The Purpose Tour
What follows is a mix of Simon Sinek’s Why-How-What model, Amazon’s position of not making a profit and the annual letter to CEOs from investment guru Larry Fink of the world’s largest independent asset management firm BlackRock. Mixing these together could be a terrible idea and just leave you with a headache like a bad cocktail. Or it could make sense and reveal a pattern that provides a better understanding of current issues. Let’s give it a go. An argument in four chapters.
Chapter 1 — The beginning. Why was the right question
Simon Sinek invented the Why-How-What model. He uses it to explain that inspiring companies and people always start off by explaining why they’re doing something — so talk about their motivation — and only then go on to say how and exactly what they are doing. His insight feels like the discovery of a secret formula — ultimately decoding the finding that inspiring organisations communicate from the inside out, starting with the Why, by way of the How, all the way to the What — and that a brand should give as good an answer as possible to the Why question about its own existence in order to be purchased.
Simon is convinced that “people don’t buy what you do, they buy why you do it”. Sell to people who believe this too. 37 million people have watched his TED talk, turning the search for Why into popular culture.
Consultants around the world were thrilled by the simplicity of this model and sent companies off in search of their Why. Screw manufacturers had to answer the question of why they get up in the morning and what the meaning of their company is. The simple answer of “to earn money” is not an ideal response in the regulatory system of innovation capitalism. This isn’t intended to sound ridiculous or scornful (sharp-tongued maybe), but rather should show that the value of the Why model — therefore the question of why — is perhaps much greater than just being a key communications phrase that sums up why a millennial in a Hornbach store should reach for a Würth screw.
Lurking in the answer to Why is the question of the kind of a capitalism we actually want to live in
However easy the question of Why may seem, it really is hard to come up with an answer. The truth is that very few companies have an inspiring Why. The Why of their work is often the result of a lucky time in the market, having an ambitious member of the company’s old guard — or simply of implementing a business model more effectively than others. It’s just that answers to Why such as “our focus is on quality”, “we always take a bit more trouble than others” or “we get up in the morning because we’re willing to take responsibility” are not particularly inspiring.
Chapter 2 — The role model. Amazon made an economic principle out of its mission
Large Silicon Valley companies all have such a nice Why: AirBnB (you can belong anywhere), Google (organise the world’s information and make it universally accessible and useful) and Facebook (bring the world closer together). What other firms can learn from this is that companies that change the world have a purpose. A company that solely earns money no longer has a right to exist. Having a higher goal became a boardroom ideal. Above all Amazon opened up the perspectives of economics, society and politics for its great mission.
Amazon managed to tell a story: namely that growth trumps profit. The Amazon investment promise: being the earth’s most customer centric-company versus short-term gain. The market doesn’t demand that Amazon makes a profit because profits were seen to be subordinate to the higher goal — and suddenly there is a shared purpose. As a listed company Amazon has leveraged the physics of dividends (Tesla is another example). However the successes (market dominance from the effect of winner-takes-all) mean profits are not necessarily being demanded from other companies either — if their mission is big enough, their Why is right. So lots of companies have an interest in becoming innovative or being perceived as such. Amazon has access to capital so cheaply, simply and for the long term like no other company anywhere else, and even when products don’t work, companies don’t die if they are perceived to be innovative. That sounds a little like a formula for invulnerability and is therefore desirable somehow.
The question of Why follows the question of for whom. Amazon’s mission is the objective of becoming the world’s most consumer-centric company. Above all Design Thinking proclaims renewal and invention from the perspective of people. “User centric” is the watchword, customer centricity directs the focus on people: What motivates them? What do they want? What are they afraid of? The New Economy’s consumer-focused questions have made the entire economy more aware of people. There is hardly a company that hasn’t tried to gear its products and services to people and in doing so perhaps fundamentally determines that it has to adopt a more humane role.
From the “customer-centric” focus on people, the focus becomes one on society, therefore to all intents and purposes on lots of people. The endboss of the customer-centric movement is an economy that benefits people. Or is that a little far-fetched now?
Chapter 3 — The particle accelerator. Money rules the world and BlackRock has plenty of it — and soon a new regulatory system to control its use.
Simon Sinek’s “Start with Why?” in 2009 asked the question of lasting value. Larry Fink, CEO of BlackRock, gave an answer to this in his letter to CEOs:
Without a sense of purpose, no company, either public or private, can achieve its full potential. It will ultimately lose the license to operate from key stakeholders. It will succumb to short-term pressures to distribute earnings, and, in the process, sacrifice investments in employee development, innovation, and capital expenditures that are necessary for long-term growth. (…)
Your company’s strategy must articulate a path to achieve financial performance. To sustain that performance, however, you must also understand the societal impact of your business (…)
Companies must ask themselves: What role do we play in the community? How are we managing our impact on the environment? Are we working to create a diverse workforce?
The 2008 financial crisis may have wiped out many assets. But what it actually wiped out was the social cement — because the economy has long since recovered, only salaries, pensions and savings haven’t. The gap between rich and poor is getting wider and resulting in a loss of trust in politics and institutions. The consequence is Trump and Brexit and AfD. Larry Fink continues in his letter:
Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.
Here an investor is forcing companies in his investment portfolio to concern themselves with social responsibility with the same meticulousness and systematics applied to looking after quarterly figures. BlackRock has announced a doubling of the size of its asset management team for “deeper, more frequent, and more productive conversations” with the management of the companies in its portfolio. BlackRock will be establishing a new regulatory system in order to measure, control and influence the social impact of the respective company.
Chapter 4 — The Finale. Welcome to the institutionalisation of the Why question
Why-How-What was marketing. It was about selling screws as effectively as Apple sells computers. Or to look as good as possible with the millennial workforce. Asking Why and the many chastening answers to it however are paving the emotional route to actually taking this question seriously. It raises awareness of values outside product cycles. Why do we exist and what kind of value do we offer society are no longer questions answered by advertising, but are charged with meaning. Like a kind of therapy.
Strategy’s task is no longer to discover the Why, but to reinvent it.
In the invention of a (new) Why, it’s not about what a company could give back to society (that’s what corporate social responsibility is asking), but about what kind of a society we want to live in (no longer a question just being asked by hippies). Digital change is rightly being understood as cultural change. The definition of Why must therefore take place in the new context of the digital economic order from real-time feedback, learning loops and transparency.
Based in Frankfurt, child is a studio for applied strategy. It combines strategy consulting with product development to produce tangible and useable results.
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