How does purpose create an innovation advantage?

June 12, 2009 — 31 Comments

It may seem entirely obvious that organizations with a sense of purpose achieve greater levels of innovation than those that don’t. I think of Apple (Insanely Great), and Nike (Just Do It) as good examples of purpose that guides and drives innovation, never mind the Aravind Eye Hospitals or Grameen Bank.

The question is why should this be so? Again – this might be obvious but I supect there are nuances.

Most start-ups have a clear sense of purpose but as they scale it gets lost. How can the very largest of organizations, those with the potential to have the most impact, create purpose that drives innovation? AG Lafley used the mantra – “the consumer is boss” to focus P&G on consumer led innovation. Jeffrey Immelt created Ecomagination, and more recently, Healthymagination as big ideas to create coordinated innovation across the many business units of GE. John Mackey at Whole Foods has used a set of core values to support grass roots innovation.

I believe that organizations whose purpose is only to build shareholder value or maximize profits will not sustain innovation. I also suspect that different types and sizes of organization need different expressions of purpose. Are there examples of sustained innovation without purpose?

Tim Brown

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31 responses to How does purpose create an innovation advantage?

  1. It seems only natural that an organization built to maximize profits will not sustain innovation. Larger organizations, lets take the Intelligence community of the U.S. for example, require a purpose introduced externally (national security threats).
    Maybe large organizations’ leadership should introduce an internal danger that simulates an a sense of purpose, and urgency, achieved normally by an external threat. For example: Microsoft’s Boston Concept Development. An enigmatic leader and personality (Gates) leaves and thus a sense of purpose develops through the company that says, “Hey, we better get on board, we have a chance to really change things.”
    As for smaller organizations an omnipresent, dynamic and strong personality is sometimes enough to drive the purpose of innovation. Take for example a James Beard-award winning chef. He/She will develop a small, highly-skilled team, surround him/her-self with talent and start innovating. For example: Ferran Adria virtually single-handedly developed a new cuisine—Molecular Gastronomy.
    So purpose for innovation can come from many different directions. Successful organizations foster acceptance and reward of drive and purpose.
    I think if there are examples of sustained innovation without purpose those organizations don’t contribute to the advancement of equilibrium between humans and the earth. Sustained innovation without purpose IS an organization built to maximize profits and shareholder value. This is at the root of the capitalist economy’s struggles right now.

  2. Marcel Duchamp comes to my mind… he was a person condemn to be succesful because he was all the time innovating, changing styles and challenging all the time. He even ridiculized art and was again very sucesful… His secret was to change fast, to avoid being catalogued. Moderrn corporations should learn something from the master of modern art….

  3. Scott Lelieur June 12, 2009 at 8:45 pm

    It is a question of motivation. Shareholders are motivated by stock price whereas employees in large part are not. Therefore if employees are the population that must be motivated in order to increase company efficacy then profitability is not the carrot. Purpose is a way to introduce a common goal and sense of purpose to a wider population of employees as a way to drive innovation, increased profitability and share price.

  4. Hi Tim,

    Can’t agree with you more. Having worked with organizations on strategies and their visions/missions/core values for years, I have realized that a large proportion, if not most, commercial organizations have lost their true purposes.

    Look at those mission statements (or similar declarations) and what you see are standard phrases like “maximizing shareholder values”, “being the number 1 in the industry”, etc. How can these organizations induce passion in their people? Without passion, how can we see true innovations?

    Fortunately, I can still see lights in most human services and social enterprises. I hope we can see more organizations really having true passions and purposes.

  5. A quick note on Duchamp to Luis Artuo Mendez Alba – I don’t think Duchamp changed quiclky, I think he changed slowly, intentionally slow, and kept himself off the art world’s rhythm’s. Think how long it took for him to create Etant Donnés. Steadiness of purpose is as important as direction. In the computer industry Steve Jobs has had that kind of focus and persistence, and so has Richard Stallman. Tim’s question turns on an organization’s purpose and how it informs design thinking. I think this turns on values, and how those values are used to guide design decisions. How would an organization that has, say, ‘learning’ as a value reference that value in design decisions?

