There are many things that I can be accused of but being a dedicated follower of fashion is not one of them. My hairstyle, for instance, is essentially unchanged since the late 60s. And recently I was going through some family photographs with my grown-up daughter when we came across a photograph of me taken 15 years ago. There I was wearing a blue shirt with a blue sleeveless jumper and beige jeans. And as we sat there looking at the photo my daughter sadly pointed out that I was currently wearing exactly the same combination. And, worse still, upon closer inspection it was clear that I had on the same pair of jeans as in the photo. Clearly fashions had passed me by.
In the business world, I also tend to ignore fashions as they come and go. Every few years a new thing comes along. Whilst others jump on the latest bandwagon, I prefer to watch fads from the side lines until they fizzle out and are replaced by the next big thing. And to help save me from going along with the latest craze I periodically revisit one of the favourites on my bookshelves: Charles Mackay’s 1841 classic “Extraordinary Popular Delusions and the Madness of Crowds”. He wrote dispassionately about the impact of mob psychology and the phenomenon of greed on topics such as the South Sea bubble and Tulip mania. And all this is by way of introducing my main points: that I think purpose is a fad, and I think that it is complication, and that the last thing that business needs is further complication.
Business seems extraordinarily susceptible to fads. What may be a sensible option for one business or industry sector quickly turns into the norm. Consultants and analysts, all of whom love benchmarks and conformity, egg on businesses until everyone is doing the same things. Everything from sale and leasebacks, share buy backs, and outsourcing, to open plan offices. It seems to be less about progress and more about following like sheep. And I believe that having a purpose is merely another manifestation of that theme. Everyone else has one and that means we have to have one as well. The fact that we already have a vision, a mission, strategic goals, a values statement, ESG commitments, code of business principles, whistleblowing guidelines, targets, KPIs, and personal development objectives doesn’t mean that we can fit in a few choice words about how we’re filling a void that needs filling to make the world a better place.
There are, I’m sure, many good purpose statements that do play an important role alongside, or above, the plethora of other company statements. But most are a complete waste of time and resources. Take these few (genuine) examples: “Our purpose is to foster and celebrate life’s opportunities” – a chocolate company. “Our purpose is to revolutionize the way the world grows.” – a pesticides business. “Our purpose is to equip families with a better, cleaner home, and peace of mind.” – a kitchen spray. “Our purpose is to create, fund, and inspire businesses that elevate humanity.” – a fund manager. These should be read alongside classics of the genre such as Enron’s Human Rights principles (“ruthlessness, callousness and arrogance don’t belong here”), and WeWork’s desire to elevate the world’s consciousness.
The world of business is hugely complex. Most operate in the so-called VUCA environment with macro and micro, global and local issues butting up against disruptors and technological innovation. So why on earth would anybody want to make it more complex than it is by adding in more and more statements of intent? The Chicago School of Milton Friedman said that if businesses had too many (often competing) objectives then they would end up going around in circles. He suggested having one simple, focused, objective that all stakeholders could understand and measure. He famously chose shareholder return. Of course, this idea is rightly maligned by pretty much everyone who believes that business has a wider responsibility. But just because shareholder return is a poor and blunt choice does not make the idea of having one, simple focus a bad one. So why not return to the original idea of business as something that makes a profit which it then reinvests and shares equitably. Clear, focused and principled. The wider societal and community issues could be more appropriately dealt with through better regulation and corporate taxation. That way we might be spared the sanctimonious preaching of Davos man telling us how they’re saving the world whilst simultaneously minimising tax, enjoying flagrant pay packages, and presiding over businesses where significant numbers of their employees suffer from in-work poverty. So, businesses focus on being profitable and governments look after their societies (for a far better explanation of this argument, see “Winner take all – the elite charade of changing the world” by writer and former McKinsey consultant, Anand Giridharadas).
Complexity often exists to hide underlying truths. When things are simple we can see them for what they. As Newton said: “Truth is ever to be found in the simplicity and not in the multiplicity and confusion of things.” Businesses which spout guff at the expense of underlying, sustainable profitable operations should be avoided. Beware Unicorns whose only purpose is to burn through other people’s money. Although, to be fair, WeWork may have actually achieved its mission of raising the world’s consciousness, because we are all now conscious of just how egregious it was. (While thousands of his employees lose their jobs, ex-CEO Neumann walks away with a $1.7bn package including a $185m consulting fee!!).
So, my advice is to forget adding purpose to the long list of statements and to stick to business fundamentals. Don’t add to complexity, just keep it simple so that everyone gets it. Aspire to the clarity of Marx when he said: “A child of five could understand this. Send someone to fetch a child of five”. (nb: that was Groucho not Karl).