Episode #127 transcript

leading with purpose: is it ‘the new black’?

Hey there, and welcome to episode 127 of the No Bullsh!t Leadership podcast. This week's episode; Leading With Purpose: Is it 'the new black'? We've had a lot of people recently asking us about the role of purpose in business. The specific question we answer today is from David, who with a number of his team, graduated from our Leadership Beyond the Theory programme last September. David's question is particularly thoughtful and well-worded, and I love the fact that he hasn't succumbed to an overly cautious political correctness. Clearly a no bullsh!t leader.

David says "I'd love to know Marty's position on the importance of purpose. Specifically, the idea that business should be geared around objectives other than making money in delivering shareholder returns. Simon Sinek's position in the Infinite Game is really strongly on the side of purpose. I would describe our company as moderately purpose-driven right now, but with a serious desire to become extremely purpose-driven.

"The challenge I have personally, is that I find real meaning in the simple purpose of building a great business, growing opportunities for my team and others within the organisation and just making the business better than it was yesterday. And it's that, that drives me and gets me out of bed in the morning, much more so than the company's actual written purpose. So how important is purpose? Could a senior leader at say Google, succeed, if they're a brilliant leader, but actually don' feel that passionate about 'organising the world's information', (Google's purpose) or in 2021, is that a deal breaker?"

All right. Fantastic question. And for me, as a pragmatic former corporate CEO and a strong believer in our need to step beyond the feel-good platitudes that dominate the leadership discourse today, I'm going to have a crack at unpicking this one. It's a big topic, but we'll see where we can get to in the next 20 minutes. So we'll start by asking if using a purpose to drive your business is a good thing? I'll then look at some of the downsides of putting purpose front and centre. I'll ask the question does purpose help people to paint within the lines? And I'll finish with a great example on balance. So let's get into it.

Okay. Let's talk Simon Sinek. Now I agree totally with the thrust of his content. His ability to take the complex and break it down into something incredibly simple and compelling is pure genius. You know that because when you hear it, even though it may be new to you, it's obviously true. Maybe too, obviously, but we'll get to that. I love his original concept "Start With Why". It probably spawned hundreds of thousands of businesses to think about purpose, where they never had previously. It's one of the simplest and probably the most powerful statements you could possibly make. If you don't know why you're doing something, the what, the how, and the when become way more difficult. Now I'll give some examples of this on the way through, and I must admit up front I haven't yet read The Infinite Game, I've only read the cliff notes on that one.

But first of all, the one thing that I deeply believe to be true, is that your people will be much more likely to give you their best, if they see where they fit in. How does what I'm doing today contribute in a broader sense, to the organization's goals? Just turning up to earn a pay-check and hating what you do is soul destroying. Most people want to know that they make a difference. Purpose is the vehicle for letting people aspire to something bigger. It paints a vision that can inspire and motivate them. Now, you know that to be familiar with the story of John F. Kennedy during the Washington Headquarters of NASA in 1961. As the story goes, Kennedy stopped to talk to a janitor who was mopping the floors. And when he asked that janitor what he was doing at NASA, he replied "Mr. President, I'm helping to put a man on the moon". Now true or not, the story demonstrates the concept of purpose, absolutely beautifully. I'm not saying that these people don't exist, but I've never met anyone who gets excited by mopping floors. But just knowing that you're part of a much bigger, more important picture can serve as a driving force for your motivation and commitment. In a nutshell, that's purpose.

Now the second point for me is that these days purpose is a differentiator that guides your stakeholders to make better choices. Sustainability has become critically important in business. As we can now see the end of the runway for some of the Earth's natural resources. As customers, we actually take notice of a company's purpose, and the more noble it is, the more comfortable we feel buying their products. And we'll have some more on this later. But it's not just our customers who are paying attention. Some very powerful investors are now choosing to only allocate capital to companies that do business in an ethical and sustainable way. Just returning great dividends to shareholders doesn't cut it anymore. What if your manufacturing operations take advantage of child labour in Southeast Asia or your business wreaks havoc on the environment of the Amazonian rainforest? You're not going to get capital.

The third thing is that if your purpose is genuine and you're serious about it, it can guide the micro decisions that come up every day in the general run of play. Now, let me give you a very personal example. At Your CEO Mentor, we are genuinely driven by our purpose, which I'm sure you're all familiar with. You get to hear it every week. To improve the quality of leaders globally. Well with listeners in over 70 countries, we're making a pretty good fist of it so far, but, we also understand that we're running a business, not indulging in a hobby. So our purpose is underpinned by a couple of really important principles.

