BE”, “KNOW” and “DO” focus areas of WestPoint framework as well.

4. Caliber producing "talent-skill-wisdom" thread, led by the Middle finger, known for its analytical reasoning (analysis, synthesis and discernment) – With Human resources seem to be emerging as the most important capability within the 21st century organizations, we have no words to express the importance of this thread as Caliber of an organization can make or break a situation in a snap moment. Interestingly enough, middle finger (along with Thump) is the only finger capable of making the snapping sound (symbolizing the make or break situation for organizations), especially, when leaders fail to hire/train the right set of people with the right caliber (i.e. mix of talent, skills and wisdom). At this juncture, it is important that leaders understand the subtle differences between skills, talent and wisdom, which sometimes are collectively called as “TALENT”. The reason we would like to highlight this subtle difference at this juncture is that certain sub-components of TALENT are more important than the others depending upon the strategic direction (organic core growth vs. adjacency growth vs. disruptive growth vs. some combination of the three) leaders decide to take their organization to –

• A skill is something that we learn (like driving a car) that needs to be “nurtured/trained” within the talent management process.


• A talent is something that comes naturally (like singing or public speaking) that needs to be “encouraged” within the talent management process.


• A gift is something that is given us from a Higher Power (e.g. wisdom) that needs to be “treasured” and used in right proportion at the right time for the right purpose.
  

With that said we cannot stress enough the importance of leaders identifying these sub-component level differences at the individual level and develop a customized TALENT management processes to grow the followers at the personal level. Discerning those differences early on at the individual level will help the organization to adopt the right TALENT development strategy for the right sub-component of TALENT. For example, nurturing/training strategy that works well for skill development, in general, does not work well for talent development. On the other hand, motivation process in general works well within the talent development process - as talents need encouragement, mentoring & the platform support.

Yet another trap leaders fall into is merging talent management process into the performance management processes – and so it is important to highlight differences between them as well. Performance management is a point in time assessment of the results against pre-established goals, based on the opinion of few managers, whereas talent management is assessing, whether an individual or an organization has the right set of talented people and processes (hiring, training, career plan, succession plan etc) in place to sustain its business operation, in alignment with its 5-10 strategic plan. Without this distinction, leaders will end up nurturing people with the outdated yardsticks of last century and developing wrong set of leaders who are not sufficiently equipped to handle the challenges of 21st century.

5. Call-to-Action producing "know-how-action drivers-Inspirational insight" thread, led by the Index finger that is known for calling the shots (knowledge, defense and offense ) – Last, but not the least, leadership, at the end of the day is walking the talk and talking the walk – which means, leadership is all about blending these “call to action” thread traits of “know-how, recommendations and intuitive inspirational insights” and translating them into actionable decisions that are appropriate for the moment - and until that happens, everything else has no meaning. With that said, “talk the walk and walk the talk” is the motto of this thread.

PDL© vs. other popular leadership frameworks

While it is true that our PDL© framework derives some of its best characteristics from other popular leadership frameworks like servant leadership, it also has few additional nuances to overcome some of the perceived shortcomings of servant leadership, especially, within a business s environment – i.e. SL’s over emphasis on servicing the followers. For example, Servant leadership, sometimes is wrongly perceived, as a style promoting too much of a charity mindset within a profit minded businesses. This is where, our balanced PDL© framework, with its balanced set of Portfolios and Threads help both leaders and followers alike, to exhibit the business focused leadership traits -with the “right portfolio/thread trait for the right moment” mindset. Having said that, we would be the first one to agree, that servant leadership is a timeless treasure and as a matter of fact, PDL© in its best form, always is manifested itself as servant leadership, especially when leaders are expected to exhibit the “unconditional love with a greater than myself” type of mindset - as alluded by Steve Faber and his team in their G5 leadership paradigm. I guess, no matter how we slice it, old is gold, as reiterated by scripture – the greatest is Love!

