By Sarah Rozenthuler and Edward Rowland — Reimagining how organisations can catalyse broader societal change is an exciting new horizon in business. However, purpose-led leadership isn’t a simple fix. To successfully connect corporate success with social progress we need to understand the potential obstacles to purpose-driven business so as to navigate the unchartered territory of our changing times.
A recent study, ‘Corporate Purpose and Financial Performance’ from NYU Stern School of Business, Columbia University and Harvard Business School, is the first to provide empirical evidence on the value relevance of corporate purpose. Monitoring the responses of around 500,000 employees from 429 companies in the US over six years, it shows that purpose alone was insufficient to drive higher financial performance, and reveals that it was the perceptions of middle managers that drove the relationship between financial performance and purpose. This finding is consistent with previous research showing that diffusing a strong sense of purpose has been least successful for levels below senior management – the very people pivotal to an organisation’s purpose becoming a meaningful driver of performance. The authors conclude that while purpose is often straightforward to articulate, it can be challenging to implement meaningfully.
Obstacles to purpose
We have identified three key obstacles preventing organisations from becoming a powerful force for good:
1. Purpose needs to be an energetic wellspring that lights up the whole ecosystem, not just the founder/higher management.
2. Most leaders lack dialogic skill.
3. Leadership development needs to prepare leaders to be propagators of purpose.
Here are some key pointers for navigating these obstacles:
1. Lighting up the whole ecosystem
Given the complexities of human systems, discovering and embodying organisational purpose is inherently a systemic undertaking. Too often, senior leaders attempt to define purpose in a huddle behind closed doors. Singular efforts to outline espoused corporate principles typically end up being seen by other stakeholders as superficial and irrelevant.
Yet if purpose is uncovered and embodied by a wider ecosystem of stakeholders, it can act as a true touchstone for inspired action. When there is an appreciation of all the systemic forces shaping a purpose, along with the creative engagement of many diverse voices, the organisation’s north star is felt throughout the whole system to be “right”.
2. Skillful dialogue
A second obstacle to purpose-led leadership is the lack of skilful communication in most organisations. It’s increasingly recognised that individual leaders don’t have all the answers.
The ability to foster dialogue is critical for purposeful leadership, yet this capacity is missing in most organisations.
Miscommunication costs organisations millions daily, leading to rivalry between departments, lack of trust and unresolved personal conflicts. Open communication is essential for building a resilient future, playing a fundamental part in purpose-driven business where change happens by drawing on collective intelligence to inspire creative solutions.
The optimum holding of dialogic spaces requires a systemic perspective, which involves seeing the whole rather than focusing solely on parts; a free flow of dialogue across the corporate hierarchy is called for.
3. Reinventing leadership development
A third obstacle is the limited scope of most leadership development activities. Senior executives troughing through complex case studies that engage their brains but not the whole person is too old-school for today’s global village.
True leadership development includes attending to our inner worlds; only by attuning to our interiority will our exteriority improve. If leaders aren’t able, for example, to regulate their anxiety about appearing unpopular, this will stop them having the difficult conversations they need to lean into. Our work has continually shown how the risks of staying silent outweigh those of speaking out.
A radical re-orientation is needed to update leadership development for the 21st century. Leaders will only manage to powerfully orientate a system to its true purpose if they embody the purpose themselves. To catalyse a flow of purposeful action across a whole ecosystem of stakeholders, leaders must be attuned to their own energy levels and what they sense the future is asking of them.
Purpose-led leadership requires a different order of sensitivity and capacity. Learning for leaders must become much more experiential, experimental and emotionally engaging so it activates a broader intelligence set, including imagination and instinctive awareness. Leaders must be in touch with their whole selves and the whole system they’re part of to be true 21st century pioneers.
21st leadership is becoming more purposeful, inclusive and conversational. When people are energised and engaged, they give their most creative ideas, insightful thinking and best energy. When leaders include their whole team and other stakeholders in articulating and living their organisation’s purpose, there’s a pulse in the room that a leader never experiences by simply telling others what to do. Leaders who draw on the intelligence of those around them and generate open dialogue are the pioneers of the emerging future.
Co-directors of The Whole Partnership
, Sarah Rozenthuler and Edward Rowland are pioneers in purpose-led leadership with a specialist expertise in working with a “whole self, whole system” approach combining systemic coaching with constellations and dialogue.
They will be co-facilitating a three-day Purpose Programme in London, 19-21 June, for leaders and change agents.