Rethinking Your Company’s Purpose Benefits the Bottom Line

PointThe traditional management model has existed for more than a hundred years and the basic tenants are still fundamental to how businesses are managed. Concepts such as hierarchy, standardization, specialization, goal alignment and the use of extrinsic rewards to motivate behavior are key components. Above all, efficiency and financial performance are emphasized. If you ask most CEO’s, presidents or owners of companies what’s the “purpose” of their business, they might look at you with a confused expression, and simply say “we are in business to make a profit”. But is that really true? Are there other reasons for a business to exist and by rethinking your company’s purpose, can you achieve stronger and more sustainable financial success? 

I and many others have written about how the traditional management model is being disrupted (1). It was built for the industrial age and there are many reasons why it’s destined to be replaced. Clearly one reason is that we have become more sensitized to the impact our organizations have on both the environment and society. In other words, the purpose for a business is not simply to make a profit, as emphasized in the traditional management model.

It is the concept of the “triple bottom line”: you can achieve financial success while simultaneously considering the impact on the environment and society. The societal impact includes how companies are able to satisfy the needs of employees through a supportive company culture.

But if you re-evaluate the purpose of your business, seeking the “triple bottom line” as opposed to a singular focus on profitability, does that mean you must sacrifice financial success? I recently engaged with a company located near Atlanta, GA, conducting a case study on how they have re-imagined the purpose of their business (2). This case study illustrates why you don’t have to make that choice.

Displayit LogoDisplayit provides a wide array of products and services that support their client’s trade-show marketing. They are a small company with 52 employees and revenue of about $11M. The company was founded in 1996 as a distributor, but began manufacturing their own products in 2012. They are financially very successful, with a 22% CAGR in revenue since 1998. But what makes them unique is the culture, embodied in their “purpose and core values”.

The “purpose” of Displayit is “…to be a blessing to everyone we interact with…” When I first read that, it certainly caught my attention and I wondered about the religious connotations and the implications for a for-profit business. Their set of ten “core values” are also unique. As I learned, the owner and key early employees set out to purposefully incorporate their religious-inspired values important to them outside of work, using them to build a company that was not only financially successful and innovative but designed to better serve the needs of employees. They have accomplished that goal.

There are seven key elements of the culture at Displayit. These include openness, a supportive environment, a foundation of trust, incorporation of religious-inspired values without being a religious organization, employees who love working at Displayit and are valued by the management, and finally a balance between meeting both financial and employee needs (note these key elements and benefits described below are explored fully in the case study).

The benefits include a highly engaged workforce, employees who are supportive of management and each other, a positive impact on customer service, a high level of innovation, happy and productive employees, and a virtuous cycle where financial success and meeting the needs of the employees reinforce one another.

When you consider this example, there are two very important lessons for any size business. First, clearly you can create a company that can be financially successful over the long term and designed to better meet the needs of employees. There is no need to choose between those two goals. It is a more sustainable management model because it is a virtuous cycle.

Second, while business models and products/services can be more easily duplicated by competitors today, a company’s culture cannot. It’s the same reason why despite the many books and articles written about highly innovative cultures at companies such as Apple, you cannot simply duplicate that culture at another company. A unique culture that fosters innovation can, therefore, be a source of true, lasting competitive advantage.

Old and New WayMany companies today focus on competing based on business models and out-innovating rivals on products and services. While that remains important, senior managers, CEO’s and owners of companies should spend equivalent if not more time creating a culture that supports innovation, including re-evaluating the purpose of their organization. It is not simply about making a profit, but satisfying the needs of employees and finding ways to engage them, tapping into the source of enduring financial and competitive success.

There are many paths to creating a culture that supports innovation, leading to financial success. Often it is driven by a crisis, but that does not have to be the case. Future articles will address that issue, but the first step will always include the senior manager in the business viewing it as a top priority and fully engage in driving the change. No one else can start the process and lead it to completion.

Notes:

  1. For more information, see What’s The Next Big Thing in Innovation Management?, and Disrupting the Management Model. Also, Gary Hamel has written extensively on the subject of disruption of the management model: The Future of Management (Boston, MA: Harvard Business School Publishing, 2007)
  2. For a full copy of the case study, email Jeff Groh at jgroh@newproductvisions.com.

Jeff Groh is President of New Product Visions located in Flat Rock, NC. New Product Visions helps companies drive revenue and earnings growth by improving their innovation management practices. We focus on processes, organization, management engagement and culture. Services include consulting, Innovation Coach™ Workshops, and MyInnovationCoach online training. Mr. Groh spent 30+ years in industry in a variety of management roles in sales, manufacturing and new product development prior to starting New Product Visions. For additional information or to join our mailing list, contact us. Available for select speaking engagements.

Specialties: NPD consultants, new product development consulting, developing new products, new product development seminars, small business consulting, new product development expert, product development process, new product development strategies, integrating NPD for mergers & acquisitions, organizing for innovation, management role in NPD, project risk analysis, innovation management

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.