Conclusion

Finally, in closing, let us not forgot the fact that, some of the best leadership moments in history, have always happened, when leaders decided to put their faith into action, in the form an unconditional love and service, regardless of the environment - whether it being business, society and/or government. The classic example, that is very appropriate for this moment, is the leadership exhibited by Mother Teresa – and the impact she has made throughout the world, with her purpose driven leadership style. There couldn’t be any better moment, than this time of the year, to honor her, given the fact; we just finished celebrating Mother’s day. I am sure, we all could hear her whispering from Heaven “Happy mother’s day” as outlined in the picture above – echoing the slogan “thing of purpose is joy forever”, and so, it is time for business organizations to embrace PDL©, following the footsteps of Mother Teresa.

PTV©- Our generation’s Sputnik Moment View - to tap the untapped opportunities?

“This is our generation’s Sputnik moment.” In his State of the Union address, President Obama threw down the gauntlet: “We’re issuing a challenge; we’re telling America’s scientists and engineers that if they assemble teams of the best minds in their fields, and focus on the hardest problems (clean energy etc.), we’ll fund the Apollo Projects of our time.”

As it turns out, our Portfolio-Thread View (PTV) is being birthed as an answer to solve these “Sputnik moment” challenges of our generation strategists – who are faced with a similar challenge of not able to effectively, tap the untapped growth (and innovation) opportunities, and so, we thought of re-positioning PTV as a Sputnik Moment View – as our way of living up to President’s challenge. In other words, PTV© is being redefined as a Sputnik Moment view, from both application and symbolic standpoints, as outlined below, and on the picture, on the top of the page -

• “Analysis/Synthesis” balanced (solving the 6 macro dilemmas of - Purpose vs. Profit, Customer Centric vs. Vision Centric Innovation, Pull vs. Push value chain, Operation Excellence vs. Innovation Excellence, long term vs. Q-To-Q results and Market based vs. Resource based view),

• “PtC©” positioned ( overcoming the collaboration gridlock using the "Power through Collaboration" process promoted by Willis Consulting LLC).

• “Nature’s principle” driven (using nature’s three principles of balancing opposites, energy conservation/transformation and Solomon’s cyclical seasonality),

• “Value Accelerators” propelled (using the value accelerators called experience/capability pools),

• “Purpose” landed (in the form of three Portfolio/Thread portfolio frameworks called experience pools, capability pools and purpose innovation pools (EPP©, CPP© & PIP©).
  

Sounds like a symbolic redefinition resembling Sputnik's “Balance-Position-Drive-Propel-Land” sequence, isn’t it? Interestingly enough, our PTV© , indeed is a Sputnik moment view that is meant to be latched on to the business orbit of corporations (as depicted on our PTV radial cycle framework picture with an embedded Apollo XVIII image on top of the page)– not only to overcome, the so called sputnik moment challenges (from the standpoint of effectively “balancing-positioning-driving-propelling-landing” their strategies), but also, to continuously measure, monitor and manage them for maximizing their efficiencies.

With one of President’s sputnik moment challenges happen to be energy sustainability – the symbolic coincidences to our PTV could not have been any better, that PTV is indeed being designed with the same energy sustainability principle as its cornerstone, from both symbolic and application standpoints. What do we mean by that? With our blog being known for its spiritual/metaphysics metaphors, let us explain PTV with yet another spiritual metaphor called Tai Chi, the well known form of Qigong/Yoga (that is further enhanced with few other popular meditation techniques of Chinese/Indian/middle eastern origins) – to get our point across!

First things first- let us start with some energy management basics i.e. matter and energy are just different forms of the same thing (as revealed by Einstein’s insight/foresight balanced energy equation- e=mc2), and so, for all practical purposes, we can call Einstein’s energy equation as value equation. With that said, Tai Chi in its essence is nothing but the manifestation of this value/energy equation in five steps - Balance, Position, Inhale, Exhale and Iterate that is in perfect alignment with our sputnik moment PTV sequence “Balance-Position-Drive-Propel-Land” , as identified in the top of the page.

In other words, Tai Chi is all about balancing the posture of our body so that energy can flow better followed by a slow and deep, abdominal inhaling and exhaling (breathing) exercise, creating a self awareness which further channels the energetic thoughts of the mind to iterate on a continual basis with an end goal of maximizing that energy.

With that said, let us peel the Tai Chi steps, like peeling the layers of onion – wherein, Tai Chi starts with a fluid balancing process first – and then gets strengthened from the right body posture – which is further accelerated by the inhaling of oxygen to make the energy flow efficient, creating the self awareness that is needed to overcome the illnesses causing stresses -by turning that self healing mechanism that is buried within our human body!

