Profit. Stability. Survival. For a business, the attainment of these items may appear to constitute an overarching purpose, but fixating on them exclusively can turn them into short-term goals at best. Without purpose-driven leadership, a company can’t easily go from keeping afloat to moving forward.
Last week, over the course of two days at the Dusit Thani ballroom, Professor Ranjay Gulati of Harvard Business School made his pitch for the effectiveness of purpose-driven leadership and the necessity of company culture. There were dozens of leaders and rising officials from various market sectors, from Vista Land to Tim Horton’s to John Clements itself and more. Despite many of them having years of experience in their respective disciplines, they were all eager to learn and grow even further. Harvard’s former Chair of the Advanced Management Program was more than happy to oblige.
Professor Ranjay Gulati’s curated case studies regarding purpose-driven leadership built on one another and thematically interlocked. Useful practices were elaborated upon while implied vulnerabilities and nuanced applications were addressed with each subsequent scenario. Fundamentally, they jointly proclaim that purpose itself doesn’t need an outright purpose statement. Rather, a purpose is a unifying ideal for tackling problems and innovating beyond them. It must have directional qualities for desired outcomes, motivational attributes to keep those involved moving towards them, considerations for client and staff relational dynamics, and it must strive for a laudable reputation.
Development Bank of Singapore (DBS)
Before purpose-driven leadership can be realized, major preparation and even some signification reassessment is required as was the case of the Development Bank of Singapore (DBS). DBS had been founded in 1968, standing firm and tastefully expanding abroad as Cold War economic barriers gradually fell away across Asia. By the year 2000, it had grown so successful that one out of every three dollars deposited in Singapore went into a DBS account.
Their reputation began to fray as the new millennium pressed on. Customer satisfaction was so low in regard to transaction speeds from the tellers to the ATMs that DBS became shorthand for “Damn Bloody Slow” among their critics. A swift succession and dismissal of CEOs followed before outside hire Piyush Gupta was brought on board. Instead of chasing hasty solutions to immediately pacify the board, he turned his attention to establishing a clear picture of where DBS stood. The image was not pleasant: DBS policies were different depending on the country and there was no core management information (MIS) to guide the various franchises under the DBS banner. In effect, the bank was “flying blind”.
Professor Ranjay Gulati stated that strategy starts and ends with how you allocate resources, a sentiment that Piyush Gupta’s subsequent directives loudly resonated with. Gupta put a strong emphasis on customer-centricity, devoting many studies to what clients needed and what was frustrating them about dealing with DBS. He and his team took a hard look at the way banks operated and saw that lax communication and redundant bureaucracy made project initiation and problem resolution sluggish. Understanding that these core issues were intertwined, Gupta’s group crafted a strong balance scorecard to measure performance in restructuring DBS’ practices and attitude based on the bank’s new purpose: to be a true bank of choice.
From the outset, DBS didn’t seem like it required to change its deceptively lucrative position and size. However, its prioritization of acquiring clients downplayed the need to satisfy them. Its success at expanding internationally obscured the need to adapt any of its branches to the encroaching digital age. Gupta’s initiatives stressed the importance of good customer satisfaction, so they’d be able to do more necessary transactions in less time, encouraging them to continue giving DBS their patronage. He also concluded that if thinking like a bank made DBS too sedentary, then the company should shift to a tech company mindset – imagine that they were going up against the superstar rookies of Silicon Valley startups rather than other lockbox lords – to regain its urgent competitiveness. Despite these radical changes, Gupta did not want to completely replace older workers with more digitally savvy initiates. The CEO was keen on turning “sheep into wolves” by building a team of over five dozen people whose main task was to train employees so they could be a part of this grand transition.
Thanks to purpose-driven leadership, DBS was able to fully engage with incredible opportunities such as China opening up its economy in the early 2010s. Wait times to use DBS services have been drastically reduced; standout examples like credit card processing going from three weeks to four days call to mind one of the bank’s newest slogans, “Live More, Bank Less.” DBS’ further success and newfound mobility have given it room to pursue plans for integrating sustainability into its methods. Furthermore, the company has an opportunity to evolve the fulcrum of its purpose-driven leadership even after Gupta retires: to be the best bank in the world.
