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RITAMCGRATH ThoughtSparks
INTRODUCTION
Theconceptofpurposehasbeenhavingquite amoment–frombooksheraldingits importancetoclaimsthatitholdsthekeyto theheartsandmindsofGenZworkersto claimsfromconsultantsthatwecan“unleash thepoweroforganizationalpurposeto transformproductivityandprofitability.”But howexactlyshouldwebethinkingaboutthis?
LETSGETSTARTED
THEPURPOSEANDVALUESACADEMIC CAMP,SPONSOREDBYTHEYALEPROGRAM ONSTAKEHOLDERINNOVATIONAND MANAGEMENT
Itwasreallyfascinatingtojoincolleaguesfromdifferentinstitutionswithdifferentperspectives toreflectonthecurrentstateoftheartofcorporatepurpose,frominitialdefinitionsto empiricalresults.
WHENDO ORGANIZATIONS TENDTOLEANINTO PURPOSE?
JonIwataandTedSnyderconducteddozensofinterviewswithCEO’sandotherenterpriseleaders.One findingIthoughtwasparticularlyinterestingwasthatorganizationalleaderstendtoemphasize purposemostwhengoingthroughsomekindoftransition.Thiscouldbeamajorshiftinbusiness footprint(asJonsaidofIBMsellingoffitsThinkPadPCdivisiontoLenovo,“wedivested30%ofour revenue,but80%ofouridentity”).
ORIGINOFTHE TERM “STAKEHOLDER”
EdFreemanmentionedthattheoriginaldefinitionof “stakeholder”wassomeonewhowasentrustedwithholdingthe proceeds(thestake)inagamblingsituation.Ihadneveractually giventhismuchthought,butithasinterestingimplications.For starters,ifsomeoneisgoingtobelookingafterawager,they wouldneedtobetrustedbyallpartiestothatwager.Everybody needstoagreethattheirtreatmentbythestakeholderwillbe fair.Bythe60’s,accordingtosomesources,ithadcometomean onewhohassomethingtogainorloseinabusiness,losingsome ofitsoriginalintent.
OURCURRENT STATEOF ACCOUNTING ANDPRICINGIN CAPITALISM DOESN’T REFLECTTRUE COSTS
Thisisapointthatmy colleagueRebeccaHenderson (linktoourFiresideChathere) makesinherwonderfulbook ReimaginingCapitalism.
Thisthemecameupatthe conferenceaswell,inthesense thatthewaywecalculateprofits doesn’tproperlyconsiderthe harmsdonebyfor-profitentities toothers.Weshouldbethinking ofprofitsinsteadintermsof solvingproblems,notcreating problemsforothers.It’sasimple ideathateveryonecangraspcompaniesshouldnotbe profitingatourexpense.Profit shouldbeaderivativeofsolving, notcreatingproblems.
THEWELL-BEINGOFTHE FIRMFORTHELONGTERM DESERVESTREATMENTAS ASTAKEHOLDER
AsresearcherssuchasBillLazonickandothers havedocumented,shareholder-centric capitalismhasenabledthe“legalizedlootingof theAmericancorporation.”Practicessuchas sharebuybacks,highlyinflatedexecutivepay, depressingthewagesofordinaryworkersand morehollowingoutoffirms,extractvaluethat hasbeencreatedpotentiallyoverdecades.
BIGBUSINESSHASA NEWSCAM:THE PURPOSEPARADIGM.
Orsoproclaimedarathercynicalarticleaboutthelevelofcorporatededicationtotheconceptofpurpose. Asits author,MariaHengeveld,says,“Bymakingthesystemiccausesofpovertyandexploitationimperceptibleand obscuringthefactthatrealjusticerequiresaradicalredistributionofcorporateprofits,thepurposeparadigm derailsanddelaysprogress.
Asaself-servingcorporatefantasy,thepurposeparadigmisdesignedtowintrustthatisn’tearned,perpetuate powerthatisnotlegitimate,andpreservealackofgovernmentaloversightunderwhichcorporationscompete witheachotherforprofits.”
I’mlookingforwardtothe conversationsthataresureto emergefromtheworkfollowing theconference.
MysegmentattheconferencewasaboutworkI’mcurrentlyin themidstof–theideathatasthepaceofcompetitiongets faster,organizationsneedtoincreasetheirclockspeedsto survive,andonewayofdoingthatisbypushingdecisionrights andresourceallocationdecisionsasclosetotheedgesas possible.
INOTHERNEWS
We’reexcitedtobelaunchingoursoftware,SparcHub,thisweek.It islikeaGPSforimplementingtheDiscoveryDrivenGrowthsystem inyourorganization.Youcanbecomeauserfor$15/month.To register,visithttps://sparchub.valize.com/,clickon“login”and selectthe“Sage”option.Forademo,visitPresentationsare communicationtoolsthatcanbeusedasdemonstrations.
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