A: Since an authentic higher purpose is the arbiter of all decisions, the leaders, the middle managers, and the first-line people communicate the higher purpose with every act. They act in often unconventional ways, so everyone recognizes the purpose is authentic, and they take it seriously. They launch new initiatives at every level. They start a viral process that gives rise to a new order. They do not dictate the new order from the top but allow it to be co-created by everyone engaging in authentic communication. For insights about the communication of higher purpose see chapters 9, 10, and 13.
Q: How can you have a PDO when you have diverse departments and people?
A: Organizations have a key need to integrate diversity, be it departmental differences or diversity based on discipline, status, gender, race, or nationality. Managers cannot integrate such differentiation. Leaders, on the other hand, are motivated by virtue rather than ego, they demonstrate genuine concern, they link people to the future, and they help them think for themselves. By creating trust and facilitating collaboration, leaders link people and nurture collaboration until the people become wedded to the higher purpose and the diversity is integrated in a unified system of collaborative, collective intelligence.
Q: How do you create higher purpose in a multinational corporation?
A: A multinational corporation is a system that crosses geographical boundaries and has employees from different cultures. You might assume that such people have difficulty communicating with one another and that people from different national cultures cannot be easily integrated, The assumption is true; they cannot be easily integrated. They can be integrated through purpose work.
This is the same issue of diversity that we addressed in the last question. The integration of diversity is the work of all leaders. It is difficult work and requires a discovery: all people are unique and all people are the same. Discovering the human commonality is at the heart of purpose work and is a form of deep learning that leaders come to understand and execute.
Q: How can you take higher purpose to the lower levels of the organization?
A: You must take higher purpose all the way down the organization. Most executives cannot figure out how to do this, and this is one of the reasons why their efforts to establish higher purpose fail. For insights on how to move the purpose down the organization, see the last three chapters.
Q: What changes account for the success of organizations that pursue higher purpose?
A: A PDO transcends the principal–agent problem and alters the social fabric. It changes communication from downloading to honest debate, to authentic dialogue, to emergent collective learning. It allows ideas to be challenged while maintaining respectful relationships. It encourages people to bring their discretionary energy to work.
As individuals change, the collective changes. Negative peer pressure morphs into positive peer pressure. People sacrifice for the common good. Leadership becomes distributed, with people taking spontaneous initiatives. A new order emerges that is aligned with current external realities. Success breeds success, external stakeholders are drawn to the organization, and new resources begin to flow to the organization.
Q: Can all organizations apply the principles of higher purpose?
A: People with the conventional mind-set focus on constraints and arguments as to why a given organization cannot be purpose driven. They articulate constraints that are real and formidable. Yet the very purpose of leadership is to transcend conventional constraints and create a PDO. In this book, we give examples from the most technical and hierarchical fields of endeavor. It is difficult to create a PDO in all domains, particularly those where all the emphasis is on transactional contracts and trust is low, but such organizations are the ones that have the most to gain.
One way you can begin envisioning a PDO is to look for organizations in the same domain that defy logic and operate from higher purpose. We often hear people tell us, “This would never work on Wall Street.” Yet Jimmy Dunne is someone on Wall Street who is creating a PDO (see chapter 9). When we point out such cases, people respond, “Oh, that doesn’t count,” and they search for something about their organization that is different that will excuse them from the accountability of purpose work. We suggest that you examine the end of the normal curve where excellence exists, and there you will find the positive deviance that will help you envision the impossible. Remember, if it is real, it is possible.
Q: How does company culture influence efforts to find and pursue a higher purpose?
A: Most companies and organizations have a conventional culture. Cultures function to preserve themselves, and people who propose significant changes are punished. For this reason, change agents must become purpose-driven leaders. Most executives, like the rest of us, are fearful, so most organizations do not become purpose driven. The leader has a calling to create conflict by continually moving the current culture in a more positive direction.
Q: What if an organization succeeded as a PDO, then failed. Can it be turned around?
A: Excellence is fragile. Once it is achieved and lost, we tend to assume that the social system will be too injured to recover. Yet in such an organization valuable assets remain, embodied in a working memory of excellence and of decay. By surfacing and examining the two realities, we can explore how we want to live in the organization and then ask ourselves how to create excellence in the present moment.
