Last month I took an in-depth look at strategy, one of the most important words that a board member needs to consider. This month I want to examine how your organisation’s purpose, vision and strategy need to align and how that enables us to define our culture, which is what really drives success.
Principle 11 of my own tgf code says: “The board should be stewards of the vision, values and culture of the organisation and are responsible for setting and monitoring strategy. This should include monitoring the performance of the organisation in line with the vision and strategic objectives.”
In the UK Corporate Governance Code (2018) it also states: “The board should establish the company’s purpose, values and strategy, and satisfy itself that these and its culture are aligned.”
So, let’s start by defining those terms:
The purpose of an organisation is the reason it exists. A purpose statement, which some organisations create, is the answer to the question ‘Why do we exist?’ For example, the purpose statement of Kellogg’s, the food company is, ‘Nourishing families so they can flourish and thrive’.
Another example comes from financial services company ING, whose purpose statement is, ‘Empowering people to stay a step ahead in life and in business’.
But let’s be clear – your organisation’s purpose is NOT the same as its purpose statement.
We do a lot of work to try and identify our purpose and then we try and summarise it in a single sentence to crystallise that reason why the organisation exists. Some organisations and businesses get caught up in trying to do a marketing exercise: ‘Let’s get a purpose statement…. and a vision statement and a mission statement so that we can put them on our website and in a brochure’.
I am saying ‘no’, these are important but we shouldn’t lose the real reason for defining these key elements of the corporate planning process. All these things are fundamental to the running of the business or organisation. They have to be more than a tick-box exercise. A clearly-defined purpose is the first step to inspiring your teams to put their hearts and souls into their roles.
That leads us on to the values of an organisation. Values explain who we are and then they act as a behavioural compass to keep us on track.
A great example of this is Zappos, a family of retail companies that began life as a small online shoe shop called ShoeSite.com. It changed its name to Zappos after zapatos, the Spanish word for shoes. Today it sells clothes and accessories as well as shoes.
The company’s purpose is defined as ‘To live and deliver WOW’.
The leadership team has also defined 10 core values that everyone at Zappos lives by. These are:
1. Deliver WOW through service
2. Embrace and drive change
3. Create fun and a little weirdness
4. Be adventurous, creative and open-minded
5. Pursue growth and learning
6. Build open and honest relationships with communication
7. Build a positive team and family spirit
8. Do more with less
9. Be passionate and determined
10. Be humble
Once we have established why we exist and who we are, we need to look at our vision for where we are going and THEN we can work out the strategy that will get us there.
Many organisations will put a lot of work into the implementation of strategy, setting up the systems and trying to get the operational side of things right, but, as Peter Drucker, the late management consultant and author famously said, “Culture eats strategy for breakfast.”
We need clear strategic objectives, but unless we get the culture right it’s almost impossible to achieve those goals. I’d go so far as to say that even if you didn’t have all those systems and operational processes right, you COULD achieve your objectives just by having the right culture.
For an extreme example, let’s look at Brazilian businessman Ricardo Semler who introduced a radical form of industrial democracy as CEO and majority owner at Semco Partners, which makes industrial machinery. He lets his employees decide their working hours and their salary levels and even what they do. Hammocks are scattered around the grounds in case anyone fancies an afternoon nap.
There are no organisation charts, no dress code and no written rules or policy statements beyond a concise, comic book-style ‘Survival Manual’ – an induction document for new starters.
The thinking behind this is that the workers have acquired a deep knowledge of the organisation’s objectives and they are trusted to use their common sense to decide what they should do on any particular day in order to meet those goals. Under Semler’s approach, Semco Partners has become one of the fastest-growing Latin American companies.
Zappos is also a far from average company. Its emphasis is on delivering exceptional customer service, but it cheerfully admits that its number one priority is company culture. Let’s look back at the Zappos purpose statement again: ‘To live and deliver the WOW’. The leadership team knows that in order to deliver the WOW of great service to their customers, everyone has to live the WOW too.
Its leaders make Zappos a fun place to work; they celebrate their team members and organise lots of fun activities and events. They also take cultural fit seriously, so hiring new people is a slow process to ensure that they will embrace those 10 core values I mentioned previously. Zappos believes in giving back to its local community. It supports toy drives at Christmas and runs a programme supplying clothes, food and hygiene products for students in need.
On the zappos.com website, Christa Foley who works for Zappos Insights, says: “For me, our culture means living our core values, and that translates into working for a company that focuses on a higher purpose than just the almighty dollar.”
Zappos believes that if you identify your values, hire by them, induct new starters in them and live by them then your business is on the road to success, profit, and growth.
Culture is what will make your business or organisation a success, but you have to define your purpose, values and strategy first.
Now, I want to touch briefly on the subject of next month’s blog post, which is the golden thread that connects your purpose, values, strategy and culture. I believe there are five steps to creating that golden thread and they help us to focus on the role of board members in making all of this come together.
Thread is flexible but sensitive and it can easily be broken. It needs to gently bring together your purpose, values, strategy and culture while still allowing them to work separately. If you forget who you are, or the culture starts to change, things can still unravel. I call it golden to signify how important and valuable it is.
Next month we’ll examine the five steps to your golden thread in detail, but I’ll leave you with the bulletpoints to think about before then:
1. Vision – People need to know where the organisation is going and how they fit in.
2. Mission – People need to understand what we are trying to do for our clients, customers or users and what their role is in delivering this.
3. Buy-in – We need to listen and act on what our teams say to motivate them and take them with us on our journey.
4. Trust – We earn trust if we practice what we preach as leaders and board members.
5. Governance – The right frameworks and policies and appropriate rewards underpin success.