Outside-in thinking No 2: Why 'purpose' isn't enough
Law firms are increasingly embracing the idea of purpose, but we wonder whether they truly understand what they’re getting themselves into. Or why.
On first sight, the “why” bit seems obvious. EY estimate that purpose-led companies out-perform the S&P 500 by a factor of x 10. Saïd Business School believes that “purpose is a source of competitive differentiation that drives customer sales and loyalty”.
Larry Fink famously wrote last year that the companies in which BlackRock would choose to invest would be those that could “ensure your business serves society”. And within those five words are two thoughts that are critical to the whole idea of ‘purpose’.
So, are law firms up for – and up to – the challenge?
How do you “ensure” that your business does anything? Leadership has to provide just that: set the right example, at all times, of the kind of behaviours and standards at the heart of the purpose statement. So any purpose has to be credible and achievable for the business, not a grandiose desire to save civilisation.
But it also comes down to that old “what gets measured gets done” adage. You need to translate what might be seen as a vague concept into everyday actions that support and drive the way you do business. You have to keep your promises. And you have to measure how you’re doing, to these new criteria.
We call these characteristics ‘integrity’ and ‘delivery’. Can you be trusted, are you consistent, will you do the right thing by people? Or will your “push comes to shove” moment betray your real priorities and level of commitment, so that you let people down?
A true statement of purpose is not another tagline that can be changed when people are bored of it. Neither is it a project.
“Serving society” is perhaps even trickier, and certainly more demanding. For a start, it means the business has to understand how society is changing and what is important. Without that insight, what is the purpose really meant to achieve (and for whom)?
Our Charisma Index research clearly shows that brands with a strong sense of direction, but not the same level of societal and consumer understanding, are regarded as self-serving and not ones to be trusted with a long-lasting relationship.
We call this ‘consciousness’. Without it, any statement of purpose is groundless and inauthentic.
We also know that business as a whole needs to be seen to be far less out for itself. The idea of ‘giving something back’ is not new, but its importance as a competitive differentiator is. ‘There has to be something more’ is now a command rather than a complaint. It is a demand for greater generosity.
These qualities need to be just as compelling for those people inside the business as for those outside. McKinsey talk of success now requiring a “new societal deal”, and that means recognising the motivations and priorities of employees or colleagues. A true sense of purpose, one that is evident in the all the ways an organisation goes about its business, can be a differentiator in choosing with company to work for, as much as to work with.
As a GC told us, “the Millennial challenge does not only apply to our recruits and Partners of the future – it’s our clients, too.”
These are difficult challenges for any organisation, but we believe particularly so for law firms. The profession is traditionally inward-focused in its structures, processes, terminology, and measures of success. It is simply not used to having to react to pressures and movements that other sectors take for granted. But we can see evidence of change, at least in ambition and awareness, if not yet in execution.
We created the Charisma Index to help bring the ‘outside-in thinking’ many of our clients have said is now critical to the professional services sector. That means introducing new measures of what it means to be an outstanding, modern business; and encouraging firms to look beyond their normal comparisons and to learn from the best brands in the world.
Daniel Pink wrote “When the profit motive gets unmoored from the purpose motive, bad things happen.” We agree. It’s essential that the two ‘p’ words are not seen as “either/or” choices, but mutual enablers. Firms need to define, integrate and measure purpose in a wider context. If they get that integration right, not only will they ensure serve both society and their own interests, they’ll also put themselves in a far stronger position to continue their success in the future.