Similarly, under PTV©, strategy is all about first balancing these six nebulous dilemmas using these three nature’s principles resulting in a positive value flow– that is further strengthened with the posture (or structure) provided by the power through collaboration (PtC) process- which is further accelerated by injecting value accelerators (in the form of experience and capability pools overcoming the value de-accelerators) that turns-on the self healing mechanism called value maximization that is buried deep within our businesses. Let us use the following “similarity map” to put these similarities in perspective!

• Balance the energy flow/blockage dilemma –> Balance the six macro level value dilemmas using “analysis/synthesis” based 3 nature’s principles as identified earlier.

• Position the posture for energy to flow without inhibition– >Position the collaboration structure for value to transform, using PtC driven collaboration principle.

• Inhale the oxygen for accelerating the energy flow -> Inject the “insight/foresight” positioned value accelerators (in the form of effective experience pools and efficient capability pool portfolios) for accelerating the value flow/creation.

• Exhale (Relax) –> Let the stakeholders (shareholders, consumers, customers, partners, suppliers etc) reap the value on a periodical basis.

• Iterate –> Reinvest and keep the cyclical process going.

As it turns out, PTV not only qualifies to be a sputnik moment view from application standpoint (i.e. its power to tap the untapped opportunities), but also from symbolic standpoint as identified in the picture and the Tai Chi metaphor based similarity map. Yet another coincidence is that PTV© , as a matter of fact aligns perfectly with Einstein’s energy equation as well!

Value Accelerators=Capital Pool x Experience Pool2

Now that we have built a compelling case that PTV indeed is a Sputnik Moment view (from both application and symbolic standpoints) – it is a moment of “call for action”! Our ask today is – should there be an interest from any of our readers (especially to those of you who are in leadership roles running specific organizations within your firms), here is a golden opportunity to seize your Sputnik type moments – and all that you have to do is, just second President’s closing statement “we’ll fund the Apollo Projects of our time” – to tap your untapped growth opportunities that are buried deep within your businesses. The call is yours -as we are just a phone call away, readily available to help and serve!

Purpose-Profit balanced Value Strategy

If you have been following my last 10+ blogs closely –You would have observed a consistent message – Purpose-Profit balanced strategy. On the other day, one of my friends, outside the business world made a casual comment – “It all sounds great to keep pounding on this purpose message – but what does that mean to us (the normal consumers) in terms of us getting a better value from the products/services we buy from these corporations/retailers”. On the surface – it sounded like a casual statement – but when I looked at it carefully- I quickly realized that this is a key question most consumers across the board are asking today - and so, I spent some time analyzing - what do consumers mean when they say "Value". More specifically, what is Value and where does that fit in to this purpose-profit balanced strategy? Is value and low cost are synonymous?Does that mean Corporations need to cut corners and sacrifice quality to offer their products/services at a lower price point? Does that mean every corporation/retailer must have a purpose-profit balanced value strategy?


With all of these questions in my head - I stepped back and classified value in three dimensions from any corporation/retailer standpoint –

• Value to external stakeholders (investors, suppliers and partners) – P&L or PROFIT focused.


• Value to internal Stakeholders (ethics, sustainability) including the code of conduct – Employees and Community (E&C) or PURPOSE focused.


• Value to consumers/customers – Products and Services (P&S) focused with emphasis on both PURPOSE & PROFIT.
  

Within each of these dimensions – the degree of value again varies depending upon how it is being perceived by the players/owners of the respective dimensions. For example, some products/services are perceived more valuable than others depending upon how consumers view them within the context of their ' life situations and experiences -and so, value is not necessarily always low cost or lower price point- which made me to realize the importance of coming up with some common value definitions in these three dimensions.

• Value from consumers standpoint is “… the proposition of experiencing the “good enough” product/service consumption attributes (it varies depending upon the product/service & for food/beverages it includes, but not limited to - taste, texture, nutrition etc.) within an acceptable price point that is accessible and relevant to their life situations and experiences.”. In other words, the term value to consumer is the summation of all the experience attributes divided by the price they are willing to pay.

