Guest Author- William W. Vogelgesang – CEO, South Franklin Street Partners – Originally Posted May 30, 2013
What makes a great company? The easy answer is management, but there are lots of well-managed companies that aren’t great, at least not yet. What makes the startup hit a hundred million in sales in seven years or less? What revitalizes the 100-year-old company, or makes the precision manufacturer obtain industry-leading quality, reliability and customer satisfaction? What gives that service company its award-winning reputation, and why do these companies succeed while others seemingly like them fall short of great?
There are a lot of places to look for answers. A stroll through the business section at Barnes & Noble or a swipe through an Amazon search provides plenty of “answers.” No one could possibly read all the material written guaranteeing to provide that “edge” or make sure your company is “built to last.”
Mission and vision statements are important, but we’ve been rewriting those for generations and virtually every bankrupt company has one hanging in the lobby. Industry-leading patents are nice but hard to come by, and even then, you are only one Harvard dropout away from losing that edge. No, really, what is it that makes some companies great?
John Mackey, Co-Founder and Co-CEO, of Whole Foods puts it simply, “Great companies have great purposes.” That sounds too easy. Doesn’t every company have a purpose? A purpose is why a business exists. It makes stuff that people buy. Isn’t that its purpose, the purpose of any company? Find a demand and supply it, right? Well, not quite. He said a great purpose.
So should we stop making fasteners, practicing law or accounting and all go out and start a biotech company to find a cure for cancer or a wellness clinic to keep people in good health? If you’re 20 something, you might think about that. For the rest of us, let’s hope not. It isn’t that we have to change businesses, but we may have to change the way we think about our existing business. Buried deep within that fastener company or law firm there is a noble purpose, a great purpose and we just haven’t found it or more likely rediscovered the one its founder envisioned. So how do we think about this?
Here is a fun exercise for understanding the motivating power of a great purpose. Let’s for a minute explore why people are drawn to demanding, sometimes mind-numbing and even dirty work. Consider the following job description:
- On your feet most of the day
- Mistakes are tolerated but can have severe consequences
- Task requirements most days exceed the time to fulfill them
- Advice is available from associates and superiors but it is often conflicting and inconclusive
- No agreed upon work procedures—you are left to use your own judgment
- Many decisions are irreversible or can only be remedied at great expense and over time
- Responsible for subordinates’ behavior with little control over their actions and their replacement is impracticable
- Long hours and weekend work is required
- Flexible work breaks and vacation schedules, but you are nonetheless on call 24/7
- Autonomy and independence is required, little assistance is available
- Performance feedback is frequent, but is often ill informed and insensitive
- You will be required to dispose of human as well as animal waste
- You are responsible for cleaning your own work space and that of others, janitorial service is seldom provided
Despite this rather cheerless description, there are roughly 15 million people holding this job in the US alone and some 3 million are expected to enter the field each year for the foreseeable future. What motivates people to this calling? Is it the money, fame or prestige? What purpose could there be that brings excitement, joy and a feeling of accomplishment to work of this nature? The answer: motherhood. Right, hit me the same way. There are roughly 15 million women who have young children and another 3 million who are excitedly expecting a baby. Hard to put that into words, but you get that there is a great purpose that gives meaning and joy to these otherwise joyless tasks.
Purpose is the why in the what. “What” is going to work everyday selling fabric to furniture companies and jobbers—competing with companies from every corner of the globe. “Why” is bringing joy and beauty into everyday life for every-day people. “What” is preparing charts and graphs explaining complex fact sets so litigators can win cases. “Why” is illuminating the path of justice and the road to understanding. “What” is building electronic assemblies with error rates measured in the parts per million. “Why” is building assemblies that fly our families, protect our borders and enable a longer life.
John Montgomery in his book Great From The Start says, “A powerful purpose is imbued with enthusiasm, meaning and relevance. Articulating your business’s purpose allows it to realize its full potential. Generally, the best people are inspired only by meaningful, game-changing work—the kind that arises from a compelling purpose.” That’s it really; a compelling purpose. It’s not the stuff that only works for the “A” players, but it’s the stuff that brings out the A-game in all of us.
Clearly, the foundation of any business has to be profitability over the long run. We can survive without a mission, vision and purpose statement—many companies do, but you cannot survive without profits that fund the business. Don’t be mistaken. Great companies make money too. In fact the book Firms of Endearment demonstrated that the great ones—Whole Foods, Southwest Airlines, Costco, Harley Davidson, and others—make more. Businesses have to make money to survive just as we have to breathe to live, but just as we don’t live to breathe, our companies and our people don’t live to make money. We want more; we want to thrive not just survive.
Now, I doubt we can find a purpose as compelling as motherhood for our fastener company, but it does show the power of purpose and how it can bring joy, fun, and excitement to what people do even when it is mundane and exasperating. It is the why in the what.
I was in London one Summer and trying to find my way to Wimbledon. I asked a Tube attendant, “How do I get to Wimbledon?” He said, “Practice, practice, practice.” It was my introduction to British wit, but it was good advice and it applies here as well. The experts say that you circle your top team and put a purpose statement together and hang it up as a straw man. Get the whole organization involved in tearing it down and putting it back together—just like a backhand that is good but not great. Live with your draft purpose statement for a while and let your organization work with it, and as a leader, listen to what you hear. Make it the subject of an Appreciative Inquire project or do something less formal. There are lots of paths, but the chances are good that a purpose statement will evolve that is the glue of model making, where all the little pieces hang together in a unified whole. One where people know why they come to work and that they are making a difference in the world by doing so. It’s why they go the extra mile for the customer or a coworker.
Roger Saillant, Executive Director of the Fowler Center for Sustainable Value and a former Ford Motor VP, put this into practice as a turnaround executive at Ford, and he says, “Listen to the people. They will tell you what the company’s purpose should be.” I think he is right. At that point, you are on the road to a purpose that has real meaning and impact and a business that is thriving. Can you imagine this world if our companies—where most of us spend the vast majority of our waking hours—were thriving not just surviving? Now that’s a vision worthy of a statement.
William Vogelgesang is a co-founder of Candlewood Partners—a middle market investment bank addressing their clients’ capital formation needs, leading change, and being a force for progress in everything they do—and South Franklin Street Partners, its private equity affiliate. Bill is active with Conscious Capitalism (www.consciouscapitalism.org) in Northeastern Ohio and is passionate about helping companies thrive, not just survive.