What if the key to truly boosting your profits was to shift your focus away from money? It might sound counterintuitive, but organizations that are fueled by a genuine purpose and a real reason for being, tend to outperform others in the long haul. In this episode of the HAPPINESS SQUAD podcast, we discuss the power of purpose-driven organizations with Alex Edmans.
In our conversation, we explore Alex’s book ‘Grow the Pie’, which emphasizes creating value for all stakeholders, fueling organizations to thrive. Alex introduces three guiding principles for organizations to define their purpose. Let’s dive deeper into this across 4 key areas:
- Redefining true happiness through purpose
- What ‘Growing the Pie’ means
- The link between employee satisfaction and stock returns
- Three Guiding Principles in Defining Your Organization’s Purpose
“Purpose is about why you exist, who you serve, your reason for being, and your role in the world. It’s not to solve all problems, but to focus on a few.”
Alex Edmans
Finding True Happiness in Purpose
We at HAPPINESS SQUAD always championed the belief that happiness goes beyond chasing external rewards. True happiness is an inside job, and when we tap into that, we not only thrive individually but uplift those around us. Our conversation with Alex further solidified this perspective as he redefines happiness as fulfilling a deeper purpose and positively impacting others.
“For a purpose to truly be owned, everybody needs to have a hand on it. Even if you have the most noble purpose in the world, if it is not connected to the individual ‘WHY’ of the employees, you don’t get the best out of the people.”
Ashish Kothari
In business, we must understand the deeper purpose of our organizations rather than chasing profits or short-term gains. But it’s not enough for an organization to merely have a purpose; it must be deeply ingrained in the hearts and minds of every individual within it. When everyone is aligned with the mission and purpose of the organization, sustainable success follows. This is what ‘growing the pie’ is all about.
“Growing the Pie”
The concept of “growing the pie” means making the whole organization bigger and better for everyone involved, rather than just for the company’s own good. When organizations prioritize societal value, they naturally achieve long-term success, benefiting not just shareholders but all stakeholders.
“As citizens, we can also make a difference in embracing change and growing the pie, and not just wait for leadership or an organization to drive that for us.“
Anil Ramjiani
As leaders, it’s our responsibility to create environments where our teams can thrive, connect with their purpose, and contribute positively to the world. This is the essence of a purpose-driven organization, and it’s a journey we’re proud to champion at HAPPINESS SQUAD.
The Link Between Employee Satisfaction and Company Success
To support this concept, Alex’s research delved into the link between employee satisfaction and stock returns. Using the “100 Best Companies to Work For in America” list as a benchmark, he found that from 1984 to 2011, these companies outpaced their peers by 2.3 to 3.8% annually, amounting to a compounded 89 to 184%. In simple words, the organizations that genuinely care for their employees outperformed the others.
These top-performing organizations, known for their exceptional treatment of workers, benefit from increased productivity and employee retention. At HAPPINESS SQUAD, we’ve always believed in the power of a positive work culture. Alex’s findings further reinforce our conviction: organizations that prioritize well-being achieve unparalleled success, and this success ties back to embracing the organization’s purpose.
The Impact of Purpose in Organizations
After this episode with Alex, it’s become abundantly clear that purpose is the backbone of any successful organization. It’s the very essence of why an organization exists and the driving force behind its decisions and actions, inspiring them to make bold moves, even when the immediate financial benefits aren’t clear. Here are 3 key principles to guide you in defining your organization’s purpose:
- Purpose should be focused and selective. It’s about understanding your unique role in the world, not trying to be everything to everyone.
- Focus on materiality and strengths. Align your purpose with what you’re best at and what matters most.
- Purpose should be deliberate and emergent. Everyone in the organization should have a say in shaping the purpose.
It’s time for all of us, in every organization, to not just talk about purpose but to live it and ensure it resonates with every employee. As we move forward, let’s not just aim to be a company with a purpose statement, but a truly purpose-driven organization, making a tangible impact in the world and in the lives of the people we touch.
Conclusion
The pursuit of profit, while important, should be balanced with a deeper, more meaningful mission. By aligning with a purpose that resonates with every member of the team, organizations can achieve sustainable success and contribute positively to society. As we continue our journey at HAPPINESS SQUAD, let’s embrace this ethos, fostering environments where purpose and profit coexist harmoniously, driving not just business growth but also societal well-being. Let’s be more than just organizations with purpose statements; let’s be living embodiments of those purposes, making a real difference in the world.
Alex Edmans is a multi-award-winning professor of finance at London Business School with a PhD in finance from MIT Sloan, and Author of ‘Grow the Pie: How Great Companies Deliver Both Purpose and Profit’. As a Fulbright scholar, he joined Wharton in 2007 before moving to London Business School. His TED talk, “The Pie Growing Mindset” and “The Social Responsibility of Business,” has a combined 2.8 million views. He’s written for the Wall Street Journal, Financial Times, and the Harvard Business Review.
Learn more about Alex at his website and LinkedIn.
Listen to the podcast with Ashish, Anil and Alex below.
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