Purpose Flashcards
understand purpose in the past
- Purpose to maximizing profits and return on shareholder value
- Corporations exist to serve shareholders
Understand purpose today
- To promote an economy that serves all
- Leading companies work to benefit all stakeholders — employers, customers, suppliers, communities, and shareholders
- Offer value to customers, contribute to society, live in harmony with nature, and create a better future
- Move beyond maximizing return on shareholder value, and maximizing profits
- Companies should not profit from creating the world’s problems, but from solving them
- Doing right by their workers, customers, communities and environment
KSF
- employees
- Attract and retain talent
- Unleash employee potential/ impact
- Build trust and loyalty – anchors employees when navigating struggles
- Unify the organization
KSF
- customers/ products
- Products are the vehicle of how you provide/ create value for your customers
- Attract customers to your purpose, align with your purpose
- Virtuous cycle
- Customers are more likely to engage and trust the company if they value the purpose – making them more loyal which will preserve the customer base and help drive top-line growth (increase revenues)
KSF
Innovation/ Uniqueness
innovation
- increase awareness of external expectations/ emerging trends
- quartercapitalism – less responsive to change in the external environment, limiting potential in the future
- inspire employees to creatively solve problems
- redefine the playing field – stay relevant in rapidly changing world
- reshape value proposition – companies can move beyond their ecosystem, connect with other companies
unique – create competitive advantage
KSF
financial performance
- overcome slow growth and declining profits
- Attracts investors seeking sustainable ROI and transparency
- Reduces risk and uncertainty – better sutied for external enviroment
- The cost of inaction is greater than the cost of action
If businesses are not doing their fair share it will only end up costing them more in the long run
management in the past
The economy is a machine, business is a machine, human is a machine
- Inputs into the machine and get an expected output
- Human capital
Reductionism
- Companies break down every component of their business into the different functional areas (HR, finance, etc.) → figure out how each group can achieve maximum efficiency
- Maximum efficiency, zero slack
Covid 19 nurses working too much, being burnt out, contracting covid - Siloed decision making
- People in different areas of the business are not talking to each other – not in the best interest of the business
- Not interacting with the other components
Short-term timelines
- Focused on quarterly capitalism → not looking in the long term, just focused on the next quarter
management themes present
- Business is a living organism/ natural system
- Complex, adaptive, nonlinear
- How systems work as a whole vs the individual pieces
- Rather than a machine → living organism
Resiliency and balance
- Follow through with their words and live up their words with their actions
- Integrative and transparent decision making
- Drive out slack and efficiency and focus on the broader system
- Focused on all different types of stakeholders
Multi-general timeline
- Thinking into the future, not the quarterly capitalism
benifits of purpose
- Moving towards integrative thinking
- Competitive advantage
- Helps promote resiliency and balance
- Provides meaning for employees
- More loyal/ engaged employees and customers
challenges of purpose
- hard, some people do not like change – accpeted by employees?
- Transparency might expose painful tensions better left unexamined
- Difficult to serve all stakeholders
- Purpose gap/ purpose washing
- Purpose does not align with the company
- CEO’s playing offence in the governance game - turning away from shareholders and not meeting all their needs – looking to serve other stakeholders
- Using purpose as a defence mechanism
- purpose too big of a challnege
- opportunity vs obligation
- how do you measure success?
