Strategic transformation

Maggio 17, 2022

Purpose Talks @POLIMI: The dual challenge of purpose and business transformation

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Purpose talks: Firms and their transformation processes in the pandemic context

POLIMI GSoM returns with Purpose Talks, a series of events featuring lecturers, consultants, business managers and coaches who will explain how companies and organisations are moving in practical terms towards a new business model inspired by a “higher purpose”, which sees people and society as fundamental elements in creating a successful business.

The pandemic has presented the world with countless challenges, starting with the healthcare sector. Companies had to go through a series of internal transformation processes to survive the impact.

What role has purpose played in this process? How do companies in the healthcare sector pursue ‘higher purpose’?

On Tuesday, May 17th, 2022, take part in the fourth of POLIMI GSoM’s Purpose Talk series and do not miss the contributions made by Federico Frattini, Dean of POLIMI- Graduate School of Management at Politecnico di Milano, Colin Mayer, Peter Moores Professor of Management Studies at Saïd Business School, University of Oxford, and Armida Gigante, Sustainability, Open Innovation & Stakeholder Experience Lead at Medtronic, who will discuss the challenges that every company is experiencing.

The event will be inaugurated by Antonella Moretto, Associate Dean of POLIMI Graduate School of Management, who will present POLIMI GSoM’s International Full-Time MBA, focusing on the programme and its objectives.

Don’t miss this opportunity to meet these great professionals and to discover the features of our purpose-driven MBA.

Below is the agenda for the event:

• 17:30 – 18:00 – Antonella Moretto, FT MBA presentation;
• 18:00 – 19:00 – Federico Frattini, Colin Mayer and Armida Gigante, Purpose Talks – Purpose and Healthcare;

Join the event: https://www.gsom.polimi.it/en/event/the-relevance-of-purpose-to-healthcare-17052022/

The Purpose challenge

Extract from the opening speech of Federico Frattini, Dean of POLIMI Graduate School of Management

In these years, the complexity of the world has increased manifold. We are facing challenges that transcend the boundaries of the nation states, and whose solutions are ambiguous, complex and require the cooperation between multiple actors. Trends such as the increasing differences between generations in corporations’ workforce, the role of corporations in a society riddled with inequality and identity politics, the quest for authenticity and the necessity of a long-term and sustainable perspective on organizations, have pushed us to interrogate ourselves around the concept of organizational purpose. In 2020, the COVID 19 crisis has accelerated many of these challenges. The legacy of suffering and despair left by such crisis triggered me to ask some fundamental questions, such as:

  • Are organizations equipped to face, and eventually solve, these problems?
  • How can we improve the ability of an organization to bounce back from a crisis and provide solutions for solving it?
  • What are the elements that we can leverage on to create new types of organizations that are better suited to face the future societal challenges?
  • How can business schools provide the instruments to a new generation of organizational and societal leaders for developing meaningful, not just better performing, organizations?

 

My perspective relies on three milestones. First, organizational purpose is an integral part in the answers to those questions. Second, taking purpose seriously means taking humans in organizations seriously, with a specific focus on their engagement with higher values and organizational commitments. Third, effective purposeful organizations require a new style of leadership. Starting from these milestones, my speech seeks to provide some reflections on human engagement and purpose in organizations.

Purpose is not something completely new, but has been central to much of the managerial thinking. In his 1938 seminal book that set the foundations for organizational research, that is, “The functions of the Executive”, Chester Barnard proposed that the job of a chief executive is, among other things, to create “faith in the integrity of the common purpose”. Kenneth Andrews, one of the fathers of strategic management, wrote in his 1980 book “The Concept of Corporate Strategy” that an exemplary chief executive is the “architect of purpose” (p. 11), who ensures that “the game is worth playing, the victory worth seeking, and life and career worth living”. However, somehow, purpose has been taken for granted so much that companies forgot about it.

A sense of purpose is something eminently individual, in the sense that we, as individuals, give purpose to our actions. We do that consciously or unconsciously. However, in organizations, such individual sense of purpose can be constrained or amplified through interactions with other people, with our team, with people at different hierarchical levels, with different external stakeholders, and it can also depend on how we perceive the authenticity of the values that the organization stands for. From research in psychology and management, and actually, from the experience of all of us, since I believe we have experienced this at least once in our lives, we know that professionals can experience meaningfulness through work, that is, they experience that they are doing something positive in their day-to-day tasks, something that is “worthy” to be attained.

From a purely instrumental perspective, this heightens performance, since individuals are more motivated as a collective, are more persistent in attaining their objectives, and enact organizational citizenship behaviors that foster trust among employees.

It is important to underlie that such “worth” has a value component that transcend merely extrinsic and instrumental reasons, but that appeals to a higher order of values. Again, such worth is subjective. When we think of our tasks as being purposeful, or meaningful, or worthy, we do not subjectively think of them as just the outcome of a transaction (“I carry out the task because I am paid to do so”) but also as a step towards pursuing a higher goal that we believe that has meaning for us, that we believe that is “worth” to be pursued. I am not advocating to substitute extrinsic rewards with intrinsic rewards. Instead, I believe that higher performance is achieved only when the two are complemented, and such complementing depends on the subjective motivational state of the individual.

