Monday, February 12, 2007

Is There Too Little "Know Why" In Business?

Is There Too Little "Know Why" In Business?
Published: February 2, 2007
Author: Jim Heskett, Baker Foundation Professor at Harvard Business School.

"Two recent books offer views of the roles of managers and leaders. The first, Know-How, by Ram Charan, sets forth eight behaviors exhibited by managers who get things done. The second, Purpose, by Nikos Mourkogiannis, could really have been titled "Know Why." It describes four kinds of purpose, "starting points" that govern what great companies do and how they do it. Each of these purposes represents a kind of "holy grail" as opposed to goals (often merely financial), missions or visions, or even a set of values. As Mourkogiannis puts it, "Let others play with 'strategy' and 'tactics' and 'management.' Purpose is the game of champions." "

According to this theory, truly transformational purpose can be found in: (1) discovery, the challenge of adventure and innovation characterized by dot-com entrepreneurs willing to work 24/7 in search of the new or unknown, (2) excellence, in which high standards are not compromised for short-term performance (as with Berkshire Hathaway and Warren Buffett), (3) altruism, where the primary purpose is to serve (customers, employees, etc.) first and assume that profit will follow (as at Nordstrom), and (4) heroism, typically involving grand plans to change entire industries or even the way we live (Bill Gates and Microsoft).

The argument is that only one of these purposes, if pursued rigorously and successfully, is required for greatness. Putting mere goals, such as primarily making money, before purpose gets us an Enron or a Worldcom. The pity, according to Mourkogiannis, is that true purpose could have enabled these organizations to make even greater "real" profits than those they reported.

One curious aspect of the book is that relatively few examples are cited to illustrate purpose in the for-profit world. Several are used repeatedly, perhaps in part to suggest the complexities of establishing purpose in an organization. Among these, the choices included examples such as BP and The Body Shop, suggesting that purpose, a requirement for greatness, is no guarantee of long-term respect and performance.

Purpose is powerful when it comes to attracting and inspiring employees, centering a company's activities, or guiding strategic change. Executives talk about and seek these things for their companies all the time. But how much purpose do we find even at the top of a typical organization? Can we aspire to a strong sense of "know why" even if our organization is not out to change the world? In terms described here, how strong is purpose in your organization? Is there too little "know why" in business? If so, why? What do you think?

If there's more, read it here...