Where does the purpose of a company come from?

To be purposeful, you have to have a purpose. Obvious really. But where does the purpose come from? Here are three very different models:

1. Designing

Some people believe the purpose can be designed and decided upon through an individual or group creative process. It usually involves the leadership plus representatives of the rest of the company. This is how most mission statements come to life in companies today. It suits an organisational metaphor of a machine: carefully designed, operated and controlled.

2. Sensing

Others consider a company to have a ‘soul’ (and therefore purpose) of its own, which is distinct from the individuals within it. The people in the company sense where it wants to go, nurture and serve it in ways that are fulfilling and meaningful to them, and allow it to develop organically. Frederic Laloux calls this ‘Evolutionary Purpose’ in his book Reinventing Organisations. It suits an organisational metaphor of an ecosystem.

3. Discovering

The company is viewed as a manifestation of the need or vision of the ‘source’, the individual who took the first step — some kind of risk — to bring the initiative to life. By understanding the source’s need or vision, you discover the purpose. Meanwhile, everyone else in the company has their own needs, vision or calling in life too. If they sense the company is a good place for them to bring their own vision to life, whilst serving the need/vision of the source then a state of flow and fulfilment follows. This school of thought is based on Peter Koenig’s ongoing research with founders, which he has developed into a set of ‘source principles’. I see this model also having an organic metaphor, but rather than an ecosystem, it’s a ‘spiral of life’, with ever more rich, complex life branching out from a source.

You might have a strong reaction to these different models. Often one or more of them will clash with your existing mental models or belief system. I would say that all three are simply conceptual frameworks. There’s no absolute right or wrong because companies are stories — products of our consciousness — so there is no law of nature we can defer to for a final answer.

So the question becomes, which framework is most useful to us as we go about developing purposeful organisations? For me, it comes down to what helps us create both authenticity and clarity.

Authenticity is essential because if the purpose isn’t real and deeply held, it becomes wallpaper which nobody believes in. A purpose without authenticity is likely to crumble under the slightest pressure.

Clarity is just as important. The clearer a company can be about its purpose, and where authority sits over what’s in and what’s out, the more freedom and agency people can have to deliver on the purpose in ways that are meaningful for them.

So, back to the three models. Here’s my take on what’s most useful:

Designing

Designing a purpose carries a big risk of inauthenticity. It can get diluted by a group process to a point where nobody really believes in it and often the purpose is a post-rationalisation to justify an existing business model.

Design is a wonderful process for problem solving, but defining a purpose is figuring out what the question is. The ‘why?’ of the endeavour comes from a deeper place. Whilst a design process can create a clear purpose statement, I don’t believe it’s very useful for creating a purpose that endures, and it doesn’t help make authority in the company clear.

Sensing

Sensing the ‘evolutionary purpose’ of a company is a very appealing idea and a huge step up from attempting to design it. Sensing the purpose as it evolves is a powerful way to build authenticity. In Laloux’s book, there are wonderful examples of highly purposeful, pioneer organisations where this appears to be happening (remember: we can’t say for certain what’s going on — it’s just a conceptual framework). If people tune in to what’s happening in the company, that can create a level of deeply felt clarity, even if it’s not clearly articulated.

Where this model becomes less useful, I believe, is in its denial of the incredibly powerful influence of the leaders who created the purposeful pioneer organisations in the first place. For example, I believe Patagonia has become the company it is, in huge part because of the vision and values of the founder, Yvon Chouinard. He didn’t just birth the company and set it free. In fact he personally gets involved in the on-boarding of all new employees to make sure they understand the purpose. I don’t buy the idea that he is merely allowing them to help shape the purpose themselves, although they most certainly help him find more and better ways to manifest the purpose. I do believe his personal influence remains enormous. This might be hard for a humble leader to fully accept, but it seems quite obvious to me.

Further, the book has two examples of companies that regressed back to more traditional top-down models. One founder sold out and the other was succeeded and the successor was eventually squeezed out by other board members. In both cases, the companies had been disconnected from the authority of their founders. The evolutionary purpose just vanished. If the founders had remained in their own creative authority over the purpose and vision, or successfully handed it on to a new source, these companies might not have regressed.

Source principles

Koenig’s source principles are the most useful model for me right now. When you look at a company through the lens of source, everything becomes much clearer. Once you know who the source is (only one person, even if it appears there were cofounders) you can unpick their need and vision. Because it comes from one individual, once you’re sure they’re speaking from the heart, you know it’s authentic. There’s no dilution.

You can also map out the various sub-initiatives within the company. Each of those has a source too and the same principles apply, all the way through the company. So it leaves you with a hierarchy of purpose, but without a hierarchy of power over people (providing people are free to start and join initiatives which allow them to express their own calling in life.)

Whilst my own experience has been that the source principles are extremely useful, it’s not without its problems. It can be hard for people with a highly pluralistic/egalitarian belief system to accept that creative authority lies with individuals, not a group. And it means rejecting the idea that a company has a ‘soul’ or life of its own. If not explained well, it can sound like a regression to a traditional, command and control model. However this couldn’t be further from the truth. With source fully manifested there is opportunity for everyone to develop and realise their own calling in life, in a beautiful network of relationships — inside and outside the company — where we all recruit others and ourselves into realising one another’s visions, and nobody stops anyone else from manifesting their calling in life.

The future

Koenig’s research is still ongoing and for now at least, the hypothesis seems to be getting stronger as time goes on. Perhaps one day we’ll discover the edges or limitations of the source principles. But as with any conceptual model, it should always be welcomed when something more useful comes along.

Image credits: Purpose, Machine, Ecosystem, Spiral of life.

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