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Leaders Use Purpose to Increase Profitability
December 2012

What's a sure-fire way to improve your company's profitability? Do a better job of connecting everything you and your employees do to your company's purpose. It's a simple yet powerful proposition.

Purpose is a key to profitability because your organization's purpose can galvanize employees, and transform the organization from one where people just go through the motions, to one where people are more engaged in their work, more committed to company goals, and more productive in their jobs.

And when that happens, profitability rises dramatically.

Now some of you are probably thinking, does my business really need a formal purpose? The answer is YES! Whether your company is a laundromat or an international financial conglomerate, your business will be more profitable if it has a well-articulated purpose.

Effective leaders know that it's not just about having any purpose. Leaders who exercise the power of purpose understand that three critical areas are involved.

One important element is that the purpose must be clear. It must be clear and simple enough that people understand it. They also need to be able to tell others what it is, so clarity of purpose is essential.

Some companies miss this point, and write a purpose statement that is half a page long. If the purpose is that long, how is anyone going to remember it? Your purpose should be clear enough that you can express it in twelve words or less, so that it's remembered fairly easily.

A second critical area is that the purpose must be compelling. It must have a sense of being noble, of contributing to the greater good. Only when the purpose is compelling will it ignite passion and commitment.

Here are examples of purpose from Jim Collins' and Jerry Porras' seminal book, "Build to Last". Note how they're both clear and compelling:

  • GE: Improving the quality of life through technology and innovation
  • J&J: To alleviate pain and disease
  • Marriott: Make people who are away from home feel they're among friends and really wanted

No matter what business you're in, you must find the noble purpose. It's there, you just have to find it.

Finally, the purpose must be communicated relentlessly. You should communicate everything you and your employees do in terms of the company's purpose. This means that nobody should ever give "company policy" as the reason for something.

If it's a company policy, it's probably because in some way it promotes the company purpose. So, the reason you don't get drunk on the job is not because it's a violation of company policy. It's because getting drunk on the job, among other things, prevents (I hope) your fulfilling the company's purpose.

And since it's supposed to be compelling and inspiring, you can't talk about it in the monotone you'd use to give someone contact information from your Blackberry.

Even if a monotone is your usual way of talking, you should use a higher, more excited monotone when talking about the company purpose.

One more thing about purpose. You can't shrug it off by saying, "But I'm not the CEO. I'm just a division head." No matter what your position, you should know and be committed to, and inspired by, the company purpose. And you should be communicating it relentlessly.

Coming up with a purpose isn't just for CEOs and presidents of companies. Every part of an organization (division, department, team) should have a purpose that fits the above criteria, and that also ties into the big picture, the company's purpose.

When employees see a clear connection between what they do in their jobs and the company's overall purpose, they do a better job. When they're focused on the purpose of their job, and how it relates to the company purpose, they're more productive.

And when employees are more productive, the company is more profitable.

Many of you have work to do. Does your company, division, or team have a purpose that meets the above criteria? How effectively are you communicating that purpose?