Firms with purpose driven leadership have tangible benefits and more successful outcomes.
One of the many things I’m interested in thinking about is legacy. Doing so requires us to ask ourselves about our purpose. By purpose, I do not mean passion. Passion can be an important factor in your success, but it is hard work that makes us passionate. Purpose is what you truly care about. It is what you are uniquely positioned to provide and gives you the resilience to succeed. For this article, I’d like to focus on what purpose driven leadership and strategy mean for our firms.
At Zweig Group, we strive to Elevate the Industry as the leaders in driving purpose and performance for the AEC universe. Before diving into some of the research and data indicating why purpose should be the foundation of your strategy, let’s look at several other examples of well-crafted purpose statements from companies you may be familiar with:
- REI – “Awaken a lifelong love of the outdoors, for all.”
- Google – “To organize the world’s information and make it universally accessible and useful.”
- Charles Schwab – “A relentless ally for the individual investor.”
You may be thinking, this is all great, but are there tangible benefits, evidence, and data that purpose driven leadership, organizations, and strategy have more successful outcomes? The short answer is yes.
The Gartenberg study published in 2019’s Organization Science 30, No.1 included 500,000 people across 429 firms suggesting a positive impact on both operating financial performance (return on assets) and forward-looking measures of performance (Tobin’s Q and stock returns) when the purpose is communicated with clarity – even after controlling for current performance. It also noted that this relation is driven by the perceptions of middle management and professional staff rather than senior executives.
Additionally, Thomas Malnight and Ivy Buche of IMD and Charles Dhanaraj at the Fox School of Business launched a global study of high growth companies that investigated the importance of three strategies known to drive growth: creating new markets, serving broader stakeholder needs, and changing the rules of the game. What they found surprised them. There was a fourth driver that hadn’t been considered – purpose.
Those in the study that were driven by purpose had average compound annual growth of 30 percent or more in the previous five years. A security firm from the study completely reshaped its business to align with purpose and saw sales increase from 6 percent of total revenue to 20 percent in the new sector of focus. A financial services firm in India, a country with abysmally low (3.5 percent) insurance penetration, following its purpose to “rise” and serve rural areas managed to grow its market and client base to serve 50 percent of villages and 6 million customers. They also found impacts on unifying the organizations, motivating stakeholders, and broadening impact. Finally, other research has shown purpose driven leaders gain nearly 50 percent more market share than their competition, they win Best Firm To Work For awards, and attract better talent.
As I’ve already mentioned, Zweig Group exists to help AEC firms see results like these by helping them design and implement the strategies that work. A few things that purpose driven leaders and firms have in common:
- They are introspective and self-aware.
- They focus on the big picture.
- They integrate purpose into their strategic plan and strategy.
- They have an ethical filter.
- They communicate and inculcate their values and purpose into the culture of their firm constantly and particularly on an employee’s day to day level.
- They set measurable goals.
- Their purpose allows them the power to innovate.
- Their purpose leads them to impactful partnerships.
At this point, perhaps you are convinced and would like to take steps to transform your firm, perhaps you’re unconvinced and would like to challenge this framework, or perhaps you are just interested enough to learn more. There are two ways for you to continue this journey of discovery. I’ll be speaking more about these topics at DISRUPT, the largest virtual business of architecture symposium in the world on May 1-5. Alternatively, you can reach out to me directly. I’m always interested in edifying conversations with others sharing a similar passion in the AEC universe.
2022 AEC Executive Roundtable This roundtable is a unique opportunity for AEC firm leaders to engage and interact with industry peers to discuss current issues facing firms today, explore industry trends and next practices, and confront the biggest challenges they face leading their firms. See you this June 22-24 in Dallas!