  6. I am currently working very hard to incorporate a design philosophy into my business. It’s a “Can anyone see what I see” problem. I realize that not money but telling the story and retelling the story until it is understood is more important than anything.

  7. Innovation and purpose, to a greater or lesser extent, are environment driven. As Jason mentions, external variables cause reactive innovation, where change is a result of the environment, not the interests of a company.

    I visualize a ‘purpose matrix’ where the x axis is the internal proactivity (high/low) of a company to create ideas and drive innovation and the y axis is the extent to which the environment drives change (high/low), producing four quadrants:

    Quadrant 1: High proactivity / High environment-driven (ED) – Cause support
    Q2: Low proactity / High ED – Revenue opportunity/shareholder approach
    Q3: Low proactivity / Low ED – Commoditization/economies of scale
    Q4: High proactivity / Low ED – Idea generation

    There are certainly other ways to categorize/filter purpose (company size, etc.), and conjunctive impacts (cause driven change increasing stakeholder value, Southwest or Google), but Tim’s post makes an important point, in order to gain support don’t confuse (or miscategorize) what is driving your purpose when communicating to your organization and stakeholders. Don’t champion a cause when your sole motiviation is increasing stakeholder value.

  8. “maximizing shareholder values”, “being the number 1 in the industry” as Catus Lee says, is how most modern companies are defining their vision. It could not be more confusing… The problem is that companies exist due to a social phenomena, to give solution to some needs, and sometimes they confuse this with profits…
    I used to work for a company funded only on the principles of increasing margin and business. It was owned only by one person, and it was incredible to follow him innovating based on that philosophy. He used innovation in a different way, just the minimun amount to the final product, and also innovation in the process to reduce costs, and some in HR to pay less, and some in finance…it was incredible, he was very sucessful talking about money and gave very few to final users of the product… for me as designer it was very frustating because we were thinking to prevail as a company providing only the best under the given circumstances, it was the pourpose of innovation from a different point of view. The owner did not like that, innovation for him was to do things to increase margin…it was the financial mind against Design Thinking, but in certain way he reached his goals thanks to our work, it was a paradox…

  9. Damon Borozny June 14, 2009 at 7:18 am

    There is a lot of talk here, but the purpose of any business that lasts is this: solve a problem, whatever that is, and do it better than anyone else.

    That is the essence of what someone commented earlier on re: AG Lafley’s mantra – “the consumer is boss”. Listen to your customer. If a company does this more than it doesn’t, chances are they’ll be successful and keep on keeping on.

  10. scott crawford June 14, 2009 at 9:57 am

    Add Add my “ditto” to Catus Lee’s comments above. One essential move is separating the offices of Chairman of the Board and CEO. They have different audiences and goals to serve.

  11. I have the suspect that great innovations often come through the temporary (and fake) assumption that shareholder profits are not priority one. I believe that when profits are the explicit driver for organization and everyone in the organization behaves on a strict profit/cost ration, then innovation is poor.

    I think poor because I see innovation as the result of excess instead of balance. If the path to innovation is a process where intuition, sensibility and experience work together in order to create new relations between things and behaviours, do you think conducing that kind of process under a rigid management ratio wiil be successfull? I do not think so probably.

    I believe that some great individuals have the power to inspire other exceptional professionals and create all together a profitable enviroment for passionate ideas that could generate memorable profits. I strongly believe that these great individuals should have a clear understanding of what profit means for an organization, but they should lso see them as a result and not as a principle. I saw several times profit-need creating innovation. And that kind innovation was extremely poor, or just marketing-maked-up (with no exceptional profits at all in the end).

    In the end profit could be a good measure of success, but not the purpose itself. Ideally you should have both. And that would be the greatest thing it could happen to your business.

  12. Christine Hollister June 14, 2009 at 5:29 pm

    In my experience, when people have a purpose larger than their own personal gain, they are more likely to do the things that foster innovation – e.g. risk sharing a zany idea, being open to the ideas of others, giving up their attachment to old ways of doing things… whatever it takes to achieve the purpose. To me, that’s a key link between purpose and innovation.

