The Economics of Higher Purpose
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Financial crisis and “financial miracle,” 113
Force for Growth (FFG), 179
Ford, Henry, 27
Free-market capitalism. See also Capitalism
higher purpose and threat to, 69–72
Friedman, Milton, 74
Fundamental state of leadership, 105, 190
Gandhi (film), 99–100, 109
Gandhi, Mahatma, 99–100, 110
Genuineness, 13, 47. See also Authenticity
Georges, Johnny, 25–26
Green Clean, 165
Greitens, Eric, 56–58, 61
Growth, an orientation to, 136–139
Haudan, Jim, 158–162, 164
Hawken, Paul, 157
Health-care spending, contractual incentives and, 41–42
Here and now, tyranny of the, 7
Hierarchy. See also Principal–agent model; Top-down companies; Top-down process
Alberto Weisser and, 28, 31
conventional mind-set and, 30, 31, 33
executives and, 109, 125, 126, 161
in military, 125
moving up the, 31
principal–agent model and, 39, 109
purpose-driven organizations (PDOs) and, 82
self-interest and, 30
Higher purpose, xi, xiii, 3. See also Life purpose; Organizational higher purpose; specific topics
authenticity of, 190
benefits of, 22–25
changes over time, 188–189
changes that account for the success of organizations that pursue, 196–197
connecting the people to the, 10
defined, 13, 53
discovering one’s organization’s, 8
embracing, 7, 15, 23, 25, 37, 52, 131, 136, 149, 154, 167, 181, 193–194. See also True believers
having more than one, 189
how it influences individuals, 186–187
how to find, 188
how to sustain, 189
manifesting internally vs. externally, 193
metrics that reflect the success of, 194
nature of, 3, 13, 186–191
origin of, 187–188
people in PDOs working on projects not aligned with, 200
the personal challenge in adopting, 78–82
and related terms and concepts, 69
taking it to the low levels of the organization, 196
turning it into a constant arbiter. See Constant arbiter of all decisions
why so few organizations embrace and create a, 193
Horizontal distrust, 80
dealing with, 80–81
Human resources (HR), 49, 141, 165–167
Hypocrisy, assumed, 112–113
Imagining the unimaginable, 27–29
Incentives, 41, 60–61, 192
high-powered, 32, 63, 205n14
output, 39
principal–agent model and, 41–44
problems with, 43
responding to contractual, 41–42
Inclusion
convention and, 135–136
from exclusive to inclusive, 34–35
full, 95
Inclusive economics, 37
Inclusive mind-set, 35–37. See also Positive mind-set
assumptions underlying, 36
importance and acquisition of an, 113–114
Input monitoring, 39, 40
Inquiry, the power of, 88–90
Inspiration
bullets and, 126–127
and service, 126
an unexpected culture of, 125–126
Insurance
risk aversion, effort aversion, and, 42–43
self-interest, contractual incentives, and “overuse” of, 40–42
Integrating vs. splitting, 130
Intent, meaningful, 95
Interface, 156–158, 160
Intrinsic motivation, xi, 16, 52, 126, 187
Intrinsic rewards, 10, 37, 60
Investors’ reaction to the idea of higher purpose, 193–194
Israel, ancient
founding of, 49–50
Rabbi Sacks on, 49–50
social contract and covenant, 50
Jobs, Steve, 53, 62
Joyful achievement, 96
“Joyful banking,” 106, 107, 128
Kaplan, Robert, 70–72
KPMG, 149–152
Leaders, 109, 146
creating purpose-driven, 153–154
higher purpose and, xi–xii
imbuing organizations with purpose, xi
purpose and, 23
types of, 60–61, 74, 146. See also Manipulators; True believers
Leadership, 146. See also specific topics
assumptions that impede successful, 29–30
the covenant of, 48–49
fundamental state of, 105, 190
higher purpose and, 15–16
and social excellence, 91
spontaneous, 96
Leadership, evolution of, 151–153
in an unlikely place, 149–151
Leadership development industry, 146
Leading from Purpose: Clarity and Confidence to Act When It Matters Most (Craig), 102
