Purposeful Enterprise

Purposeful Enterprise: Design Your Organization to Change the World

by Roger Mader

“Purposeful enterprise means doing work that makes a difference, work that helps others, and aspires to make the world a better place. As a happy consequence, you’ll find you take pride in your accomplishments and discover that you love your work more deeply.” The premise is compelling, in theory.

Mader’s Five Ps are purpose, promise, principles, people, and performance.

“Purpose should:

Appeal to customers, drawing them to the business and offering over competitors with a lesser aspiration.
Compel teams, attracting, motivating, and retaining top talent, including leaders, employees, partners, and suppliers.
Offer an ideal for the community, a timeless but worthy pursuit.
Positively impact society in a way that elevates the human condition in perpetuity.
Produce sufficient economic value that investors will be rewarded for funding and pursuit of purpose in the longer term.”

“Truly meaningful purpose serves all of society. It benefits more than just the communities we touch directly. We aspire to create a better world for generations and across the planet. Purpose serves humanity, the global community, today and tomorrow. It sounds grandiose.” Yes. It does.

BUSINESS ROUNDTABLE

“The Business Roundtable represents a membership of CEOs in America who thrive [strive?] to promote the US economy while practicing sound social policy… In 2019, the Business Roundtable issued a fundamental redefinition of purpose, to right this wrong of the prior two generations: the Statement on the Purpose of a Corporation. This manifesto earned the endorsement of 181 chief executives of some of the largest global corporations.”

Did anything meaningful result from this press release? I assume not, since no examples are included.

BRAND PROMISE

“Translate purpose into a brand promise.”

“In a word, Disney promises: ‘Magic.’”
“Virgin uses a single word to symbolize their promise” ‘Irreverence.’”
“Nike distilled their brand promise into a single word, a single moment of visceral experience: ‘Winning.’”

“Your promise should resonate now and forever. Of our five Ps, only your Promise serves the customer. And not just any potential customer; your target customer, those who resonate with your purpose and choose you because of it, they remain your audience for your promise.” Three pages later, the author seemingly contradicts himself. “Purpose lasts for generations. Promise requires updates.”

“Breakthrough brands enter the lexicon as verbs. Seriously, Google it. Grab a Coke, pass a Kleenex, Hoover the rug.” Uh… what?

WHERE TO PLAY, HOW TO WIN

The terms Where to Play and How to Win are introduced in the book Playing to Win: How Strategy Really Works by A.G. Lafley and Roger Martin, which the author credits in the footnotes.

“Business strategy answers two simple questions with difficult answers: where to play, and how to win. Your Five Ps answer the challenge. The first two Ps tell you where to play. They define the game. The last three determine how to win.

Where to Play

Purpose: Why does our business or organization matter to the world and make a difference to future generations?
Promise: How will our purpose matter—to us, to others, and particularly to our employees and customers.

How to Win

Principles: How should we behave? When should we say no?
People: We can inspire ourselves, our people, our customers, and our extended network of partners, suppliers, and intermediaries as united advocates, rallying to the cause.”
Performance: We measure these activities to track our impact and course-correct along the way.”

This is a strange remix. Playing to Win is about competitive strategy. Lafley and Martin write, “It is a choice about where to compete and where not to compete.” Maybe a more relevant Roger Martin book to quote would be When More is Not Better, in which Martin proposes a disincentive to short-termism: “I would give the owner of each common share one vote per day of ownership up to four thousand days, or just under eleven years.”

BETTER, FASTER, and FREE!

“Breakthroughs occur by simultaneously reinventing a better and faster and cheaper solution. That means a whole new set of assumptions to design a fundamentally ‘different’ solution—a transformative version of ‘better’ that changes the market calculus. This simple algorithm cracks open markets. It allows us to make a promise that competitors cannot yet fathom.”

“Pursuit of promise requires the holy trinity of design: produce a perfectly desirable solution, instantly available, and free to the end user.” Well, that sounds like a winning business model.