    A challenge in really large companies (tens of thousands of employees) is having a credible purpose that employees believe in. Lots of companies espouse or try to impose a purpose, including talk about putting the customer first or being great, but inside the company employees don’t believe it. When they don’t believe it, they don’t get inspired and internalize it, which means they don’t use it a reason to rise above all the little human idiosyncrasies and dysfunctions that regularly stifle innovation. I think it would be interesting to see what Apple and others who have long-term success with innovation did / do to make the company purpose personal for employees.

  13. Let’s apply some lifecycle thinking.

    A business has a lifecycle. Boring as it may be, that lifecycle is dependent on making money. To do this in a sustained fashion means its purpose is its very survival and existence. That fundamental purpose drives the need for innovation.

    An innovation has a lifecycle. But the business lifecycle will only be as long (or short) as that particular innovation lifecycle if the business fails to reinvent itself through continued innovation.

    So I’m having difficulty separating the two. If we look at Jim Collins research on “Built to Last”, he said it comes down to valuing people as your core asset. Google is interesting because they seem to give their people more latitude in defining a “purpose”. But Google’s asset base is people-heavy. P&G on the other hand has a lot of supply chain assets…they are somewhat constrained by lifecycle of these physical assets so their “purpose” must be more focused.

    Maybe the answer is a balance between the “crassness” of making money and also doing something meaningful via a “higher purpose”. This topic definitely requires more beer/wine/alcohol.

  14. Another thought/rant. Maybe there is a “Maslow’s hierarchy” in business models where “purpose” is more critical? Most of us operate in technology-oriented businesses…is purpose more important for us in “information-centric” jobs than say, some in the garbage collection business? Can you imagine going into a steel mill and talking to one of the operators about purpose? Does the typical retail worker who is paid minimum wage relate to “purpose”? Do the executives in either of these businesses care about purpose? What about people who work for non-profits?

    Not to debunk purpose here…just throwing stuff out. Maybe its got to do with how individuals are rewarded. Its entirely plausible that worker A who is low-paid might create the same output without the need for purpose and worker B who is high paid might need purpose to deliver the same output. Hmmm. But that means Maslow’s does not apply to businesses but to individuals. End of rant.

  15. When Sergey Brin from Google was asked about the kind of business they were expecting when they bought YouTube in 1650 millon, he answered that it was not about profits but about enancing user experience.

    Going back in time, when Brin and Page were asked about how they were thinking to generate a business from their page rank concept, they declared they did not know, they just wanted to give people the best tool to rank pages and at the same time the best search engine, that was all at the time….

  16. I very much agree with Christine Hollister’s point of view. Putting the customer first or being great have become so commonplace that they do not make real sense. Some kind of small purpose clusters could be engineered in large companies, tracking day to day actions towards that purpose.

    Purposes cannot make sense to everybody unless you are in a small monolithic, highly hierarchical structure or society, not exactly the one’s we have nowadays in business (even if they are present in other contexts like politics, music, religion…)

    We seem to face a dilemma: apply to purposes the same frenetic “innovative” pattern applied to whatever product’s innovation or state so large and commonplace purposes so that every innovation will fit in giving boards the impression that the strategy is a “coherent” and long term one.

  17. James Littlewood June 18, 2009 at 8:05 pm

    You only have to look at the finance markets, who’s lack of purpose was so singularly focussed on the buck that it’s now forced into questioning its own values.

    Indeed, its purpose and value structure was so flawed that the rest of us are also questioning ourselves: why the hell did we tolerate it? How could we have? WTF were we thinking? Ah, but so easy to be wise …

    Never mind innovation. The finance market not only collapsed, it took down half the paradigm of western democracy with it. What would have said?

    The question is, beyond individual brands, what other entire sectors suffer from purpose miopia?

    In 10 years time, when we look back on the legacy of Mr Wozniak & Mr Jobs, what will we see to have been foresaken in the spirit of “insane greatness” (or even of “making the world a better place.”) … And what will prompt this review? The emergence of Skynet? Pandemic brain cancer? The evolutionary disappearance of human fingers?

    Hey, it’s Friday.

