THE BLOG
08/05/2013 11:26 am ET Updated Oct 05, 2013

Fit for Purpose: Changing in a Changing World

I collect British words and phrases. 'Rubbish' somehow seems less trashy than my American trash, a' cupboard' more Mother Goose charming than a cabinet. Thanks to the English, I now 'have a think' about things. And one of the things I've been having a think about is the idea of being 'fit for purpose.'

We use that phrase often at the University of Oxford in our work helping corporations undergoing transformations. We talk about changing the organization's people and processes to become more 'fit for purpose' -- a term that means something like 'being well suited for its designated function.' But I think there is a deeper meaning in a corporation becoming 'fit for purpose'. And in that deeper meaning lies great opportunity to improve financial performance, to unleash innovation, to attract and retain employees and customers.

The current purpose of the corporation is usually not the lofty kind. At least not in the we say it when we contemplate life and say things like, "I want to live a life of purpose and meaning." But having a purpose beyond increasing shareholder profits is key to the modern corporation's ability to survive and thrive.

Here's why...

The world is changing so fast that a company's success is increasingly driven by its ability to innovate and adapt. Change is imperative -- and the rate and complexity of change has exponentially increased. But here's some bad news: Most corporate change initiatives fail.

This isn't new news. John Kotter's 1995 book Leading Change: Why transformation efforts fail reported that a shocking 70 percent of corporate change programs crash and burn. And after eighteen years, more than 25,000 organizational change books and a plethora of leadership programs on how to manage change, 70 percent of change programs still fail.

Why do change efforts keep failing so consistently? It is well documented by management consultancies and academic research that more 70 percent of that 70 percent failure rate is because behaviors get in the way. But why do managers and employees resist the change? There are some obvious, well-studied reasons: fear of change, disbelief in the vision, change fatigue, etc.

I think there is a deeper reason. People will change behaviors for something they believe in, for something that captures their hearts and minds, that stirs imaginations and appeals to aspirations. For that, they will overcome fears and bust through inertia.

From my experiences, I've observed that transformations with a purpose beyond profits are energetically more successful. I've lived through a wide variety of change initiatives - drove them as CEO of social enterprises and an NGO, championed them as a founder of healthcare and housing coalitions, guided them as a corporate consultant. My experiences resonate with a transformation path we suggest to corporations at Oxford's Saïd Business School which goes something like this: 'To improve performance, you have to transform the organization. To transform the organization, you have to change behaviors. To change behaviors, you have to change mindsets. And to change mindsets, you have to engage the imagination.'

Think of purpose in terms of enabling change. We no longer live in a 'command and control' world where top-down edicts result in behavior change. And we know financial incentives are not enough to change behavior; change simply in the service of making money can feel necessary but not necessarily sufficient. The winning market strategy can win the buy-in of hearts and hands along with heads - by serving people and planet along with profits. The story of change cascaded through the organization from the top leadership to the front lines becomes a story of uniting to fulfill a great purpose.

Even some of our business terminology is not truly fit for purpose. 'Human resources' are more than resources from which value is extracted, like the company's property, plant and equipment (PPE) -- they are stakeholders in value creation or destruction. Employees today want more -- and their performance is inspired when their labor is in the service of something greater. 'Consumers' today want more too because they are more than mere consumers; they/we want to be part of creating social and environmental value. So smart business undergoing change will change in the direction of being more: the change transformations most likely to succeed will be in service of something more than cost-efficiency to improve the bottom line or growth for the sake of growth.

The human hunger to have a life of meaning and purpose is a need that, when met, does generate profits. Meaning is a means to improving recruiting and retention. It resonates with consumers looking for value from products and services that align with their values. It is a means to improving lovely metrics like EPS and EBITDA. Meaning drives money. The awareness of this is becoming more mainstream. It's been on the Davos agenda for years and top executives from companies including Virgin, Puma, Unilever and Huffington Post recently called for a Plan B (bteam.org) -- a new evolution of business that 'puts people and planet alongside profits.'

Some call this compassionate capitalism, care capitalism, capitalism with humanism. Those are all nice terms. For corporations needing to change in our rapidly changing world, I suggest it is simply smart strategy and a path to improved performance, resiliency and profitability. Companies wanting to decrease their risk of becoming another transformation tombstone in that 70 percent graveyard can work on becoming fit for purpose. And that is something worth having a think about.