Saturday, 31 May 2008

The need for an Internal Purpose

In previous posts, I've written about the increasing importance of internal capability to business competitiveness.

I've also become increasingly interested, and have been talking with a couple of clients about developing the core theme, purpose or differentiator at the centre of this capability (and other approaches to gaining competitive advantage).

Firstly, just to point out that having a core purpose is recognised as important in most reviews and theories about strategy. For example, the CIPD’s report on the ‘black box’, 'Understanding the People and Performance link states:

“One of the keys to the HR-performance link is the existence of a ‘Big idea’, a clear mission underpinned by values and a culture expressing what the organisation stands for and it trying to achieve. In Jaguar, for example, the Big Idea is quality, in Nationwide it is ‘mutuality’. In our case studies the existence of the Big idea was strongly linked to employee commitment.”

The report suggests that the Big Idea needs to be embedded, connected (internally and externally), enduring, collective, and measured and managed.

Probably better known is the concept of a BHAG (big, hairy, audacious goal – pictured) in Collins and Porras’ 1996 book, ‘Built to Last: Successful Habits of Visionary Companies'. They explain that:

“A true BHAG is clear and compelling, serves as a unifying focal point of effort, and acts as a clear catalyst for team spirit. It has a clear finish line, so the organisation can know when it has achieved the goal; people like to shoot for finish lines.”

However, most Big ideas / BHAGs relate to beating the competition (strategic positioning) or developing new processes / technology (core competencies), not to internal purposes (organisational capability).

I think that this is something organizations need to look at, and is becoming increasingly important given increasing focus on self actualisation (clearly demonstrated by the millenials but increasingly by other generations as well) and growing cynicism with big business, both of which are evidenced through an increasing search for meaning (see next post).