Organizational Purpose (#104)
“When you’re surrounded by people who share a passionate commitment around a common purpose, everything is possible.”
Founded as a coffee shop in Seattle in 1971, the Starbucks Corporation has grown to more than 16,000 locations in 2007. Late that year, as the financial crisis and recession approached, Starbucks had lost its purpose. Revenue was flat at $9.8 Billion. The focus on growth had overshadowed that stores were attracting less customers, products other than coffee consumed energy, the supply chain had issues, and the point-of-sale infrastructure was antiquated.
To overcome these huge challenges, Howard Schulz, who served as Starbucks Chief Executive Officer from 1986 to 2000, was brought back to help the company find its soul. In March 2008, he brought the leadership team together in Seattle to rediscover their company’s purpose. After deep thought, Starbucks crafted a purpose statement and dedicated themselves “to inspire and nurture the human spirit — one person, one cup and one neighborhood at a time.” They didn’t stop there. Their first order of business was to make sure they were the undisputed authority in coffee. A new semi-automatic espresso machine, the new Pike Place Roast, and having each store grind beans several times a day helped them get back to the basics. Second, Schultz closed the doors of every Starbucks, retrained every employee through a video, and recommitted the company to inspire and nurture the human spirit. The company lost $60 Million in revenue in one day, but the refocus on purpose continued to develop loyal customers. Finally, Schultz wanted every old and new store’s ambience, as well as its sights, sounds, smells, and employees, to spotlight their great coffee and bring people together.
Schultz spent a lot of time over the next two years communicating the purpose to his leaders, his board, and the hundreds of thousands of Starbucks employees. They worked hard to make sure the company embodied the purpose as well. The focus on the purpose in each and every store got Starbucks back on track, fixed problems, and enabled domestic and global expansion. Shultz’s focus on purpose worked – Starbucks had $22.3 Billion in revenue and $2.8 Billion in profits in Shultz’s final year, 2017, as CEO.
Purpose vs. Vision vs. Mission Statements
Organizations routinely have statements that describe their purpose, vision, and mission. Although these statements may make sense in the C-Suite, when they filter down to the lower levels, they can cause confusion within the team on the difference between each of them. It helps to remember the definitions:
Purpose Statement — the why for your company or your organization
Vision Statement — what your organization will look like in the future. It provides the direction and focus over the next several years so that the organization can achieve the vision
Mission Statement — what the organization does and who it does the work for
RaceTrac Petroleum is a third-generation, family-owned company, headquartered in Atlanta. It owns and operates more than 670 convenience stores and gas stations across the southeast United States. Their revenue was estimated at $11 Billion in 2019. They have all three statements.
Purpose — To make people’s lives simpler and more enjoyable
Vision — Become the convenience store of choice
Mission Statement — Place our people first, ensure open honest communications, and always provide tasty food, competitive prices and friendly service
Organizational Purpose Statement
Of course, I favor the purpose statement, since it plays such an important role in the leader’s intent, shaping your organizational culture, and growing your grit. However, it takes some tough intellectual thought for you and your team to develop a powerful, impactful purpose statement. Here are some corporate purpose statements to help you think about crafting your own organization’s powerful purpose statement:
IBM — Building a smarter planet
Southwest — To connect people to what's important in their lives through friendly, reliable, and low-cost air travel
Whole Foods — Our purpose is to nourish people and the planet
Netflix — Make great films with great people
Bayer Crop Science — Science for a better life
Apple — Disrupt the status quo
Organizational Purpose Exercise
It takes a 360-degree approach with your entire team to figure out your organization’s purpose. The purpose is nebulous, but you can start to frame it by asking questions around the periphery. It’s not easy -- this is tough, intellectual work. Surveying other organizations, as well as having talks with your leadership team, your rank-and-file, and your marketing team are critical to uncovering your group’s purpose.
Other Organizations
A good start place is to take a look at other organizations in your space. Trends in other organizations are superb indicators of what is driving action and connection in similar audiences. Looking at comparable organizations can help identify gaps and uncover emotional appeals that they are using. Three questions to ask your team as you examine the competition:
What seems to be the purpose of others in this space?
What are these organizations missing? What are their gaps?
What trends are emerging and what seems to be driving them?
Leadership
Talking to your leadership team can also provide insight into your organization’s purpose. They may have different perspectives and different goals than you, but these can influence your organization’s why. Use these five questions with your leadership team to get conversation flowing:
What do you believe our brand does that no one else can?
What makes us different?
How does our company or our product change the lives of our customers and all who encounter it?
What are we trying to change in the marketplace and our world with the work we do?
Why did you start working in this company? Why did you choose this industry?
The Rank-and-File
During a visit to the NASA space center in 1962, President John F. Kennedy noticed a janitor carrying a broom. He interrupted his tour, walked over to the man and said, "Hi, I'm Jack Kennedy. What are you doing?"
"Well, Mr. President," the janitor responded, "I'm helping put a man on the moon."
NASA’s purpose resonated through the 400,000 people working on the Apollo Program. Your purpose must resonate at every level of your organization – from the CEO to the janitor. Talk to as many people as possible to get an idea what marketing, accounting, sales, manufacturing, and yes, even the custodial team, thinks your purpose is. Use these questions to get the ideas flowing:
Why did you choose our organization over others?
What purpose do you feel you’re fulfilling every day?
What inspires what you do?
What about our organization motivates you?
Marketing
Your purpose can be hidden in the way you’re talking about your brand. The “bumper sticker slogans” that marketing uses are enlightening. In the 1960s, Avis was a smaller car rental company than the giant Hertz. In 1962, they embraced their smaller size and started running ads that said, “When you’re only #2, you try harder.” This resonated so deeply that Avis used this advertising campaign for 50 years. Take some time with the marketing team to read your materials and determine:
What common themes appear in the way we talk about ourselves?
What is the emotional driver behind those themes?
How is the language we’re using different than the language of our competitors?
What are the benefits we’re touting really solving for our customers?
Once you have multiple perspectives on your organization, sift the wheat from the chaff and determine what commonalities exist. Maybe you have incredible work ethic across the organization. Maybe your product is slightly different than the competition. Maybe you take a more strategic approach. Take these ideas and weave them into a coherent purpose. For instance, those three ideas might combine to create a corporate purpose of “Built for the Long Haul.”
Then test it out on the leadership team. See what works, what doesn’t, and what gets the team excited. Then refine it. When you’re finally satisfied with it, publish it to the entire organization. Then communicate your purpose at every opportunity. Even when you’re tired of hearing it, communicate it some more. Like NASA, everyone, including the custodial team, needs to understand and live up to the purpose.
Obstacle
For companies, one of the biggest challenges is balancing the need to make a profit and living up to your business’s purpose. Sometimes the two align, like with Starbucks. However, most of the time they don’t. It requires tough decisions and strong leadership to balance the two. And it may require regularly revisiting the purpose statement to make sure it aligns with your organization and its evolving business environment.
Conclusion
Dominating the global coffee market needed an incredibly strong purpose statement. Starbucks found its purpose and used it to become ubiquitous in lives of millions in the United States and overseas. Your organization may not be focused on making the world’s best cup of coffee, but putting the intellectual energy into developing or improving your purpose statement can increase your grit, build your culture, and deliver incredible results.