Learning
from knowing to, 33–34
stimulating learning, 10, 164–167
Leider, Richard, 53–54
Levy, Ricardo, 46–49
covenant and, 48, 49, 51, 76, 148
crisis and, 46–48, 75–76
downsizing and, 46–48, 75–76
higher purpose and, 47, 51, 54
overview, 46
principal–agent model and, 47, 48, 54
transformative moment, 48–49
Life passions, 103
Life purpose. See also Personal purpose
benefits of having a, 22, 77, 78
finding one’s, 17–22
Life statements, 18, 19
Lift: How to Live in the Fundamental State of Leadership (Quinn and Quinn), 190
Love, 47–49
Mahoney, Richard (Dick), 11–14
Manipulators (type of leader), 209n53
crises, sacrifices, and, 75–76
definition and nature of, 60
higher purpose and, 6, 61, 62, 68, 73–75
mimicry, 73, 75, 76
pet projects and, 74–76
true believers and, 60–61, 72–76
Marriages, good vs. great, 89
“Me” to “us,” shift from, 50
Meaningful intent, 95
Meola, Tony, 130–133
Michelangelo, 98
Micromanagers, 125–127
Midlevel managers turned into purpose-driven leaders, 10
Military, 57, 103, 125–126
Mimicry, 73, 75, 76
Mind-set. See also specific topics
a jolt to the, 113–114
Mission Continues, The, 57–58
Monsanto, 11–14
Moral hazard, 39, 40, 99
Moral power, 56
Morality, 128. See also Ethical conflict
Multinational corporations, how to create higher purpose in, 196
Multitasking environments, 205n14
Mundle, Corey, 86–87
Nash, John, 40
Nash equilibrium, 40, 41, 43, 45
Negative emotions, 18–21
9/11 terrorist attacks, 64, 73, 117
Noble cause, 53, 62. See also Prosocial goals
Non-cooperative Nash equilibrium, 40. See also Nash equilibrium
Optimism, 22, 23
Organizational culture. See Culture Organizational higher purpose, 15, 16, 24, 25, 59, 61, 63, 64, 66, 138, 158. See also Higher purpose; specific topics
becoming personal for employees, 10
defined, 53
eight-step path to, 8–11
examples of, 56–58
impediments to the adoption of, 8
origin, 187
personal higher purpose and, 187, 188. See also Personal purpose: organizational purpose and
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br /> Organizational purpose. See also Collective purpose; specific topics
discovering the, 105–107
personal purpose and, 104, 116, 188
Organizations. See also specific topics
good vs. great, 89–90
purpose and, 23
Peer pressure, positive, 95, 197
People and purpose, 16–17
Perkins, David, 125–127
conventional culture and, 125, 135
on inspiration and service, 126
on leadership, 125–128
positive culture and, 128
Personal development, 182, 184
Personal purpose, 17. See also Life purpose
collective purpose and, 104, 172–175
organizational purpose and, 104, 116, 188
power of, 103
transformative effect of finding one’s, 23, 104
waking up to and discovering one’s, 102–103, 187
Pet projects, 74–76, 209n53
Pfau, Bruce, 149–154, 162
Planning, from vision to, 179
Positive, purpose-driven organization checklist of components for a, 95–96
Positive Business Conference, 177
Positive culture, 125, 129, 164
creating a, 128, 138, 163, 165
Positive Energizer Network (PEN), 176–177, 181–185
Positive energizers
definition and nature of, 11, 63
at DTE Energy, 175–176
unleashing the, 11
Positive mind-set, 35. See also Inclusive mind-set
assumptions underlying, 35
Positive peer pressure, 95, 197
Positive regard, 95
Principal–agent contracts, 123, 132
Principal–agent framework, 192
inefficiencies due to contracting frictions in, 43–45
Principal–agent model, 38–40
vs. alternative models, 41–43
CEOs and, 109, 123, 138, 154
contracts and, 39–41
covenant and, 52
downsizing and, 47–48
equilibrium and, 43, 45
focuses on the role of explicit contracts, 93
higher purpose and, 64–66, 99, 109
incentives and, 41–44
midlevel managers and, 154
most profound insight of, 41