SUBWAY’S PURPOSE

“By 2014, Subway operated 41,000 restaurants worldwide, and remains the world’s largest restaurant chain by number of units in 2022.” In 2015 the author was hired as a consultant to help Subway with a decline in growth. He asked founder Fred Deluca, “‘Who is your customer?’ He barely paused. ‘Customers? I don’t have customers. I have franchises. They have customers.’” Wow. How could a company grow to this scale with such an anti-marketing mindset? I guess this speaks to the power of what How Brands Grow author Byron Sharp calls “physical availability.”

“It took me some time, through the course of our field work, to fully grasp the kernel of brilliance in Fred’s surprising claim. Subway takes care of their franchisees. Franchisees take care of their customers. This informed every decision for Fred. He was deeply committed to his franchisees. And they revered him for it.”

This is an odd take in light of negative press spanning three decades about how Subway has exploited its franchisees.

Why Subway Is “The Biggest Problem In Franchising” by Richard Behar, Fortune Magazine, March 16, 1998.
Subway Exploited Immigrants and Victimized Franchisees, Bombshell Lawsuit Alleges by Josh Kosman, New York Post, December 21, 2021.
Where Did Subway Go Wrong? By Lisa Linkowsky, Franchise Wire, June 21, 2022.

“We launched a battery of field research… We saw how dedicated local owners and their families were to serve their customers as neighbors and support their communities. Almost anecdotally, [sic] without seeking credit or claim, we heard of generous acts of local kindness. We observed a sense of kinship among Subway’s small business owners and their neighbors.”

After the death of the founder, Subway interim CEO Trevor Haynes hired the author as global Chief Marketing Officer. “On Trevor’s behalf I took on the task of translating Fred’s work, and the dedication of his people into Subway’s ‘purpose.’ I knew how transformational a declared, shared, and authentic sense of purpose could be for an organization, particularly in a turnaround.”

“There it was—the simple answer hiding in plain sight. Subway stands alone as an authentic, active member of its communities. Owned locally by neighbors who live among the community they serve. It takes a village to come together. Only together can we thrive.”

Does Subway really stand alone with locally owned franchises? 80% of Chik-Fil-A franchisees operate only one location, for example.

How is a contrived statement of purpose going to inspire stakeholders? Clearly insiders would know the true nature of the relationship Subway has with its franchisees. From their perspective, wouldn’t Subway’s purpose be ruthless pursuit of growth?

And what about customers? The book mentions ethnography several times. I think if you followed a representative sample of Subway customers, you would find that they eat at Subway when they want a conveniently located, relatively inexpensive, reliably mediocre meal. From the customer perspective, that’s the purpose of Subway.

FINAL THOUGHTS

Guy Kawasaki wrote in The Art of the Start, “Making meaning is the most powerful motivator there is. It’s taken me twenty years to come to this understanding.” I read that 18 years ago, and it has stuck with me.

A similar thought was expressed by Teresa Amabile and Steven Kramer in The Progress Principle: “Of all the positive events that influence inner work life, the single most powerful is progress in meaningful work.”

Purposeful Enterprise closes with a story about Mario, the superintendent for three apartment buildings in Manhattan. The story exemplifies that people can find meaning in ordinary work.

It speaks to intrinsic motivation. I don’t believe that derives from a contrived Corporate Purpose statement.

After reading this book, I’m inclined to agree with Carl Panteny, who wrote that brand purpose is conflated with Corporate Social Responsibility. “These should not be confused or interchanged. One is a campaign tactic. The other is a fundamental change in how business is conducted for the wider good. It’s not just a tagline… This is why the term ‘Brand Purpose’ needs to be banned. It’s trivialised a serious strategic approach to business, sustainability, society, and the environment.” Mark Ritson has also written about the hypocrisy of brand purpose.

If a company truly lives and breathes a noble purpose, it should be obvious. Patagonia comes to mind. But if you have to try so hard to discover a purpose, it is likely a disingenuous side show: virtue signaling in lieu of actual virtue.

This book contains 430 grams of words and more than 200 footnotes, but lacks a coherent train of thought. It reads like a first draft with long digressions and innumerable copyediting problems. Most comically, the quality management pioneer W. Edwards Deming is referred to as “W.E. Demons.”