This view understates the reality of most organisations. Corporations of course, are much more complex social machines that make up one of the most important building blocks of modern society. A company today is more than just a business. At macro level companies are one of the principal agents of social change. At a micro level they are important forums for social interaction and personal fulfillment. If the way a company is run does not reflect this reality, it automatically causes a misalignment between the broader social context that exists in an organisation (for its interaction with employees) and senior management. Purpose is the embodiment of an organisations recognition that its relationship with stakeholders are interdependent.
The best senior executives recognize this. They understand that an organisation exists not to exploit commercial opportunity but to morally serve its broad and self-defined responsibilities. This drives them to focuses on organisational purpose rather than just performance and strategy.
So why is one approach more successful than the other? The answer boils down to human nature. As change agents senior managers need to maintain an engaged and ideally excited workforce. Executives that focus on a company’s narrow self interest such as pure financial exploitation and gain eventually loose the excitement, support and commitment that tends to exist when objectives are linked to broader human aspirations. When organizational values become merely self-serving, companies quickly lose the sense of identification and pride that makes them attractive not only to employees but also to customers and others. And when management’s respect for and attention to its employees’ ideas and inputs is diluted, motivation and commitment fade.
Purpose—not strategy—is the reason an organization exists. Its definition and articulation must be top management’s first responsibility as it is the key to creating and maintaining an atmosphere of consistent commitment and motivation within any origination.