  18. We are struggling a bit with this topic in my company (2000+), so it piqued my interest. I am reminded of one of my favorite quotes:
    “If you want to build a ship, don’t drum up the men to gather wood, divide the work and give orders. Instead, teach them to yearn for the vast and endless sea. ” —Antoine de Saint-Exupery

    Purpose will provide its own inspiration, but it is not enough by itself. You need focus. Without focus, some will “yearn for the vast and endless sea”, but be content with just playing on the beach.

  19. Tim,
    Great observation and insight as usual.

    Closing the gap between the “purpose” and the ability to “create meaningful” products and experiences is becoming a core innovation advantage for many companies who can actually do it.

    We see far too many companies getting hung up on generating and coming to consensus around lengthy mission statements that don’t mean anything for the end user of their product or service. By the end of an expensive weekend offsite, executive teams rarely come away with anything that is actually going to create meaning for their consumers.

    More companies need to connect the breadcrumb trail from “company purpose” to “meaningful” products and services, and then begin to work on closing that gap.

    A great corporate example to add to your list of examples is Target: “Democratizing Design”

  20. Something I came across since my last post…

    Goal is always to make money/profit…but should not be confused with Purpose – which according to Ted Levitt@HBS, is to get and keep customers.

    Purpose becomes a means or path to achieve the goal. So a well articulated purpose can “illuminate” a path (or best path) to the goal.

  21. Great insights.

    I believe that another issue facing growing start up companies related to innovation are the different personality types required for innovation and business growth. Innovation requires industry specific knowledge and creativity while business growth requires a more “corporate” mindset. When these two personalities clash in the management environment; innovation tends to be stiffled.

    A great example of this would be the Lotus Corporation. First known for being an early creator of the spreadsheet application. Their spreadsheet application was created by extremely talented and creative individuals. When the application became popular consultants and other individuals of the “corporate” mindset were brought in to run the company. Effectively ending the creativity of the Lotus Corporation.

  22. This is a great conversation!

    Purpose driven design is an extremely valuable driver leading to clear focus and measureabillty when authentically derived from the DNA of the organization or workplace through an inclusive, collaborative process. We believe at Maclay Architects in values led design where we examine our clients mission, core values, principles and beliefs in the beginning of the process, establish project goals and objectives related to them and then identify likely implementation strategies logically proceeding from them. This often happens in the beginning stages of the design in afternoon or all day design charettes or intensive client workshops facilitated by us or when important, more neutral facilitation professionals.

    We often like to recommend key project stakeholders participate and and as much of the organization’s community to come along as well. Given we believe in integrated green focused design we also like to have key design consultant team members join in as well. We might or might not use the LEED categories of Sustainable Sites, Energy Efficiency, Water use, Materials, Indoor Environment to assist in developing key goals and objectives coordinating with overall mission, values and core principles. This is a good starting place though.

    From all of this we like to create a project mission statement which we afix to all project meeting minutes through initial to detailed design phases through construction. We do this to remind the owner, builder and our consultant team of the big picture purpose we’re all seeking on the project. So having a sense of purpose is important, no strike that, it’s mission critical!

    If you want to learn more about this go to http://www.maclayarchitects.com or my personal design blog mentioned above.

  23. in his last post, Sree Hamid points out the relevant importance of the word’s meanings: goal, purpose, objective, ambition, or even dream, can be used with specific and different connotations even by stakeholders of a same project, escpecially when it is a multicultural one where english, even spoken, is not the mother tongue. Gender issues and sensitivity make also a difference, recent reserarch has shown that women engineers, in design processes, go beyond the commonplace splitting between “corporate” culture and national culture facilitating a new way of management and, moreover, a new way of setting purposes…

  24. Wow. Lots of different definitions of purpose, a term I wish Tim had defined for the context of his post.

    My thinking about purpose comes from the Built to Last model. It’s that enduring, deeply engrained reason for existence that permeates throughout the people and processes of an organization.