purpose-driven organizations (PDOs) and, 142, 192, 194, 197
self-interest and, 41, 44, 45, 47, 121
sharecropper example and, 38–41, 43–44
why it was created, 41–43
Principal–agent perspective, assumptions of, 47–48, 142, 147
Principal–agent problem transcending, 147, 194, 197, 201
transformation of, 108
viewed as a principal–agent opportunity, 162, 201
Prison, recovery programs in, 85
Profits, pursuing higher purpose and optimizing, xi, 62, 130, 147, 192
Prosocial behavior conventional mind-set and, 31
purpose and, 136
Prosocial goals, 53, 56, 59, 67, 70, 74. See also Noble cause
Prosocial motivation, 22, 67, 136
Public relations (PR), 8, 9, 107
Purpose. See also Higher purpose; Life purpose; Personal purpose; specific topics
definition and nature of, 12–13, 53
discovering the power of, xii
finding purpose in a university, 100–101
helping others find, 101–102
and practices, 119–120
Purpose-driven culture, 142–144, 149, 194. See also specific topics
Purpose-driven employees, examples of, 4, 86–87
Purpose-driven organization (PDO). See also specific topics
creating a, 192, 194–201
envisioning the, 8
example of, 4
finding the time and energy to create a, 199
how a successful company becomes a, 199
how it comes into being, 194–195
how to have PDO when you have diverse departments and people, 195–196
nature of, 194
principal–agent model and, 142, 192, 194, 197
reconciling how some failures are aligned with purpose and some successes are not, 199–200
sustaining a, 200–201
turning around organization that succeeds as PDO, then fails, 198
what turns a manager into a leader of a, 195
when people above and around you do not believe in a, 198–199
Purpose workshop, 104–105
Pursuit of higher purpose, 3–4. See also under Higher purpose; Profits
belief in the authenticity of the organizational, 60
why it is not more common, 7
Puzzle, 45–46
Reflecting on experience in a disciplined way, 86
Resources, attraction of, 96
Risk. See also Fear; Moral hazard
deviance as risky, 146
leadership as risky, 146
Risk aversion, 11, 30, 41–44, 63
Rocks, staring at, 98–99
Root Inc., 158
Rowe, Mike, 86–87
Sacks, Jonathan, 49–50
on covenant, 50–51, 76, 148
higher purpose and, 54
on United States, 49–51
Sacrifice
for authentic purpose, 47
for the common good, xiii, 39, 59, 60, 63, 113, 197, 201
for higher purpose, 25, 56, 60
Saginaw, Paul, 139, 141–142
Samuel and the kingdom of Israel, 49
Sandler, Herman, 118–119
Sandler, O’Neil and Partners, 116–119
Self-interest, 39–40, 44, 112, 119, 201. See also Effort aversion
authenticity and, 9, 13, 23–24
and the common good/collective good/collective interest, 5, 13, 23–24, 32, 37, 39, 47, 56, 59, 113, 192, 201
conventional mind-set and, 30–33, 40, 54, 99
economics and, 5, 59, 192
higher purpose and, 5, 13, 15, 16, 23–24, 32, 37, 54, 56, 59, 63, 123
of leaders, 39, 123, 125
leaders and, 5, 7, 8, 15, 16, 32
principal–agent model and, 41, 44, 45, 47, 121
social contracts and, 39, 50
transcending, 47, 56, 59, 194, 201
Selfishness, 39–40, 119. See also Effort aversion; Self-interest
as contagious, 39, 56
Serafeim, George, 70–72
Shapiro, Robert, 12
Sharecropper example, 38–41, 43–44
Shared vulnerability, 96
Shareholder value, 7, 74, 114
goal of maximizing, x–xi, 53, 74, 75, 192
Shareholders, 7
Shark Tank (TV program), 25–26
Simpleminded, 29, 35. See also Conventional mind-set
Social contracts, 50
covenants and, 50, 51, 56
self-interest and, 39, 50
Social excellence. See also Excellence things that bring about, 91
Social pressure and inauthenticity, 129
Socialism, higher purpose and, 192–193
Solomon, Micah, 4
Southwest Airlines, 25, 64–65, 73
Spirituality and higher purpose, 190–191
Splitting vs. integrating, 130
Spontaneous contribution, 95