Netflix
It’s important to remember that while DBS’ reorientation was a great example of purpose-driven leadership in action, the bank was already a firmly established entity when it underwent these changes. As progressive as Gupta’s maneuvers were, they were chiefly reactive. DBS’ plan for an Indonesia branch falling through was a critical factor in their vaunted “Digitalization Wave” of internal modernization and start-up mindset adjustment. Professor Ranjay Gulati’s next purpose-driven leadership case study cast the spotlight on an actual start-up finding purpose and fostering a culture from there. That being the once scrappy upstart DVD rental service Netflix.
Netflix’s current proliferation is quite visible. What the company did with video streaming to shoot past former home entertainment juggernaut Blockbuster is well known, but Professor Gulati chose to study how Netflix accomplished it. He cited co-founders Reed Hastings and Marc Randolph prioritizing a potent and agile company culture to keep Netflix competitive and flexible.
The establishment of company culture is an essential aspect of purpose-driven leadership, Gulati stated. A culture is a collection of invisible rules for how a group of people does things, what they believe in, and how they present themselves as a joint entity. It’s cognitive in how it guides the way affiliates think in regard to their work and emotional in the way they feel and express ideas. Company culture can drive performance depending on how it’s built, reinforced, and adjusted.
Netflix’s culture was vividly illustrated in its declassified 125 slide culture deck, which was eventually made into a more succinct ten-page memo. To summarize in two words, the culture is centered on Freedom & Excellence. Traditional constraints on employee leave were cast aside. Sluggish oversight was to be minimized in favor of fast, adaptive decision-making spread across various teams.
Just because employees could take unlimited days off and greenlight productions if they had a majority team vote over even their seniors, that doesn’t mean they were exempt from assessment. Hastings and his retinue routinely reminded everyone under Netflix’s employ that these allowances were permitted in service of making the company functional and successful. Cohesion, not chaos, was still at a premium.
No matter how large Netflix became, there would never be room for “brilliant jerks” and underperformers. Applicants were intensely screened to ensure that they were compatible with the company’s aims. The company had no outright entry-level positions. Current employees were expected to keep their skills sharp and current lest they be given a generous severance package and a more up-to-date replacement. Even entire offices can be shut down for falling behind despite the liberties given them as seen with their original Paris and Berlin offices in 2015. This brand of purpose-driven leadership lionized a company culture of freedom, but it was freedom within a framework.
Etsy
A good framework with palpable rewards and consequences is another aspect of purpose-driven leadership that can keep a company on track even as it experiments and takes risks. Without it, a business may find itself in a similar position as Etsy did in 2017. Etsy was founded in 2005 as an online marketplace for unique, vintage and handmade goods, typically from smaller businesses who found it challenging to compete with larger industrial rivals. Its original CEO, Robert Kalin, went so far as to discourage businesses capable of mass-production from joining Etsy.
As early as 2005, Etsy appeared to be a strong exemplar of purpose-driven leadership. It knew who it wanted to work with, what it wanted to do, and it had every intention of staying true to its identity. Craft topped commercialization. Caring trumped capitalism.
Etsy implemented a strong, appealing company culture that was supportive of its suppliers and employees. Fees were accommodating to sellers and staff enjoyed amenities such as catered lunches and a yoga room. Kalin’s 2011 successor, CEO Chad Dickerson, made a strong push for Etsy to perform more sustainability and other socially responsible practices, winning the marketplace a coveted B Corporation certification. Chad felt strongly about Etsy’s original vision of helping craftsmen “make a living from what they make” even as profits plateaued and plummeted shortly after Etsy went public in 2015. Etsy’s board sacked him in 2017.
Josh Silverman was brought in as CEO to save the company. Although, if you asked any of the employees who remained after his and Dickerson’s layoffs, they’d tell you that he was destroying its spirit. Silverman didn’t hesitate to shave off excesses in manpower and outside impediments. Under his leadership, Etsy stopped applying for B Corporation certification, began charging sellers more and demanded alterations to the marketing.
