There is a growing unease within organizations: the disaffection of employees is obvious in most of them. Engagement levels are very low. There is also a malaise with organizations: the scandals and malpractices that led to the crisis of 2008 have durably undermined the confidence that people could have in companies, banks in particular. One of the popular answers to this malaise is to favor the development of a so-called “noble purpose” for corporations.
The notion of corporate purpose, in fact, is not new. It has been a key component of strategic management since at least the 1960s, according to which a company must have a vision, a mission (or purpose) and a strategy. The importance of purpose was highlighted by best-selling author Jim Collins twenty years ago with his two books, Built to Last and Good to Great.
Historically, there are two justifications for the importance of purpose: moral and strategic. More recently, a third one, social, has emerged.
The moral justification of purpose: The moral justification is based on the idea that one must give a moral sense to the mission of a company, because it can not be reduced to seeking profit. Here we find an old idea shared by Christians and Marxists according to which wealth is guilty and the pursuit of profit is immoral. If the corporation as an institution is to be accepted, it is only if the profit generated serves a higher objective, particularly a societal one. The whole field of social entrepreneurship and corporate social responsibility is a direct product of this thinking.
The strategic justification of purpose: A purpose is also justified in a very different way by some strategy thinkers who see it as condition of the company’s performance. By providing a direction for the choices of top management, it makes it possible to avoid morally hazardous decisions and go beyond the short term. It would thus be a condition of long-term performance. This is advocated by Jim Collins cited above. An example he gives is that of Fannie Mae, an American financial institution whose purpose is to allow modest households to buy a home. According to him, Fannie Mae’s associates make their daily decisions in light of this rationale and ensure that, in the words of the strategists, they are “aligned” with this purpose.
The social justification of purpose: More recently, the importance of purpose has been highlighted in relation to the question of employee engagement and the meaning of work. The disengagement of employees in large organizations is a growing phenomenon and a real strategic problem that top management is keenly aware of, and for good reason: engagement is the primary factor of economic performance. Lost in a big wheel of which they feel like cogs, employees cannot see the link between what they do and the objective of the organization. Their work seems meaningless. And indeed: who can be motivated when one spends one’s days updating PowerPoint slides? The idea, therefore, is to define a noble purpose for the organization so that employees can identify with it and find meaning in their work; Everyone remembers the famous story: one asks a worker on a construction site what he does; he answers: “I cut stones”. The same thing is asked of another, he answers: “I build a cathedral”. With a noble purpose, instead of cutting stones, collaborators will build cathedrals again. They will keep updating PowerPoint, but now they will better understand why, or so the thinking goes.
The limits of purpose as a goal
Unfortunately, experience shows that the value of purpose quickly finds its limits. Quite often, the purpose is created artificially by a consulting firm and is disconnected from the true identity of the organization. It is only there for decorum and the ‘cathedral’ is made of cardboard. Employees are not fooled and the cure is then worse than the disease because it feeds cynicism and… disengagement. In addition, no matter how noble, a purpose does not prevent moral and ethical misbehavior (As demonstrated recently by the Oxfam scandal) and it certainly does not prevent inept management.
A noble purpose does not necessarily lead to long term performance either. Most of the companies that Jim Collins celebrated as role models in his books have in fact done quite badly. Motorola has all but disappeared and Fannie Mae, which we mentioned above, guided by its noble purpose of allowing modest families to buy a home, is one of the main responsible for the 2008 housing crisis because it has abundantly lent to individuals who did not have the means to borrow, leading them to personal bankruptcy.
In fact, giving meaning to one’s work does not necessarily require working for an organization whose purpose is noble and generous. Indeed, experience shows that disengagement and loss of meaning comes more from management practices that are inept or obsolete than from an absence of noble purpose. Purpose as it is envisioned today, a means to an end, does not work.
Fortunately, we can find a way out by looking at how entrepreneurs consider purpose.
Another conception of purpose: Learning from entrepreneurs
Nobody doubts that entrepreneurs are very engaged in their project. What is their motivation? For some it is the pursuit of profit; for others, an ego drive that translates into a grandiose vision. But what recent research has shown is that for most of them, the motivation is more prosaic: it comes from the pleasure of creating “something” with others; the pleasure of being by what we create, the sense of achievement and the fulfillment of association. And this can be for projects that are mundane, like selling sandwiches one makes, or extraordinary, like sending people to Mars. It does not matter. So it is not so much the object or the purpose of the association as the association itself that becomes the moral justification of a company. In the field of management, research on the notion of fair process draws similar conclusions. It shows that people are more sensitive to how a decision is made than to the substance of the decision itself. In other words, people will accept a decision more easily, even if they do not approve it, if they feel that it was taken by following a fair process (consultation, discussion of objections, etc.) while a decision that has been taken without a fair process will leave them dissatisfied even if they approve it. It is in this spirit that the most interesting current research in management is devoted to new forms of management and decision-making (liberated enterprise, holacracy, teal organizations, etc.) and not to the search for metaphysical purpose.
Indeed, one of the main cases in Frederic Laloux’s important book, Reinventing Organizations, is Morning Star. The company has developed a very innovative organizational style, removing the roles of managers and implementing a philosophy of “self management”. Laloux describes at length how it works and how successful it is. What does Morning Star do? It produces tomato sauce! You can be a model of management in which employees feel good and yet have no purpose beyond producing quality tomato sauce.
The individual and the organization should no longer be seen as the means of a superior necessity, serving some metaphysical purpose; they are their own justification, and no longer have to justify their existence in moral terms.
We can thus consider purpose in a totally different way from the metaphysical version currently in vogue. While the latter adopts a teleological conception, placing purpose outside and beyond the organization, one can, on the contrary, place it within the organization and the individual; the purpose is the organization and the individual by themselves in their effort to thrive. This is what Spinoza invites us to with the notion of conatus. This Latin term literally means “effort”; conatus is the effort of any living organism to persevere in its being. It is a principle of life that brings the reason for being at the level of the individual, in a non-teleological conception, by which one defines in oneself and by oneself, and by one’s very existence, a reason for being.
In this conception, the individual and the organization are no longer the means of a superior necessity, serving some metaphysical purpose; they become their own justification, and no longer have to justify their existence in moral terms. They are, period. In entrepreneurship, this idea is conveyed by the first principle of effectuation, which specifies that entrepreneurs start with what they have, i.e. who they are.
Purpose in an age of disruptions
The fact that engagement and motivation can come more from how we do things than why we do them is all the more important as the major disruptions in our environments call for an overhaul of our management principles. The modern hierarchical enterprise was born from the industrial revolution and automation at the end of the 19th century. Part of the current malaise within organizations comes from the growing gap between these obsolete principles (authority, limited knowledge, difficulty of sharing, subordination to knowledge, centralization of resources) and the current socio-demographic and cultural changes that make people more autonomous, more educated and less inclined to join an organization without asking questions. This is where the real challenge lies. At a time of disruption and disenchantment of employees of large organizations, which are only different manifestations of the same phenomenon, the quest to find a purpose is a distraction from the main task, which is to reinvent management.