Interest in purpose as an organizing principle for corporations has accelerated over the past year, amid the cascade of health, economic, social and environmental crises we are living through. Purpose-driven organizations existed well before the pandemic, but the 2019 U.S. Business Roundtable statement, which redefined the purpose of a corporation to serve all stakeholders (and not just shareholders), brought the idea into the mainstream of business thinking.
Still, considerable skepticism remains about whether purpose is a feature or a fad of the modern corporation. Recent research suggests that the purpose gap is real but also that corporations with strong purpose-driven cultures are not only more successful in digital transformation efforts but also succeed in ways that embrace both technology and humanity.
The Purpose Gap
In a survey of over 4,000 managers and executives published by MIT Sloan Management Review, 72% strongly agreed that it is “very important to them to work for an organization with a purpose they believe in.” However, only 49% strongly agreed that they believe in their organization’s purpose, and only 25% strongly agreed that their organization is as purpose-driven as their leaders profess it to be.
More striking are the survey’s findings that compare purpose-driven companies to other companies. Organizations that are further ahead in the transition to a digital workforce are also more advanced in explicitly incorporating values — specifically around issues of diversity, equity and inclusion — in their approach to digital transformation. The study found stark contrasts between purpose-driven and other organizations in the following areas:
- “Leaders have the right mindset” to succeed in the digital economy: 93% vs 62%.
- The organization “is building a robust talent development pipeline of the leaders [needed] to thrive in the digital economy”: 74% vs 41%
- Diversity and inclusion is a top management priorities: 84% vs 37%
- “Deliberately” gender-diverse project teams: 68% vs 35%.
The study concludes that leading the modern digital workforce “is as much about prioritizing the effectiveness of enterprise values as the value of enterprise efficiency” (emphasis theirs). This prioritization requires a new set of leadership capabilities that are both affective and effective.
Managers as Purpose Connectors
To close the purpose gap, the role of the manager is taking on heightened significance, especially at a time when teams are working remotely. Often overlooked and underappreciated, managers are now faced with a “double squeeze” as they work to support scattered teams and execute business priorities. On the one hand, managers must demonstrate leadership capabilities that emphasize authenticity, transparency, trust, empathy and caring. On the other, they need to plan, execute and motivate in new, agile ways that advance organizational strategy in extreme uncertainty.
In the pandemic era, managers who can pull off both the affective and effective parts of the job have an outsized impact in their organizations. 2020 data from RedThread Research and CultureAmp suggests that compared to those who have ineffective managers, people who rated their managers as being “very effective” during the pandemic are almost four times more likely to recommend their company to other people, three times more likely to be “highly engaged” and 10% more likely to say they plan on staying with their company.
A Systematic Approach to Cultivating Purpose-driven Managers
Most people understand the need for executive leadership commitment to large-scale change that is purpose-driven and advances digital transformation in a values-driven way. But that commitment on its own is not enough for the cultural shifts required throughout the organization. Cultures are neither created nor changed by executive decree; they are co-created by people at all levels of the organization.
Instilling and developing purpose involves more than sharing information. Purpose is felt and shared, which requires social and experiential learning experiences that help managers discover what connects them to the organizational purpose. Then, they can help others create the multi-level purpose alignment that is needed for success.
One instructive approach comes from global construction materials giant CEMEX. The company’s digital transformation effort began in earnest in 2015 and is aligned with its purpose of “building a better future.” Employees at all levels of the organization are now challenged to develop a growth mindset and enhance their capabilities for current jobs while preparing for future ones.
Managers are central to driving cultural change and that mindset and behavior shifts are required for change to happen. Therefore, the company’s CEMEX CONNECT leadership program introduces first-time managers to a leadership model that breaks with traditional models. The curriculum progresses through four levels of purpose-driven leadership that depart from traditional managerial development programs:
- The discovery of personal purpose, which emphasizes the development of an authentic, unique leadership style.
- A style of team management that emphasizes the cultivation of individual strengths and creates harmony.
- Engagement with the company in a way that emphasizes a “business owner” mentality and creates accountability.
- An outward focus that creates value for customers, the community and the greater ecosystem.
Taken together, the components of this program shift the managerial model from the traditional “follow the leader” and “move up” approach to an energizing and empowering focus on exploration, success and accountability.
Connecting Purpose to the Future
It is impossible to predict if and how purpose will be an organizational driver in the corporation of the future. One thing, however, is clear: The urgency necessitated by business disruption and the rapid adoption of technology as a result of the pandemic do not, alone, constitute digital transformation. While the flight to digital solutions has enabled organizations to survive, much work remains to ensure that they thrive. A top-to-bottom alignment on purpose is driving those organizations that are seeing success.
Editor’s note: Don’t miss our infographic on modern leadership development, which shares insights from learning leaders like this one.