Q: What if you believe in having a purpose-driven organization, but the people above you and around you do not?
A: A person in this situation tends to conclude that nothing can be done. The conclusion is an indication that the actor is still in the conventional, managerial mind-set. But a leader is transformational. A leader transforms the beliefs of those below, at the same level, and above. If this question reflects your perspective, seek to discover your own highest purpose and begin to live from an internal locus of control. Doing so will teach you how to do things you think you cannot do.
Q: How do you find the time and energy to create a PDO?
A: The conventional manager lives a reactive, fear-filled life that is short on meaning. The conventional manager cannot find the time or energy to reflect and has limited options for renewal. The purpose-driven leader can find no higher intention than to pursue the highest purpose. Pursuing the purpose paradoxically produces energy and saves time. Purpose-driven leaders are fully engaged.
Q: If my company is already successful, how does it become a PDO?
A: The conventional answer is to create a burning platform, some problem that will capture the attention and force commitment. Our answer is create a burning desire. Look around and discover excellence in the real world, understand the excellence, link the excellence to the deepest needs of your people, align yourself with the excellence, become a constant example of the excellence, speak continually of your aspiration, and align all strategies and processes with the excellence. The approach is based on attraction rather than compulsion.
Q: How do you reconcile the fact that you are a PDO, yet some of your failures are aligned with higher purpose and some of your successes are not aligned with higher purpose?
A: As this question illustrates, you never fully succeed in creating a PDO. Organizations are complex, and conflicts never stop arising. Some projects naturally evolve away from the purpose. In terms of profit they may even succeed. A purpose-driven initiative may fail. To maintain a PDO you must engage in continuous reflection and evaluate whether every action is driven by purpose. It is a journey filled with failure and continual recovery.
Q: What if you are in a PDO but you are working on a project that is not aligned with the higher purpose?
A: This is easy. If you have a PDO and you are working on a project that is not aligned with the higher purpose, you can speak up and challenge the project. Because you are in a PDO, people will openly discuss the issue and come to a consensus that is satisfying to all. If this is not the case, you do not have a PDO.
Q: What do
es a higher purpose have to do with finding good talent?
A: Companies that become purpose-driven evolve a culture of excellence in which people are valued. Such cultures differ from the conventional, transactional cultures that mark most organizations. Talent is attracted to a PDO because employees acquire resources that far exceed their salaries. An organization that becomes a PDO often shows up on a list of best places to work.
Q: What happens to higher purpose after it brings an organization economic success?
A: If the purpose is authentic, the answer is that nothing happens. If the organization is seduced by economic success without purpose, leadership has work to do.
Q: If you create a PDO, how do you sustain it?
A: An organization is a dynamic system, and when an organization becomes a PDO, human nature works to undermine it. A PDO is sustained by leaders who continually focus on the repair and enhancement of the culture. That focus is the difference between a manager and a leader. The manager thinks only of strategy; the leader thinks of culture and strategy as one dynamic system that needs to be constantly knitted together.
Some Final Advice
The conventional mind-set opposes the concept of higher purpose, people of higher purpose threaten the existing culture, and most executives shun purpose work. For you this is an opportunity. If you are willing to become a purpose-driven leader and implement the eight steps to organizational change detailed in this book, you will evolve into a new person, a leader rather than a manager. You will be a leader who looks at the principal–agent problem and sees the principal–agent opportunity, a leader who turns agents into principals.
In your journey to purpose attend to the word authenticity. You do not seek a higher purpose to satisfy external demands. You do it because you believe in it, because you are convinced that higher purpose energizes people and elevates the organization. Higher purpose stabilizes the organization as self-interest is sacrificed for the common good. Then the collective interest and the self-interest become one. People bring their creative energy to work like never before. The time being taken away from the here and now to do purpose work is actually an investment in radically transforming the here and now.
Begin by reflecting on the eight steps to organizational change that we have shared here. Remember that the first step is a change in your own mind-set. You must believe that your organization can be transformed into a purpose-driven organization with a purpose-driven workforce. And, above all, you must be genuine in your purpose and clear in your communication of that purpose. If you do that, you will leave a legacy behind that will long outlive you. Significance is success.
