Blog #2: Deciding on Purpose, by Darragh Power and Traci Maddox
On June 13, the G7 Summit announced they would contribute 1 Billion doses of the COVID-19 Vaccine to the poorer countries of the world. This decision came along with several others (curbing climate change, girls’ education). These decisions might make one ask “Why?” The G7’s purpose was to reject nationalistic approaches of the past several years and show the benefits of democratic values. No matter your opinion—is it enough vaccines? —this is a perfect example of a purposeful decision. The G7 has decided to “walk the talk” and address global problems they can impact.
The G7 decisions demonstrate setting aside narrower self interest in favor of wider interests. But this comes with some difficulties in negotiating those interests. To do only what you want is easy. To convince others to vote for the common good is where leadership really comes in.
In our previous blog, we presented a “Heart of an Organization” model that links purpose to action. In this blog, we will dive deeper into purposeful decision-making. It’s about aligning your actions with your purpose in an increasingly connected and complex world.
In his recent article, Larry Robertson states that purpose can be powerful, but only if it permeates every aspect of your business. However, nobody can be all things to all people, and integrating purpose is often about trade-offs. As you consider integrating purpose into your every move as a company, here are some considerations.
Not Every Decision is a Right vs. Wrong Decision
Governments, companies, and leaders often must make complex decisions that consider the needs of all stakeholders. But every decision is not a moral dilemma. There is not always a right and a wrong side. It’s easy to say, “That’s not legal and we won’t do it.” It’s much harder to weigh the needs of one population over another. Rushworth Kidder, founder of the Institute for Global for Ethics lays out the elements of ethical dilemmas and decision-making. When decisions are about two “rights” they become ethical dilemmas. Consider these four “right vs. right” situations:
- Truth vs. Loyalty. Anyone who has had to answer the question “Honey, do I look fat in this outfit” understands the critical nature of balancing your loyalty with absolute truth-telling. This applies to people, companies, or countries too.
- Individual vs. Community. This played out in real life over the pandemic. Do I wear a mask to protect myself and others, or do I value my individual rights above all?
- Short-term vs. Long-term. We see this in companies all over the world. Do I answer only to my shareholders this quarter, or do I have a longer-term objective in mind?
- Justice vs. Mercy. Courts (and homes) are filled with decisions that mix of fairness, empathy, and compassion
When you make a right vs. right decision, you’re really telling the world who you are as a person or an organization. The G7 decided to make a public statement of who they aspire to be. Just like them, your actions speak louder than your words. Larry Robertson explained a deeper triad that underlies the Heart of an Organization as well. It’s that purpose, value, and culture support each other. They work together to influence the level of care and actions that bring the heart of your organization to the forefront of everything you do.
Principles for making decisions
A very useful way to consider trade-offs in decisions is to use principles for decision making. Alex Edmans Finance Professor in the London Business School shares some great principles in his book “Grow the Pie.” He considers organizations as value creators on behalf of society. He further suggests organizations reflect on where they can make the maximum positive impact on behalf of society.
- Principle 1: Multiplication – Will spending $1 return a multiple of $X on behalf of society? For example, to buy computers for a school looks good on a company’s annual report (you can show the $1 spent very easily). But if the money was given to an NGO who not only bought the computers, but trained teachers and students how to use them, and continued to do so, then the money is better given to the NGO.
- Principle 2: Comparative Advantage – Coca Cola’s “last mile” program for example allows for the distribution of vaccines to very remote locations through its refrigerated supply chain. This is something that Coca Cola have a unique comparative advantage with. The comparative advantage is over any other organization in society.
- Principle 3: Materiality (extrinsic and intrinsic) – Extrinsic materiality is working on issues relevant to the world and its stakeholders. Some examples represented at the G7 are climate change, pollution, and girls’ education. Intrinsic materiality allows organizations to decide to do something because they care enough. They simply decide to do something. SAP’s Autism at Work program is an example.
Having principles to make decisions is very helpful, because you cannot do everything for everyone, and there are questions of scale:
In a recent McKinsey/Fortune study, 45 leading CEOs gathered virtually to discuss purpose. These CEOs said that we can no longer separate purpose from profit. Additionally, companies without purpose are destined to be less successful over the long run. Purpose that starts at the top and shows up in corporate policy and leader actions is much more likely to permeate the organization. Thus, every decision has a “north star” as a guide no matter who in the organization is making it.
Robust partnerships, supply chains and ecosystems mean that most organizations must transcend their own boundaries to work in a larger system. Purpose can be considered at industry and international level. As far back as 2005 the 7 transformations of leadership in the Harvard Business Review pointed out the benefits of leaders who look beyond their organizations boundaries. They mention the rarest type of leader is the Alchemist—someone who can reinvent themselves and their organizations in historically significant ways. These leaders can take the bold moves needed to use an organization’s purpose as its guiding star.
What can we do together that we would be unable to do alone?
In the end, the McKinsey/Fortune study showed that purpose begins with the employee. The thousands of little actions they make every day are the core of the company. Employees can incorporate their company’s purpose into everyday decision-making. They can simply ask “if this decision was in breaking news tomorrow, would my company’s purpose shine through?” In our everyday lives, what we do, what we share on social media, and what we support all show our purpose to the world.
You can learn a lot about a company’s purpose by observing their culture. How do employees treat each other. Do teams work well? Do people have each other’s backs? The culture of an organization shows how well they will live out their purpose.
First-line managers are a critical cog in the purpose wheel too. Are your managers exhibiting behaviors and influencing their direct reports in a way that amplifies the purpose of your organization? Are they bringing value to customers in the right way?
Contemplate and Decide
To create that “Future with a Smile in it” you must consider how your everyday decisions align with who you want to be in the world.
At the heart of your organization there is the intrinsic and extrinsic material difference you want to make in the world. Depending on the scale you want to impact, the level of care and commitment you want your stakeholders to have, and the day-to-day multiplier impact you want to make every day to fulfill your purpose, start to ask yourself this question:
What is the highest impact I want to make today to make the world better?