Consumer Value Equation = Top Experience attributes/Price

• Similarly, value from external stakeholders or P&L dimension standpoint is spread across four perspectives (as identified by Kaplan and Norton in their BSC) with a chain of cause and effect relationship: The continuous improvement in core business portfolio elements (internal business processes, products, services and assets etc) creating an improved financial value to key stakeholders (investors, suppliers and partners).

External stakeholder Value Equation = Financial KPI from the four perspectives as outlined in the balanced scorecard design from Kaplan and Norton.

• Similarly, value from internal stakeholders or E&C dimension in nutshell - is employee productivity – i.e. the way employees conduct their business across various profit and purpose focused initiatives – thus creating the 5P (Purpose, Profit, People, Planet and Passion) effect within the communities.

Internal stakeholder or E&C Value Equation = Employee productivity KPI and Sustainability Indices in business and people related areas.

With this foundational definition background – I did a deeper dive analysis on the larger consumer value question using a Value/Experience based Spending (VES) framework as outlined in the top of the page. With the tough economic conditions still lingering- most consumers, of late, have started changing their spending patterns when it comes to buying various P&S categories. Our research also suggest that more than 50% of the consumers are looking for better value deals while buying consumer products/services - followed by another 30% who are willing to sacrifice their preferred brands for better value brands. This is definitely an alarming trend for the branded players - and so I did some “deeper dive analysis” on the spending patterns of consumers across various product/service categories. The insights I garnered was all the more intriguing - that consumers have started altering their spending patterns, not only based on value, but also, based on the way they map their preferred products/services to their personal consumption experience life cycle.

For example, consumers are not likely to reduce their spending on certain essential products/services (like utility services and house-hold items, even though they see them as less valuable) -whereas, they are more likely to reduce their spending on categories like Books and CD’s albeit their higher value. With this renewed insight and findings – I grouped the products/services under five experience categories and plotted them within the VES framework – with “degree of spending” on X axis and “degree of perceived value” in Y axis as outlined below and on the top of the page.

• Essentialize Me – addressing the basic experience -where consumers do not even think of reducing their spending as they believe that these products/services are essential for their livelihood even if they are not highly valuable.


• Energize Me – addressing the nourishment and Health &Wellness experience where consumers are less likely to reduce their spending as they see the value in these products/services serving their body, soul and spiritual needs.


• Enrich Me – addressing the “educate/enhance me” experience – where consumers are likely to reduce their spending, although they recognize the value.

• Entertain me – addressing the relaxation experience – where consumers are kind of divided 50-50 when it comes to value and spending patterns.


• Exuberate Me – addressing the luxury or feel great experience – where consumers are more likely to reduce their spending on these products/services as they do not see much value.
  

Interestingly enough, four of these experience categories fell perfectly in to the four quadrants of the framework with an exception of one category – which got placed in the centre of the framework covering all the four quadrants. What does this tell us? There is a new reality or a “new value based experience equation” evolving when it comes to consumer spending. This new reality - is indeed a wake up call for the corporations and retailers alike – and so, it is time to accept this new reality (i.e. placement of their products and services within this VES framework) and devise an appropriate value strategy to answer this emerging spending patterns and value perceptions of the 21st century consumers. However, by no means – I am suggesting that super premium strategies have lost its relevance – I guess “doing both” is the way to go.

What in the world is a “World Class Purpose Model”?

Courtesy : Google Images



One of the "golden rules or the litmus tests" investors apply before investing in a firm is the sustainability of its business model (or) the ability of its business model to make money for the long haul. As a matter of fact, investors value the business model more than anything else (even more than the financial plan itself) as– at the end of the day – a sound business model is the one that is going to guarantee the sustainable value or return for their investment. Speaking of this sustainable value/return – most recently, investors also have come to grips with the reality that long term value is not just achieved by the money making guarantee of the business model - but also, by the purpose criteria (KLD scores, sustainability indices, corporate governance scores etc) on top of the profit metrics - as outlined in one of my earlier blogs. In other words, these purpose criteria enabled business models are the ones that is going to give the sustainable value for the investors (& to all the other stakeholders/society alike) as opposed to the mere profit metrics based business models - and I call them as purpose models (http://strategywithapurpose.blogspot.com/2010/06/purpose-driven-strategy.html) as they re-purposes the vision/mission/value/BHAG of the firm within the context of the cross border industry boundaries with a 3P (people, planet and passion) based purpose mindset.