    So in that case (reacting to Sree Hameed’s comments), I would definitely talk about it with the garbage collector, the hourly employee in a hotel, etc. Collecting trash may not ever be sexy, bit it’s more than just picking up garbage. It’s helping ensure a safe, healthy, and livable neighborhood. Trash not collected carefully can attract bugs and enable disease to spread, it can be unsightly and send messages that the neighborhood is dirty or even unsafe, and it could expos kids playing outside to risk if they find sharp objects that fell out of a bin while being dumped but weren’t noticed by the trash collector, etc.

    Will thinking that way have trash collectors dancing a little jig as they go about their job? No, but it might help them reconnect to the much deeper purpose behind their efforts.

  25. To see sustained innovation without purpose we need only look at our environment and ourselves. We and our environment and all of our actions are the products of evolution. Evolution is constantly innovating without purpose.

    Apple, an innovator, is as much a product of evolution as the seemingly least innovative corporations. The only difference between the two is the environment has been able to kill off one and not the other. Why? Because Apple is not averse to change while the competition is. Yet is is Apple which has a more integral structure than the competition.

  26. The application of purpose question: Will the consumer see for themselves and experience first hand the results of this decision or action?

    Laser sharp focus on the experience of the consumer is the fuel that drives purpose. When a team is focused on attaining a clearly stated and well defined goal (and has an emotional bond to short term gains made while working towards the goal) they will innovate to expedite the attainment of the goal. When the focus is on providing an exceptional experience for the consumer it is the company that wins and the company that has the great experience. That is a rewarding experience for everyone.

  27. Yes I think this is very true. I think it’s fair to say that the product of a process is normally a reflection of the process, so the shape and spirit of a company matters.

    People need vision to have emotion or to be engaged fully, and without emotion there is only work/routine. So if people don’t have a picture for what they are trying to do then they can’t shape their intuition and fall back on reason alone.

    It’s about the gut feeling for the vision, the spirit of the work. If you’ve got that the rest falls into place..

  28. Worked for a purposeful innovative company, once upon a long time ago. Focus, focus, focus. Every employee at all levels knew our % of on-time and correct product shipments, consecutive days w/o accidents or injuries, and what was going on on the factory floor. If an office activity was tied to customer satisfaction (the “what” we all were focused on) we were entirely on our own to make autonomus decisions about “how” to do it.

    We also knew that all of our executive team walked around and could ask any one of us at any time, “What have you done today for the company?” Intelligent capable answers were expected. If you didn’t understand how your work that day fit into the company’s purpose, you had better find out.

    We all understood the business model and the economic framework it operated within, the unique value our company offered, and how it was intended to transform within our industry from ____(this) to ____(that). So we all could make decisions swiftly and with high certainty that we were doing the right thing, for the right reasons.

    Also, all the big decisions had been made for us — they led to industry transformation and if we followed the blueprint, we would succeed at this purposeful work.

    And that was where the individual could shine. If you had a rationale for your actions — or a suggestion that illuminated a new aspect of the business that was valid, the door was always open.

    And literally, if any of the executive team was in their office, the door was open — you were welcome, even expected to come in — but never to waste anyone’s time.

    It was the best place I ever worked. Great energy, dynamism, purpose — and what it’s like to be part of an entire organization with a single, shared mission? Indescribable.

  29. The purpose of Apple and Nike is to make profits as it is for most companies. However, the both realised very early on that great products and innovation naturally leads to profits and success. They’re not innovating for the sake of it; innovation keeps you ahead of your competitors.

  30. The short (theoretical) answer to your question is “no”. There are always exceptions to the rule, but systems theory strongly suggests that organizational purpose is the central driver of the internally generated innovations that allows the organization to adapt to changing conditions in its environment. No sustained purpose=no sustained innovation. It also seems that purpose is the key ingredient in organizational innovation generated through a process of “addition by subtraction”, using the principle of “resistance” (as in the role of ohm’s in the flow of electricity): purpose+resistance=addition by subtraction. Nike’s “Just do it” slogan/philosophy seems to offer a good example of this principle.

  31. Paulo de Tarso Romeu Soares February 25, 2014 at 10:20 am

    We need to do what we are able to do with our available tools and to try to listen carefully the needs from our customers…..good start!!

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