The first is that income follows impact. It's only through being able to have an impact and make a difference to people that we deserve to make money. If we have no impact, our business goes nowhere, and rightly so. The second is that we believe strongly in the power of competitive markets. If we find a market need that is unmet, we'll be rewarded. And if we don't, we won't. So we entered one of the most crowded markets on the planet, leadership development and performance. Now I'm sure the authors of Blue Ocean Strategy would have burst out laughing if they'd heard about our business plan before we launched it. But every day when Em and I make decisions about the business, our purpose is the thing that guides those decisions. Our number one filter, does this help us to reach more leaders with our content? Full stop. But this can be a balancing act sometimes, right?

For example, we had to take a decision a little while back as to whether or not we'd run paid advertising on this podcast. We'd been approached by a podcast hosting company before about running paid ads, and we'd also had direct approaches from some big global brands to run campaigns for them on No Bullsh!t Leadership. Now for 6 or 12 months, we basically took the line that we wanted to keep the podcast ad free. Why? Because we weren't particularly interested in the revenue. Unless you're Joe Rogan, it doesn't pay big. Trust me. However, one of the upsides to advertising is that the hosting company actively goes after opportunities to promote and grow the podcast. And when we looked at advertising through the financial lens, it didn't make any sense at all. But when we looked at it through the purpose lens, it ticked all the boxes. So with our awesome podcast host, Acast, we now get more exposure and reach more leaders than we could have before. And that my friends, makes it worth all our while, for you to listen to the odd host read ad by yours truly.

So we've worked out that purpose is a good thing, and it can be pretty important as an ingredient in running your business successfully. But what are some of the downsides of being purpose-driven? Well, I've got a few here.

The first one is you can't just develop a purpose and leave it there. A purpose is way too abstract. But, if your purpose is actually crisp and clear, it can help to set long-term strategy, which then drives mid-term tactical plans, which then drives short-term operational plans. So, purpose? Sure. But on its own, it sounds hollow and people can become cynical about it very, very quickly. If your CEO and board decide to disingenuously check the purpose box by putting it on the website and the glossy brochures and the annual report, it can actually be counterproductive. It will de-motivate rather than inspire people, when the way the company operates is clearly at odds with its stated purpose. Purpose is but one element of an overall package that lets people work out what they need to do to be successful.

The second problem is you can't simply put people before profits. Now, Simon Sinek is famous for his drive of putting people before profits, which sounds totally noble and aspirational, doesn't it? My question is, which people? For example, let's look at the concept of putting your employees first. Who can disagree with the platitude of putting people ahead of profits, as if it were that simple. This may not work that well. Let's say for example, you have a policy of making sure that everyone is paid in the top quartile of the wage bands for their roles. There are no expectations on individual performance and a firm policy of no sackings and no redundancies is implemented. Now that's certainly putting your employees before your profits. But what does that do to people's productivity? Well, I'll give you a clue. It completely kills it. When people know they have a well-paid undemanding job for life, it breeds gross inefficiency, and a sense of entitlement.

And I know, I've worked in organisations that are just like that. And let me tell you, it is ugly. But who suffers when the employees are put first in this way? Well for a start, the customers are sh!t out of luck. They will pay more for their products. The quality will invariably be lower. And over time, the option of purchasing a product may no longer even exist, if the company can't compete and it goes broke. The shareholders will also make lower returns. And before you start berating the concept of shareholder capitalism, remember who the shareholders actually are. As well as the Gordon Gekko types that we love to see parodied in movies, the shareholders are actually mutual funds, 401ks, IRAs, superannuation funds. These companies invest money on behalf of the unit holders, who are people just like you and me. And many are just retirees looking to afford to be able to live after they stop working.

Then there's the concept that staff redundancies are never warranted, and it's a sign of bad leadership. Well, that's just complete bulls!t. It's true that laying off people should be a last resort, obviously. And it's also true that some industries seem to have a hair trigger on their redundancy gun. But there are times when redundancies absolutely can't be avoided and are essential, ethically, morally and practically. So for example, when an entire business unit can't compete. Often, a conglomerate will have to close a whole business unit that is haemorrhaging cash, otherwise the whole group goes down. Or an asset like a coal-fired power station has to be closed down. You want a greener planet, no worries, but there are always impacts and there's always a price to pay. Or when two companies merge and there is obvious duplication of roles and people. There's no way you can just leave that the way it is and guarantee everyone a job. It just doesn't work that way. So as laudable as the sentiment is, it's not always possible in the real world. Here's the thing. No money, no business, no people, no purpose. And this goes for every single type of organisation. It's no different whether you're a not-for-profit, a government organisation or a commercial business, this is a critical principle.