Within the context of this renewed purpose inspired thinking – it is equally important for business models to have a balanced purpose/profit formulas to qualify itself as a purpose model- as corporations are not in the business of running charities. In other words, purpose models must augment the “value based purpose metrics” with “cash flow based profit metrics” to position the firm on a solid ground for the long term sustainable success to further qualify it as the world class purpose model. Speaking of a world class purpose model – we are going to come up with two more complimentary metrics (one for profit and one for purpose) to help investors to evaluate whether a given purpose model can qualify as a world class purpose model.


With the fact that “cash is the king” in today’s business context – we have chosen “operating leverage” as the key measure to assesses the overall health and wellness (& risk level) of the purpose model and to qualify whether it can become a world class purpose model from profit sustainability standpoint. Similarly, with our mantra being “purpose is the queen” – we have chosen “purpose leverage” that assesses the overall purpose and values (& tolerance level) of the purpose model and to qualify whether it can become a world class purpose model from purpose sustainability standpoint.


Operating leverage in my mind is the relationship between fixed and variable cost – the higher the operating leverage, higher the cash flow and vice-versa. In other words, those purpose models with a higher operating leverage and lower marginal cost are the world class purpose models from profit sustainability standpoint. A quick degree of operating leverage (DOL) measure, which shows the extent to which operating profits change as sales volume changes can be calculated as outlined below . More specifically, DOL is the percentage change in income (or EBITDA) divided by the percentage change in the sales output.

DOL = (Q (P-V))/ (Q (P-V) – F)

Q= Quantity produced or sold
V=Variable cost per unit
P = Sales Price
F=Fixed Operating Costs

So, higher the DOL leverage, higher the change in operating profit and better the purpose model is. In other words, in actual numbers, let us say we have a purpose model with a DOL index of 2 along with a 25% change in sales volume - the potential change of operating profit for this purpose model will be 50% (2*25%), a great number, which will definitely make it as a world class purpose model from profit sustainability standpoint.

Purpose leverage, on the other hand, is the relationship between fixed and variable emotional equity – the higher the purpose leverage, higher the emotional attachment of the stakeholders (consumers, investors and suppliers) to the firm and vice-versa. In other words, those purpose models with a higher purpose leverage and lower emotional equity cost are the world class purpose models from purpose sustainability standpoint. A quick degree of purpose leverage (DPL) measure, which shows the extent to which purpose inspired profits change as sales volume changes is can be calculated as outlined below from purpose sustainability standpoint. Specifically, DPL is the percentage change in income (or EBIT) due to the purpose inspired emotional equity divided by the percentage change in the sales output.

DPL = (Q (P’-V))/ (Q (P’-V) – F)

Q= Quantity produced or sold
V=Variable cost per unit
P’ – Purpose inspired marked up premium sales price (i.e. higher sales prices consumers are willing to pay for the super premium products/services because of the firm’s purpose agenda or their emotional attachment/equity to the brand or firm. For example, a Health and Wellness/Green minded consumer will be willing to pay higher price when they know that the firm’s purpose align with their personal purpose/values.
F=Fixed Operating Costs

So, higher the DPL leverage, higher the change in operating profit and better the purpose model is. In other words, in actual numbers, let us say that we have a business model with a DPL index of 5 along with a 10% change in sales volume - the potential change of operating profit for this purpose model will be 50% (5*10%), a great number, which will definitely make it as a world class purpose model from purpose sustainability standpoint.

Bottom line: As represented in the justice model picture at the top of the page, the DPL-DOL balanced purpose model that gets us the repeat customers - where the cost to deliver incremental products/services for an incremental customer approaches almost zero, where the cost needed to bind additional customer’s emotional equity to the firm’s brand approaches almost zero, and where we get a lots of the cash up front and where we have lots of good will and emotional equity on the purpose bank—is what makes a purpose model a world class purpose model. What more can we ask for?

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.
  

ENERGIZE

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.

EMPATHIZE

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.

EMPOWER

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!

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.