NOTES
Chapter One: Seeing What Cannot Be Seen
1. Micah Solomon, “5 Wow Customer Service Stories from 5-Star Hotels: Examples Any Business Can Learn From,” Forbes, July 29, 2017.
2. Joan Magretta, “Growth Through Global Sustainability: An Interview with Monsanto’s CEO, Robert B. Shapiro,” Harvard Business Review, January/February 1997.
3. P. A. David, “Path Dependence, a Foundational Concept for Historical Social Science,” Cliometrica 1, no. 2 (2007): 91–114.
Chapter Two: Higher Purpose Changes Everything
4. This account is adapted from R. E. Quinn and G. T. Quinn, Letters to Garrett: Stories of Change, Power and Possibility (San Francisco: Jossey Bass, 2002), chapter 2.
5. B. Fredrickson, Positivity (New York: Crown Publishers, 2009), chapter 9.
6. R. W. Quinn and R. E. Quinn, Lift: The Fundamental State of Leadership (Oakland, CA: Berrett-Koehler, 2015), chapters 3 and 4.
7. V. J. Strecher, Life on Purpose: How Living for What Matters Most Changes Everything (New York: Harper One, 2016), chapter 1.
8. On adding years, see P. L. Hill and N. A. Turiano, “Purpose in Life as a Predictor of Mortality Across Adulthood,” Psychological Science 25, no 7 (2014): 1482–86; on heart attack and stroke, see E. S. Kim et al., “Purpose in Life and Reduced Risk of Myocardial Infarction Among Older US Adults with Coronary Heart Disease: A Two-Year Follow-Up,” Journal of Behavioral Medicine, February 2012; on Alzheimer’s disease, see P. A. Boyle et al., “Effect of a Purpose in Life on Risk of Incident Alzheimer Disease and Mild Cognitive Impairment in Community Dwelling Older Persons,” Archives of General Psychiatry 67, no. 3 (2010): 304–10; on sexual enjoyment, see B. A. Prairie et al., “A Higher Sense of Purpose in Life Is Associated with Sexual Enjoyment in Midlife Women,” Menopause 18, no. 8 (2011): 839–44; on sleep, see E. S. Kim, S. D. Hershner, and V. J. Strecher, “Purpose in Life and Incidence of Sleep Disturbances,” Journal of Behavior Medicine 38, no. 3 (2015): 590–97; on depression, see A. M. Wood and S. Joseph, “The Absence of Positive Psychological (Eudemonic) Well-Being as a Risk Factor for Depression: A Ten-Year Cohort Study,” Journal of Affective Disorders 122 (2010): 213–17; on drugs and alcohol, see R. A. Martin et al., “Purpose in Life Predicts Treatment Outcomes Among Adult Cocaine Abusers in Treatment,” Journal of Substance Abuse Treatment 40, no 2 (2011): 183–188; on killer cells, see B. L. Fredrickson et al., “A Functional Genomic Perspective on Human Well-Being,” Proceeding of the National Academy of Science 110 (2013): 13684–89; on cholesterol, see C. D. Ryff, B. Singer, and G. D. Love, “Positive Health: Connection Well-Being with Biology,” Philosophical Transactions of the Royal Society of London: Biological Sciences 359 (2004): 1383–94; on performance, see A. M. Grant and J. M. Berg, “Prosocial Motivation at Work: When, Why, and How Making a Difference Makes a Difference,” in The Oxford Handbook of Positive Organizational Scholarship, eds. K. S. Cameron and G. M. Spreitzer (New York: Oxford University Press, 2012), 28–44.
9. See Manju Puri and David Robinson, “Optimism and Economic Choice,” Journal of Financial Economics, 2007.
10. The Human Era @ Work: Findings from the Energy Project and Harvard Business Review, 2014, https://uli.org/wp-content/uploads/ULI-Documents/The-Human-Era-at-Work.pdf.
11. Irrigation Association, “Shark Tank Success Story to Appear at 2017 Irrigation Show and Education Conference,” press release, September 11, 2017, https://www.irrigation.org/IA/News/Press-Releases-Folder/SharkTanksuccessstorytoappearat2017IrrigationShowEducationConference.aspx.
Chapter Three: Imagining Organizations of Higher Purpose
12. This account is adapted from R. E. Quinn, The Positive Organization: Breaking Free from Conventional Cultures, Constraints, and Beliefs (Oakland, CA: Berrett-Koehler, 2015), chapter 2.
