Why You Need to Understand The Purpose of Purposeful Enterprise

Spring Spotlight: Creating the Purposeful Enterprise
Explore the best practices and insights examining this essential element of lean transformation in this and other articles in this occasional series.

“What is your organization’s purpose?” is not a trick question. Coming up with a simple response, however, is rarely an easy task. That’s partly because generic bromides about making money and growing the company will always fail to align your company around worthwhile pursuits.

Indeed, as Jim Womack points out in Repurpose Before You Restructure (a reflection triggered by the decline of General Motors), realizing your company’s purpose will require a deep rethinking, done from the standpoint of your customer. Whether you are forming a company or restructuring an existing one, he says you need a clear and compelling purpose be the North Star shaping that purpose.

Womack wrote this 2009 column while General Motors was fighting to survive what was a seemingly insurmountable crisis that eventually required massive government support. Yet even in the midst of this challenge, Womack reminded us that mere survival is not enough. The company instead needed to think through deeper issues first:

“The natural instinct of senior managers in any crisis is to restructure and resize. But the question is always, ‘Restructure and downsize toward what?’ No customer cares about a company’s structure. No customer cares about downsizing. Customers only care about companies solving their problems along life’s path.”

Defining Purpose is an Existential Imperative

Menlo Innovations CEO Rich Sheridan affirms the fundamental need to define your purpose as a strategic and existential imperative that will inform all decisions. “The intention and purpose of our culture was as clear at the beginning as it is now,” he writes, “to ‘end human suffering as it relates to technology’ by bringing joy back to the invention of software. We had a purpose from the start—and that purpose dictated everything we built.”

Customers only care about companies solving their problems along life’s path.

Pursuing an intentionally joyful culture led to many of the practices that Menlo is now known for, including paper-based planning, paired programming, an open office plan, and daily standup meetings. Sheridan notes in How Purpose Shapes Culture that the company created many of these practices to solve situational problems in the moment. And, because they based their decisions on a clear sense of purpose, they inevitably came to discover the theory and practice embedded in these countermeasures.

He urges people to reflect on and articulate their organizational higher purpose, saying: “Do not pursue process, plans, or practices without purpose.”

John Shook details the inherent tension when developing purpose-driven systems in Purpose, Process, People. It’s not enough for an organization to have a well-defined purpose; nor is it enough to think through how translating that purpose into tangible practices suffices. That’s because “the lean enterprise is a socio-technical system” that works both the social side and the process side equally in order to thrive, he argues.

Shook delineates between social companies (who emphasize worker involvement and understanding) and technical companies (with sophisticated tools from andon boards to Kanban systems), emphasizing the full system of lean only comes alive when these aspects are balanced, with purpose providing True North. “It’s the balance that makes the difference,” he says. “The integrated balance. Toyota—when its operating like the high-performing Toyota we know so well—gets it right. They manage to do BOTH.”

A Strongly Defined Sense of Purpose Translates Into Concrete Daily Practices

Having this strongly defined sense of purpose translates into concrete daily practices. The process of translating goals into daily work correlates with hoshin kanri, and can be seen vividly in the Planet Lean article Two Years of Hoshin at the Dutch Ministry of Infrastructure. As noted by Diana Uphof, who worked on this journey, a clear sense of purpose informed the numerous small steps that this Dutch department took when creating clearly defined goals and specific measurements pointing the path forward.

Uphof says they launched the process by identifying the right goals for the organization to pursue. They decided that providing a dependable infrastructure network would be supported by improvements in safety (no injurious incidents) and quality (determined by delivering projects right the first time, on time, and within the given budget).

The development of lean leadership and daily accountability is ultimately about changing a behavior.

While these foundational goals may not seem shockingly counter-intuitive, the magic emerged in the details of making this happen. The process of getting full agreement by everyone, and then drilling down into the details of how to achieve these goals, engaged everyone and helped translate the broad goals into immediate action plans. This work triggered deep reflection translating strategic goals into tactical actions, and was visualized in an obeya—a room where all pertinent information is shared visually for everyone involved in a process.

This work was then rolled out operationally, with individual teams and workers asked to implement goals at a focused tactical level. As they did so, they gathered Key Performance Indicators (KPIs) to keep them on track, learning as they went which were the most important. Overall, the two year process helped the ministry learn key lessons. Among the most important, according to Uphof: “The development of lean leadership and daily accountability is not about implementing a model or changing an organization, but about changing a behavior.”

True North as the “One Ring that Rules them All”

Indeed, a comprehensive, detailed and above all purpose-driven approach to work inevitably aligns the many pieces of pragmatic improvement work, says Jim Womack. His article about creating the social basis for lean management emphasizes the way that True North integrates and guides the tangible efforts of continuous improvement—how the purpose of purpose, as it were, links the known tools with the intangible motivations and efforts of the people doing the work.

Fulfilling the promise of lean rests on clearly assigning meaningful operational goals to leaders with a clear sense of purpose. “Doing this creates the reassuring social context that keeps every employee and manager focused on maintaining stability and moving performance steadily upward over time, knowing that they are respected for their knowledge and abilities and protected from contradictory and impossible demands.”