Should the ‘purpose’ of an organisation influence its operational and strategic decisions? And if so, what does a unified process that teams can draw upon look like? Without a link, decisions made will potentially run counter to what the organisation is trying to achieve.
To explain why this important, I’ll introduce you to a draft Harvard Business Review submission from Janellis – a firm I’ve partnered with for more than 3 years – and provide insights into the role purpose could and should play in critical decision-making processes.
You’ll see that the paper draws on challenging issues like cyber attacks and financial regulation to make the case for a unified decision-making framework. It outlines the difference between having a handful of senior individuals with strong critical thinking skills and the ability to think critically as a team, where all members of a crisis committee, for example, have a robust and defendable process for making tough decisions – especially when they are under time pressure and often dealing with incomplete information.
The process (laid out in more detail in the draft) appears simple at face value, however I’ve learned over the past three years that there are nuances to be aware of when applying it in practice. The 7 steps are summarised as:
- What is the situation?
- Who do we need in the room?
- What do we know?
- What may happen?
- What might the impacts be?
- What do we do?
- What do we communicate?
Team members all have their own unique perspectives, skills, strengths and experiences that they bring to the table. To make the most of their diverse attributes and drive better decision-making, a powerful process is needed to bring it all together.
So, where does purpose fit into the process?
Purpose is now serious business. For example, the ASX Corporate Governance Principles and Recommendations (4th Edition) advise that the board is responsible for defining an entity’s purpose. The World Economic Forum’s ESG framework encourages companies to go beyond just defining their purpose and advising how they are embedding it in their strategies, policies and goals.
From my work in this field I note that very few organisations have a well-thought through purpose statement. It should reflect the ‘benefit to society’ a company intends to deliver in a profitable way, or in a financially sustainable way in the case of not-for-profits, social enterprises, government agencies etc.
Purpose, values and risk appetite are all mentioned on pages 3 and 8 of the Janellis paper, and here’s some additional insights that we have been discussing:
- It’s important that a framework like this is aligned to an organisation’s purpose.
- Purpose is an additional ‘fact’ to be collected at Step 3.
- Purpose is very much about opportunity, so Step 4 would be a natural point to ask “Given our purpose is X, can we create upside or opportunity here?” For example, Optus is “creating a better, more connected future for Australia” and aligning with the Minister’s vision for cyber security leadership is an opportunity.
- At Step 5, there are brand and reputation impacts if the organisation responds in a way that is perceived to be contrary to its purpose.
- Explaining the connection between an organisation’s purpose and the decision made is helpful when communicating with stakeholders at Step 7.
It is still early days when it comes to a detailed application of purpose to decision-making and I trust this helps in bridging the gap between purpose as a concept and what it means for the critical decisions that people, teams and organisations must make in practice every day.
Both Janellis and I welcome your comments and feedback.
Phil Preston helps people and organisations decode purpose to maximise their performance and impact. He is a speaker, facilitator, adviser, author and coach, and you can contact him via hello@philpreston.com.au
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