As he researched Etsy, Professor Ranjay Gulati initially viewed Silverman as an antagonistic force anathema to purpose-driven leadership, but he came to realize that the new CEO was attempting to fix the company’s fundamentals. Silverman recognized that many of the site’s fundamental features like the search bar weren’t working correctly. The company rarely took advantage of opportune promotional chances relating to seasonal holidays or prolific trends. Costs were high and shipping speed was slow. In short, as it was with DBS, Etsy had neglected its customer base, thereby stymying its growth.
Fortunately for Silverman, he was able to marry much of Etsy’s fundamental purpose to profit. Besides fixing what was lacking on the platform, he encouraged Etsy to step away from its “handcrafted” branding and to a more general goods promotional image. This would bring it to the attention of a wider online shopper audience, the sort that uses Amazon and Alibaba. The tightening of logistics allowed customers to buy and receive items faster, making sellers more profitable in spite of Etsy’s raised transaction fees. Regaining its health, Etsy could once again engage in environmental and social initiatives, this time on its own terms. The more centered research branch was able to determine that by donating one penny per shipped item to NGOs, Etsy could help make a far more significant dent in carbon emissions than it ever did as a B Corporation.
Under Silverman’s leadership, Etsy’s purpose had morphed from earnest yet cautious to succinct and proactive: “Keep E-Commerce Human.”
The Mahindra Group
Professor Ranjay Gulati took the opportunity to premier his findings on a case study he had never discussed previously. It was a display of purpose-driven leadership on a grand scale. The Mahindra Group of India is an outright conglomerate and the oldest corporate entity featured among this quintet having been founded in 1945. Mahindra’s size and history belie its concise core tenant that carried them through the 90s and into the modern day: To be admired.
That is not to say the Mahindra group was not respected, rather it was aggressively associated with rural tools and vehicles as it had its start supplying such essentials to the farms and wilds of India. Since then, it had expanded into sectors relating to personal transportation, electricity, and even national defense. The Mahindra Group was composed of a number of subsidiaries, each left mostly untouched after their respective acquisitions to preserve their uniqueness and motivation which had made them so appealing to the conglomerate to begin with. Such diversity among its industries was a strength, but to reach for its new purpose it would need them to move together in stride and attitude. Mahindra would need them to RISE.
The core purpose behind RISE is to “challenge conventional thinking and innovatively use all [its] resources to drive positive change in the lives of [its] stakeholders and communities across the world to enable them to RISE.” Its three main brand pillars are “Accepting No Limits”, “Alternative Thinking”, and finally “Driving Positive Change”.
In 2011, Mahindra leadership sent representatives across the conglomerate’s components to teach staff from management to initiates how RISE worked. How they should think globally, take risks, pursue new approaches, coax innovation, and celebrate ingenuity. They were also encouraged to be agile yet disciplined so that they’d be able to create, recognize, and utilize change for the benefit of the company and its surrounding communities. A timetable of 10 years for full integration and implementation was laid out.
By keeping the creed simple in statement yet robust in its particulars, Mahindra was able to embed purpose into its organization. Employees felt comfortable sharing their ideas and taking initiative. Some individuals were inspired to expand their knowledge and skills; one corporate manager took it upon himself to learn more about agriculture, thereby boosting his ability to talk to and serve the farmers his office interacted with. RISE even managed to incorporate its “Positive Change” tenant with armored military vehicle production by using the other pillars to conjure the philosophy of “being Mahindra defense, not Mahindra offense.” Financial return targets have been reassessed, permitting immediate cost if long-term prospects are promising ala solar power research and installation.
Today, RISE persists in Mahindra’s purpose-driven leadership as the conglomerate increases its scope. RISE is constantly being tweaked and iterated upon to maintain clarity on Mahindra’s goals and encourage positivity in the workforce. Looking forward a whole decade gifted Mahindra Aerospace, Tech Mahindra, Club Mahindra Holidays, and all the other subsidiaries with scope and time to link broader purpose to actionable company strategy.
