Purpose-Driven Leadership: It Casts a Long Shadow and Teaches Us a Lot

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Sep 16, 2014

When the CEO of one of the nation’s largest pharmacy chains announced that the company would stop selling tobacco products in its 7,700 drug stores, he made headline news and set a powerful example for others to follow.

CVS Caremark (recently renamed CVS Health) President & CEO Larry Merlo put a firm stake in the ground by voluntarily forgoing a source of $2 billion a year in revenue.

So, you might be wondering, what was he thinking?

Leading through purpose

CVS Health is evolving from a pharmacy into a health care company with a broader commitment to increasing access, lowering costs, improving the quality of care and driving the innovations needed to shape the future of health. As such, its mission is to help its 100 million customer-patients every day to manage such chronic conditions as high-blood pressure, high cholesterol and diabetes— maladies made worse by smoking.

Central to achieving this lofty mission was the creation of a purpose and leading through that purpose.

A team at Senn Delaney worked with Merlo and his senior leadership team to define CVS Health’s purpose of “Helping people on their path to better health” as part of a continuing culture-shaping journey. Merlo and his team determined that this purpose is the “why” the company exists, and it is the essence of CVS Health employees’ commitment to customers, clients, stakeholders and each other.

Merlo summed his rationale up by saying, “Sometimes, we all need to dust off our values and ask ourselves if we’re truly living in concert with them,” he says. “Put simply, the sale of tobacco products was inconsistent with our purpose.”

Another example of a purpose-driven leader is Gen. Joe Robles, CEO of USAA, a financial services firm serving military families. We helped him focus the organization on creating a great culture to support a high purpose of “serving those who are serving us.”

That purpose-driven focus has earned USAA awards for having the highest customer loyalty in America, the best customer service in America, and being the best place to work in Technology in America. It also has among the best financial performance records in financial services. Joe has stated that ”80 percent of our success is due to our purpose and our work on culture.”

Purpose is an inspirational driver for engaging employees

When a leader and organization establish a clear purpose for the organization (the why we exist), it will become the inspirational driver for engaging employees, clients/customers and communities. In other words, the organization’s strategies, capabilities and culture become the engine used to achieve the organization’s purpose.

As Roy Spence Jr., author of It’s Not What You Sell But What You Stand For, said, “If you have a purpose and can articulate it with clarity and passion, then everything makes sense and everything flows.”

It is important to note that higher-purpose organizations don’t sacrifice performance they enhance it. PepsiCo CEO Indra Nooyi says it well and often in communicating about purpose. In a corporate reputation study on purpose and performance, she stated:

Performance with a purpose is based on the belief that companies can — and must — achieve business success while also achieving a lasting and positive imprint on society.”

virtuouscycleLes Wexner, highly revered philanthropist and CEO of L Brands, including Victoria’s Secret, said in his annual message on giving that “By doing well we can do good.” Doing good things for society inspires employees and helps companies do well.

As Les says, by doing well, we can do good for our community. It is a virtuous cycle and a win-win for all.

The purpose-performance connection is clear

There is mounting evidence that aligning an organization with a higher purpose does drive business results. A 2014 study by Deloitte found that an organizational focus on purpose leads to higher levels of confidence among stakeholders and drives business growth.

According to a 2010 Burson-Marsteller/IMD Corporate Purpose Impact study, a strong and well-communicated corporate purpose can contribute up to a 17 percent improvement in financial performance. And that’s in the short-term. The longer-term benefits of having employees aligned with a strong sense of purpose are incalculable.

While I believe the understanding by most leaders of the need for a healthy culture has reached the tipping point, broad understanding of the power of purpose is about 10 years behind. That’s partly because there is a fair amount of confusion about around the true meaning of vision, mission and purpose.

While just words, they are different. Vision and mission are mostly interchangeable but neither makes the definition of purpose. They are both what we “do” and/or what we want to become. One company, Pentair, wants to be or become the next great industrial organization. That is what they call their mission, not their purpose.

Purpose is the highest-order contribution to society of what we do. It is our noble cause or why we deserve to exist. Pentair’s purpose, which fits for lines of business from swimming pool equipment to water purification for cities, is “To improve the quality of life of people around the world.”

What is your organization’s purpose?

Improving the quality of life of people is Pentair’s “why.” Senn Delaney’s purpose or why is to positively impact the world by inspiring leaders to create thriving cultures.

If you haven’t seen the very widely viewed video of Simon Sinek on the power of why, it is worth watching or re-watching.

5 questions to consider with purpose-driven leadership

Leaders who want to embark on this path to a more inspired workforce and purpose-driven results can begin the process by considering these five key questions:

  1. Does your organization have a purpose that fits the noble cause definition?
  2. If so, do all the employees really understand it and see the connection?
  3. Do you and others in your organization have a purpose and do they have a personal connection to that purpose and their role in living up to it?
  4. Do your clients and customers clearly understand your purpose and what it means to them?
  5. Are you willing to make hard decisions to remain true to your own and your organization’s purpose as Larry Merlo did?

A company’s purpose is never fully achieved. It’s not something to be accomplished and then checked off the to-do list. Rather, purpose becomes a true north on a compass guiding each employee’s daily actions.

As Larry Merlo at CVS Health said in announcing the end of tobacco sales

This was the right decision for our company. There was a lot of discussion among the management team – it’s a real contradiction to talk about all the things we are doing to help people on their path to health and still sell tobacco products. It’s my job as the CEO to ensure that we’re positioning the company not just for short-term success, but for the long-term, as well.”

Needed: An unshakeable belief in the purpose

Creating the purpose statement is not the hardest part, although it takes a right-brain heart versus head process to get there. The real challenge becomes truly living that purpose, even when billions in revenue is on the line.

Courageous decisions are made by leadership that casts a long shadow, guided by high-performance core values and an unshakeable belief in the purpose.

Does your company have a purpose? Do you understand how that purpose relates to what you do each day to make a difference? What examples can you share about companies with an inspiring purpose?

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