Now thirdly, the biggest problem with being so-called purpose driven is that many people make it an excuse for not doing the work that leaders need to do to make their organisation profitable and sustainable. They sort of miss the point. Sure, by all means, be genuinely driven by higher order objectives. Use that as a critical filter for every decision you make. Use it to shape your competitive strategy. Use it to motivate and inspire your employees and customers alike. But when management says, "people come first, not profits", it's just bullsh!t. With all the best intentions, it's most often just the excuse that weak leaders need so that they can capitulate. To not demand a minimum standard of performance and behaviour. To not do everything humanly possible, to improve the efficiency and competitiveness of the business. To not innovate, to find better ways of serving the market. People before profits is a really dangerous statement. But it's said in a way that's so obviously something we should aspire to, that we don't challenge it. And then, the repercussions are that we become an underperforming business, which in case you haven't caught up with me yet, is bad for almost everyone.

Okay, I just want to jump in briefly to remind you of our free virtual event on the 11th of February. And it's only a week away. We promised to give something special back to our community of leaders once we passed our milestone of 1 million podcast downloads. So we're running No Bullsh!t Leadership live. This is a completely free, virtual, half day event. I'll be giving my latest keynote address, which will accompany the launch of my book in the USA later this year. I'll be running two master classes with Q&A opportunities for you. And we have three very special guest interviews with some incredible leaders, which I absolutely loved recording. So head over to www.yourceomentor.com/stats, and register if you haven't already. For our Australian audience, it starts at 9:30 AM, Eastern daylight saving time on the 11th of Feb., and for our US audience, 5:30 PM on the evening of the 10th of February, that's US Eastern time. Hope to see you there guys.

Okay this next section is going to be quick. Does purpose help people to paint within the lines? One of the key questions that I've pondered is this: "If a company is purpose-driven, will it help to curb bad behaviour?" The short answer for me is a resounding no. Purpose has no bearing whatsoever on individuals who are liable to go rogue. Think about the complexity of some of the issues that have arisen in large corporates in recent memory. Financial scams, ripping off unsuspecting customers for personal gain, using accounting trickery to pump up the share price of a company to get your bonuses. This stuff is all driven by good old fashioned self-interest. And for an individual who's driven solely by self-interest, the slogan on the wall does nothing. If that individual, is above you in the hierarchy, you are screwed. I'm sorry to have to tell you, but I figure you already knew that.

Now, if you have a leader at the top of the organisation who insists on observing high standards- legal, moral, and ethical - and she can demonstrate clearly what's okay and what's not, well, that's a different thing. That speaks to the culture of the organisation. And in these organisations, the rogues don't last long, they get squeezed out. But coming back to David's original question, "Can employees at Google get by if they don't live by the purpose of 'organising the world's information'?" Absolutely. Look around you and just think about how many of your workmates are driven by the company's purpose. How often does that come up around the water cooler? Not that often, I suspect. It's the culture that will make or break the day-to-day behavioural norms that you live with. Every individual is driven by different stuff and remember, leadership drives culture and culture drives performance.

Alright, I just want to finish with a wonderful example of balancing purpose with the realities of business. And this example is a company called Thank You Group. It was set up a number of years ago, by a couple of Australians, they're only young, Daniel and Justine Flynn. It was a small business with a hugely ambitious purpose. To ensure that no person in the world has to live in extreme poverty. And just to give you some context around that, at the moment, there are over 700 million people living in extreme poverty. It's more than 10% of the world's population. Thank you is clearly a purpose-driven company. They started out with a simple product, bottled water. Then they developed personal care products, soaps, body washes, salt scrubs, and all that stuff, all environmentally friendly of course, but the clever bit, is how they've set up their business model. The group is structured so that they have a not-for-profit entity, which is the Thank You Charitable Trust.

This in turn, is the sole shareholder, of the Thank You Group, which is a commercial business, that retails their products through the normal channels. The commercial entity has a very interesting goal. To make as much money as it possibly can for its sole shareholder, The Thank You Foundation. What a great juxtaposition of purpose these founders have established. Make as much money as you possibly can in the commercial entity for the sole purpose of carrying out your life's work through the charitable foundation. Now this is not rocket science, but people talk about these things like they're mutually exclusive. They're absolutely not.

To wrap this all up, purpose is an essential part of any organisation. Why do we exist and for whom? That's a question you should be able to answer. It gives everyone in the organisation, a common platform from which to operate and tells the rest of the world, what you stand for. But on its own, it can actually be extremely dangerous. And the well-meaning platitudes of putting people before profit can sometimes deliver unintended consequences and perverse outcomes. So sure, find your purpose. Mix it with a good dose of pragmatism and get on with running a strong profitable organisation that can serve all its stakeholders well.

Alright, so that brings us to the end of episode, 127. Thanks so much for joining us, and I reckon by now you already know what our purpose is. So please take a few moments to rate and review the podcast, as this enables us to reach even more leaders. I look forward to next week's episode, where Em will join me for another Q&A.

Until then, I know you'll take every opportunity you can, to be a no bullsh!t leader.

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