 

Here we need to make an important distinction. While purpose is present, with different levels of awareness, in every task that we as humans do in our lives, the sense of meaning is heightened only when we have such higher “worth” in what we are doing. I call this “expansive purpose”, or, as Harvard Business School Ranjay Gulati says, “deep purpose”. Critics of purpose often think of purpose as a monolithic concept, which is often enacted by companies for engaging in window dressing, or impression management, or for conforming to a broader societal trend. I think that these critiques are fair. If we do not make the distinction between more expansive and less expansive purpose, purpose in organizations is just another way for appeasing specific constituencies, oftentimes the shareholders, but without triggering an actual change in how organizations behave. Truly purposeful organizations consider purpose as the core principle around which activities are organized, and commitments are pursued. Purposeful organizations are authentic, and such authenticity is recognized by internal stakeholder and by external stakeholders. Purposeful organizations go beyond purpose statements. Since purpose comes from a subjective, individual motivational state, and not from a statement, has to be “experienced” and “lived” by the professionals, and not just read. When such expansive purpose is experienced by individuals as a collective, there is an unleashing of energy, which improves performance over the long run, creates a culture of tolerance to failure, as well a “call to arms”. That is, a generalized sense of direction, vision and meaning, that channels the distributed, individual efforts into a joint, collective effort.

We know that embedding purpose in organizations, and in particular, “expansive purpose”, creates a sense of engagement among individual members. But how do we do it? What are the challenges to the successful embedding of purpose in contemporary organizations? There are many, but I will focus just on one: value complexity.

As organizational leaders, we know that within the organization there are multiple individuals, who have different values, worldviews and perspectives. This can cause conflicts that break the social capital within the organizations, the authenticity of relationships, the trust between coworkers. Being able to hold different values together productively, without escalating the tensions, is an important challenge of future organizational leaders. This complexity does not happen only in organizations, but also in society. We all have been witnessing to the emergence of “identity politics”, that has been polarizing and dividing our societies, lacerating the institutional fabric of our democracies, and where communication is not used as a way to create dialogue but as a way to escalate tensions. We, as organizational leaders, must learn from this. Organizational purpose should give the general direction of the organization as to create collective engagement, not creating a totalizing moral order within the organization. An expansive purpose does not suffocate the presence of multiple values held by individuals within the organization, but can gather them and hold them together in the commitments that the organization has made to its purpose.

Purposeful organizations are democratic organizations. This is not an easy task. Research has shown that hybrid companies, those that combine financial and social goals, due to the presence of multiple (and often conflicting) values and logics, have a harder time in surviving. This is why leadership is so important. Leaders can convey the purpose to the different teams present in the organization, make them focus their attention to such objective, but also engage them in pursuing it and provide the motivational elements to individuals so that they can give meaning to their own daily work. We believe that purposeful companies can play an important role in “repairing” the fabric of our societies but such change cannot be authentic if organizations do not change themselves first, from the inside. And change has to proceed from human action, and specifically from leadership. This is why the role of business schools in educating and providing tools for the new generations of leaders, managers and professionals will become so important. Value complexity entails complexity in decision making of leaders, so leaders need to have the appropriate skills (which are not just ready-to-use tools) to engage in purposeful strategy planning and decision making with multiple goals. This is why the transformation of organizations towards purpose is not easy nor quick, but often entails errors and pushbacks. One concept that I believe to be core in this discussion around purpose and people engagement is “phronesis”, that is, “wisdom” or “practical reason”. According to Aristotle, the goal of practical reason is to undertake appropriate action, in particular circumstances, to achieve specific purposes. Since phronesis is a human, not merely technical, competence that can be learnt through its exercise, I firmly believe that business schools can improve leadership in organizations by educating generations of organizational and societal leaders in exercising purposeful “practical reason”. This necessitates a shift around what the business schools are supposed to achieve for what it concerns managerial education. They should move from “what to think” to “how to think”. The focus on phronesis as a purposeful leadership competence is very important because it sheds light to an important obstacle that organizations face when engaging in a purposeful transformation, that is, the consideration that organizational change towards purpose is ripe with tensions, and each tension must be tackled pragmatically. Embedding purpose in an organization is not the blind and top-down application of an abstract morality (what is good or worth, and what is bad or not worth) to an organization, but it is the engagement in practical, situated, day-to-day actions that sift through all the domains of effective leadership and enable the organization to move towards such morality: getting authentic buy-in and commitment from all levels of the organization, balancing the short-term pressures from investors with the necessary long-term commitments related to purpose, creating an organizational climate and culture that is supportive of the development of human capabilities.

To conclude, working with purpose, and in particular with what we called “expansive purpose”, by leaders is not an esoteric field of knowledge, but can be nurtured and learnt. To paraphrase Jim March, one of the greatest management thinkers of all times, leadership is a combination of “plumbing and poetry”. It cannot be just scientific, theoretical and deductive knowledge, as its effectiveness in implementation in heterogeneous contexts requires a practical and human sensibility by leaders. However, it cannot just rely on pure improvisation and rhetoric, as the company should be able to function effectively on a day-to-day basis, starting from their internal processes and structures. Both “plumbing” and “poetry” should be kept together for an effective purposeful transformation. The array of competences needed for leading purposeful engagement in companies is vast and heterogeneous in nature, and requires skills that only practice and self work can develop. Business schools can lead this transformation, by developing awareness on what is purpose and why it is important, by providing educational paths that integrate different disciplines to give a holistic perspective of what “working with purpose” means”, and by nurturing the future generational of organizational and societal leaders.  This is what we are committed to do with our new Next Generation MBA, that was illustrated before.

 

 

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