Pete Carroll
The final purpose-driven leadership case study put a heavier emphasis on “leadership”. The replacement of a CEO is sometimes necessary. As seen in the DBS and Etsy case studies, they can even have high turnover rates. While not painless, a new CEO can be brought in with some speed and relatively little incident even if the organization’s top hierarchy was formerly familial as seen in the Mahindra Group. There are leadership positions that are more entrenched, immediate, and pressing when it comes to guiding others. For instance, an American football coach.
Pete Carroll has been a part of the football coaching world since the 70s, working his way up from Graduate assistant to the University of the Pacific’s Pacific Tigers to Head Coach and Executive Vice President of the Seattle Seahawks. Over the decades, he has formulated a player-friendly, empathetic, and psychology-focused approach to coaching. This lies in stark contrast to the more militaristic coaching styles used by his peers such as the New England Patriots’ Bill Belichick, Carroll’s thematic foil for this case study.
Carroll’s coaching philosophy is the product of decades of research, not just in the realm of football with legends like Monte Kiffin and Bud Grant, but in the fields of anthropology and sports psychology as well. None of these routes were pursued out of distraction or whimsy. Genial as he is, Carroll’s purpose-driven leadership on any of his teams is determined to lead them to victory. It’s just that he’d rather ask players what they need and how they feel so he can reconcile them with the team’s greater goal, which is, as mentioned earlier, to win.
With how demanding the sport is mentally and physically, some football athletes view the sport as more of an extremely profitable job than a passion. Carroll’s style combats this mindset by building a team culture that is competitive at the core but caring in the overture. It’s almost parental in how he’s demanding yet empathetic to each of his players. Stimulation is also in great supply under Carroll with physical contests on-and-off the field, altered venues for team meetings, occasional pranks, and the odd fan celebrity cameo or two from Snoop Dogg and Will Ferrell to name a few.
Professor Ranjay Gulati managed to arrange a video interview with Pete, the details of which he shared with his audience. Carroll talked about the setbacks and milestones of his career, as well as his outreach programs A Better LA and A Better Seattle. He stressed that caring for people was not a weakness and that he’s able to train players so hard and well because he’s come to know them as people. Although he’s a coach first and a businessman by necessity, if there was a lesson that attendees of Harvard Business School-related events could learn from his ongoing tenure as a coach, is that if they want a dedicated and enthusiastic team of their own, then they need to become a boss (or leader) who everybody wants to work for.
Perhaps the most visible and vivid showcases of Caroll’s ideology in motion happened in a playoff game during his first season with the Seattle Seahawks. His quarterback at the time, Michael Hasselbeck, had been skeptical of Carroll’s relentless positivity and the relationships he tried to form with players, even as Pete tried to immerse him in the culture. Hasselback had been playing rather poorly up to that game, even flubbing an interception, but rather than shouting out a reprimand, Caroll told him, “Hey, it’s OK. We need you today.” Four touchdown passes by Hasselback soon followed. The Seahawks went on to win that game.
Purpose-driven leadership can be used to overcome the traps that incumbent or even successful companies fall into—myopia, arrogance, stagnancy, procrastination, and a lack of courage. Determining your company’s purpose can make the people in it more productive and dedicated. Purpose can come to mind in times when resilience is required in the face of unprecedented challenges. Strategies and rallying cries can come from leadership that challenges staff but supports them in producing relevant thoughts and suggestions.
From conglomerate heads to sports coaches, purpose-driven leadership can be undertaken on a multitude of levels and across different types of organizations. It looks back, moves forward, and glances around so it always knows where it is in its environment. Finally, neither purpose nor culture needs to subsume the individual. Instead, they can connect with that person’s own goals and inspire them to improve.
This lecture may have begun in a Dusit Thani ballroom, but it doesn’t have to stay locked there. By reading and sharing this primer, you’ve helped it continue beyond those walls.
You can watch a free online talk about his book Deep Purpose here:
If you enjoyed that video, you could read articles on purpose-driven leadership and other topics written by Professor Gulati here.
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