13. A. L. Molinsky, A. M. Grant, and J. D. Margolis, “The Bedside Manner of Homo Economicus: How and Why Priming an Economic Schema Reduces Compassion,” Organizational Behavior and Human Decision Processes 119, no. 1: 27–37.
14. Some economists have recognized the weaknesses of high-powered incentives in “multitasking environments” to explain why some organizations choose not to use high-powered incentives that focus on easily identified economic outcomes. See, for example, Bengt Holmstrom and Paul Milgrom, “Multitask Principal–Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design,” Journal of Law, Economics, & Organization in special issue: Papers from the Conference on the New Science of Organization 7 (1991): 24–52.
15. Indeed, recent research in economics has focused on economic theories of corporate culture and trust. See, for example, Song Fenghua and Anjan Thakor, “Bank Culture,” Journal of Financial Intermediation (forthcoming, 2019). For an economic theory of trust, see Richard Thakor and Robert Merton, “Trust in Lending,” MIT Sloan Working Paper, March 2019.
Chapter Four: Transforming Self-interest
16. See James Mirrlees, “The Optimal Structure of Authority and Incentives Within the Organization,” Bell Journal of Economics 7, no. 1 (February 1976): 105–31; and Bengt Holmstrom, “Moral Hazard and Observability,” Bell Journal of Economics 10, no. 1: 74–91.
17. See Candice Prendergrast, “The Tenuous Tradeoff Between Risk and Incentives,” Journal of Political Economy 110, no. 5 (October 2002): 1071–1102.
18. See National Acade
my of Sciences, Health and Medicine Division, “Best Care at Lower Cost: The Path to Continuously Learning Health Care in America,” news release, September 6, 2012.
19. See Eva A. Kerr and John Z. Avanian, “How to Stop the Overconsumption of Health Care,” Harvard Business Review, October 1, 2014.
20. See Edward Lazear, “Performance Pay and Productivity” (NBER Working Paper No. 5672, National Bureau of Economic Research, Cambridge, MA). About half of this productivity increase came from a “selection effect,” wherein the most able workers were attracted to piece rates and the less able workers left.
21. H. Paarsch and B. Paarsch, “Fixed Wages, Piece Rates, and Incentive Effects” (mimeograph, University of Laval, Quebec, 1996).
22. See S. Fernie and D. Metcalf, “It’s Not What You Pay, It’s the Way You Pay It and That’s What Gets Results: Jockeys’ Pay for Performance” (mimeograph, London School of Economics, 1996). For a review of this literature, see Canice Prendergast, “What Happens Within Firms? A Survey of Empirical Evidence on Compensation Policies,” in Labor Statistics Measurement Issues, eds. John Haltiwanger, Marilyn Manser, and Robert Topel (Chicago: University of Chicago Press, 1998).
23. See George Baker, Michael Jensen, and Kevin Murphy, “Compensation and Incentives: Practice Versus Theory,” Journal of Finance 43, no. 3 (July 1988): 593–616.
24. See Anjan V. Thakor, “Corporate Culture in Banking,” Federal Reserve Bank of New York Policy Review, August 2016, 1–16 .
25. See Oege Dijk and Martin Holmen, “Charity, Incentives and Performance” (working paper, University of Gothenburg, November 2012).
26. On society, integrity, honesty, social identity, and reputation, see George Akerlof and Rachel Kranton, “Identity Economics: How Our Identities Shape Our Work, Wages and Well Being,” Public Choice 145 no. 1/2 (October 2010): 325–28; on corporate social responsibility, see Roland Benabou and Jean Tirole, “Individual and Corporate Social Responsibility,” Economica 77, no. 305 (January 2010): 1–19; on moral behavior, see Roland Benabou and Jean Tirole, “Identity, Morals, and Taboos: Beliefs as Assets,” The Quarterly Journal of Economics 126, no. 2 (May 2011): 805–55; on intrinsic motivation, see Roland Benabou and Jean Tirole, “Intrinsic and Extrinsic Motivation,” The Review of Economic Studies 70, no. 3 (July 2003): 489–520.
The Economics of Higher Purpose Page 20