Companies Discover the True Value of Purpose

Purpose provides stability and clarity in order to embrace agility and ambiguity — which could well serve as a definition of Resilience. Companies are restructuring with this in mind.

By Aish Narang

Last year, two of our clients announced restructuring, and both are interesting cases to examine when talking about the connection between purpose and resilience.

Both companies have anchored purpose clearly on a division level. Siemens, a global technology powerhouse and the largest industrial manufacturing company in Europe, presented a plan to “consolidate divisions from five to three while giving them more autonomy” and analysts described the move as “entrepreneurial”.

We agree. The move fosters entrepreneurship because it structures the company along the lines of what each division strives for at its core.

By giving themselves a purpose, companies create two movements; they instill flexibility within their organization and strengthen their innovation power from inside out, and they are better prepared to absorb external shocks.

This filters down to the decision making process on a team and individual level. It serves as a compass to drive innovation and culture.

Siemens is pursuing a leaner holding company in order to give their strategic companies more flexibility and freedom to pursue their purpose.

Mercedes-Benz’ Purpose Initiative

The Daimler Group, not only the company behind Mercedes-Benz but one of the biggest producers of premium cars and the world’s biggest manufacturer of commercial vehicles has been in this purpose process for Mercedes-Benz.

Having had the privilege to contribute programs on digital transformation, we were able to witness this commitment first hand.

In two highly quotable blog posts on LinkedIn, Dieter Zetsche (Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars) elaborates on the reason, Purpose was so important to explore and define.

Mercedes-Benz has defined its purpose as First Move The World — reinventing 21st century transport. And they do it acknowledging the paradox they find themselves in:

“As more and more people seek that individual independence through auto-mobility, the more we realize it comes with a couple of not so great dependencies”, Zetsche writes in his article WHY?. This is the dilemma the company wants to solve.

The new structure Daimler announced last year supports this ambition. The three legally independent units Mercedes-Benz AG (cars and vans), Daimler Truck AG (trucks, buses and coaches), and Daimler Mobility AG (previously Daimler Financial Services AG) make sure the internal mindset and the external structure complement each other, as Daimler describes it: “It’s easier to be quick, flexible, and close to the market if the structures around you support this approach.”

The goal yet again: greater entrepreneurial freedom, closer alignment to their customers and markets and more agility and freedom to enter partnerships — all of the things you need a common vision and goal for.

Making your purpose a key element of your strategy is a way of becoming resilient on an organizational level. A team can better serve changing customer requirements, assess risks and opportunities and build a culture of intrapreneurship if the purpose is clear.

Companies have identified the true benefit of a strong sense of purpose and the effect can be huge: Stability without protecting the status quo can provide exactly the mix of freedom and structure an organization needs to thrive.

Purpose makes a company bulletproof without having to wear armour. In that respect, you could compare it to wearing a superman cape.

More about Resilience in our WDHB Quarterly Newsletter.