Spontaneous leadership, 96
Stakeholders, 24, 193
Staring at rocks, 98–99
Strategic uncertainty, 63
Strecher, Vic, 22, 77
Stress
“good,” 103
time, 80
Success, recognizable, 96
Successes not aligned with higher purpose, 199–200
Successful life vs. significant life, 115
Talent, higher purpose and finding good, 200
Teams, good vs. great, 89
10,000 Stories Challenge, 162–163
Thought walls,
85–87
breaking down, 88–93
nature of, 85–86
Time discipline, 96
Time stress, 80
dealing with, 80
Top-down companies, 82, 88, 92. See also Hierarchy
Top-down process, change as a, 11, 35, 171
Toxic leaders, 125, 126
Transactional assumptions, 29–30
Transparency, 47, 80
True believers (type of leader), 60–61, 71, 72
crises, sacrifices, and, 75
definition and nature of, 60
higher purpose and, 61, 72–76
manipulators and, 60–61, 72–76
Tugendhat, Edward, 70–72
Uganda, 71–72
Uncertainty, 63, 102
Unconventional people, 54–56
United States. See also specific topics
dual foundation of covenant and contract, 50
University of Michigan, finding purpose in, 100–101
Value creation and purpose, xi
Veihmeyer, John, 150–154, 162
Vertical misalignment, 81
dealing with, 82
Vision
formulating a, 176–179
a statement of, 176–179
from vision to planning, 179
Visioning exercise, 92–93
Vulnerability, shared, 96
Wall Street, authenticity on, 116–118
“We the people,” 50
Weddle, Jim, 62, 146–147
Weinzweig, Ari, 139–142
Weisser, Alberto, 28, 35–37
control and authority exerted by, 28, 39
conventional mind-set and, 28, 29, 33, 35
failure, 28, 29
financial expertise, 28, 29
hierarchy and, 28, 31
higher purpose and, 32
learning experiences, 28, 33, 40, 51
need to be “the expert,” 33, 34
self-interest and, 40
simplemindedness and, 29, 35
success, 28, 29, 31–32
Workhorse model of employer–employee relationships in economics, 38, 39. See also Principal–agent model
Zingerman’s, 139–142, 165, 176, 189
ABOUT THE AUTHORS
ROBERT E. QUINN is the Margaret Elliot Tracy Collegiate Professor Emeritus at the University of Michigan’s Ross School of Business. He is one of the cofounders of the field of positive organizational scholarship. He has written 18 books. He is in the top 1 percent of professors cited in organizational behavior textbooks. He is the recipient of multiple teaching awards. In a global survey he was recognized as one of the top speakers on the topic of organizational culture and related issues. More than 15 million people viewed his video talk on purpose.
ANJAN V. THAKOR is the John E. Simon Professor of Finance, Director of the PhD program, and Director of the WFA Center for Finance and Accounting Research in the Olin School of Business at Washington University in St. Louis. He is a research associate of the European Corporate Governance Institute and a Fellow of The Financial Theory Group. He served as managing editor of Journal of Financial Intermediation from 1996 to 2005 and currently serves as an associate editor. He is past president and a founder of the Financial Intermediation Research Society. He has published his research extensively in the top economics and finance journals. He has been named as the fourth most prolific researcher in the world in finance over the past 50 years based on publications in the top seven finance journals over that time, and as one of the five-most prolific finance authors in the world from 2005 to 2015. He has been actively involved in advising PhD students who have gone on to enjoy distinguished academic careers and has chaired dissertation committees of more than 30 students who have received their PhDs. He has won numerous teaching awards in the MBA, Executive MBA, and PhD programs. He has consulted with numerous corporations.