The business case for purpose has been clear to many of us for years, so the benefits may seem self-evident for readers of this newsletter. However, there is still a great deal of confusion among leaders about what purpose truly means, and how organizations can make the transition to becoming purpose-led. While the rationale may be clear, the roadmap is complex.
Leaders on Purpose has been researching this topic extensively since 2015 in collaboration with top academics. Our aim has been to provide clarity on the stages of evolution required to embed purpose and transform systems and culture. We do this by connecting the “why” with the “how.” Although most businesses know “why” they need to transition to a purpose-led approach many struggle to understand “how” this can be accomplished. Our maturity model provides a strategic framework for this organizational journey to help leaders progress purpose from theory to practice.
What is Purpose and how does a company embed it in their organizational DNA? This is the question that has been on our minds since we started Leaders on Purpose and has been the core of our CEO Study research since 2015. Over the years, we have studied and interviewed hundreds of organizations, identifying key patterns related to successful purpose-led transitions. The has led us to identify each stage of the evolutionary journey for organizations as they move toward becoming purpose-driven businesses.
Embarking on a journey towards becoming a purpose-centered organization entails navigating through various stages, each delineated by distinctive characteristics, challenges, and strategic foci. Building on the work of Robert Van Tulder and his researchers (Rob Van Tulder, 2014), we have identified five defining stages of a transitioning organization:
The Five Stages of Business Transformation
An organization’s first stage is referred to as Inactive. This is when sustainability and purpose are not primary drivers in decision-making. Organizations that operate only to maximize their revenue and increase returns to shareholders are firmly within this stage.
Following this is the Reactive stage, which is prompted by external factors like changes in legislation or policy. The organization begins to embed sustainability in its operations and strategy, albeit reactively. Their business strategy doesn’t come from any ingrained purpose.
In contrast, in its next phase an organization can then be referred to as Active. This happens when purpose and sustainability are incorporated into marketing and future product decision-making, signaling an integral role in organizational operations. However, this is not yet a holistic endeavor, and the business may still operate in silos.
Next, we arrive at the Proactive level where the organization seeks a leadership role in driving a sustainable and purposeful future, integrating these values into every facet of its identity and decision-making process.
Finally, we reach the Generative stage. This is when purpose and profit symbiotically fuel each other, marking the complete transformation of the business model into one that is thoroughly groundbreaking in its sector.
The Purpose Maturity Benchmarking Tool
To help firms to find where they are on their journey, we have developed our own Purpose Maturity Benchmarking Tool (PMBT). It encompasses a rigorous analysis of nine pivotal areas, including organizational perspective and governance, to not only determine the current maturity stage of an organization but also to guide its trajectory through informed, strategic decision-making. This tool stands as both a beacon and a guide for organizations, highlighting potential for purpose-centered evolution and leading them through the intricacies of transformation while embedding sustainability and purpose at the core of their operations.
The PMBT provides organizations with a robust framework to identify their current stage, comprehend respective demands, and strategically maneuver toward becoming a genuinely sustainable, purpose-centered business. This tool not only illuminates the pathway but also emboldens organizations to pioneer change within their sectors, driving towards a future where purpose and profitability mutually thrive.
Curious to know more about the PMBT or where your organization lies on its purpose journey? The research and insight for the PBMT has informed our Performance through Purpose Accelerator Course, which you can sign up for now.
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