Specification Inside Purpose

Specification is the second sub-blade of the Purpose blade that is outlined in Powered By Change (PBC). Once we have elevated to discover our main thing, we need to specify precisely what our main thing has the purpose of doing. The reason for specification is to communicate the elevated purpose of your company in order to equip it with qualities that enhance its agility and ability to respond to change. It is worth thinking about whether you are doing this with your business. If not it is probably a good idea to start as there is a direct, empirical link between a company’s ability to specify its purpose and its profitability. In fact, establishing purpose is one of the highest drivers of success.

High performing companies demonstrate a strong sense of a clearly specified purpose that propagates through shared values across the entire organisation. They also have a well-defined mission that depicts the reason that the company exists and which inspires people to join them. This is the reason why such companies win. An excellent example of a company that knows exactly what it is doing and why is IKEA. Its mission statement says: “Our vision is to create a better everyday life for the many people. Our business idea supports this vision by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.” This is one of the reasons for IKEA’s success. Their mission is what it enables as an outcome for its customers. 

Specification is the method of establishing the company’s elevated purpose. It is linked to the company’s inherent skills, enjoyment and value creation. When specifying purpose start by completing the following three steps:

  1. Identify what your company loves to do.
  2. Identify what your company is great at doing.
  3. Identify what your company can add extreme value by doing. 

The intersection point is what is being enabled for the end-user. This is essentially the mission and there is a way to express this that enables the elevated purpose to be executed. The  specification technique is a way of finding the best combination of the holistic and the practical. As an example, imagine a company that makes loft ladders. This company could think it is in the loft-ladder business, or in the ladder industry, or in the accessing lofts market or even the house utilisation industry. The holistic and practical approach can be applied to specify how this is manifested. 

Firstly, look at the elevated purpose in the most holistic way, which is the  maximisation of space. Secondly, we then turn to the practical in order to give our purpose focus and direction, and in this example “the maximisation of space” could be specified as “maximising space in people’s homes.” The benefit of the specification is that people understand the business they are really in, and also their role inside that. If you then wanted to execute your elevated, specified purpose in the most practical ways, you can now see that you would be able to get involved with what happens under people’s beds, and what happens under floorboards, or what happens inside people’s rooms in terms of dimensions, or what you could create with bi-folding doors, and on it goes. Elevation properly defined using specification opens up the opportunities from just being in the loft-ladder industry, to absolutely practical ways of maximising space in people’s homes more generally.

Not only is it important to understand how to specify purpose. It is important to understand why you would want to in terms of business impact, aside from that mentioned above. Profitability is the primary measurement used globally by businesses and specification of purpose has an important impact on that. In terms of profit and revenue increases, over 11 years an average company sees a rise of 1% in profit and 166% in revenue. Whilst an exceptional company experiences an increase of 756% in profit and 682% in revenue for the same timeframe. The reason for this is that an exceptional company has a purpose that is clearly defined and that its people believe in. Where such belief exists there is also greater alignment and employee engagement. The upshot of this is a significant increase in productivity and ultimately revenue and profits. This is directly linked to the fact that engaged employees are 50% more productive and 33% more profitable than their peers who are not engaged or actively disengaged. In the UK alone, the cost in terms of lost productivity to organisations is $35 billion per year from workers that are not engaged or disengaged. This figure is $350 billion for the US. This alignment and engagement is down to how well purpose has been specified. There is a clear, empirical argument that purpose is one of the highest drivers of business success.       

Another benefit is that by specifying what our purpose does, we focus managers and employees on key objectives, avoid becoming waylaid by ideas or initiatives that are too niche or sideline projects, and remain alert for opportunities occurring in what we have defined as our “swim lanes.” Specification can therefore almost be part of a company’s compliance. If an organisation is doing something that, on reflection, does not correspond with its stated specified purpose, then that action probably needs to stop. 

Within the PBC solution, we provide the tools needed to ensure the creation of a specified purpose that is aligned to the elevated purpose. Given the significant financial implication that failure to specify purpose can have for a company, it makes sense to ensure this is done.

Key Takeaways:

  1. Specification is the method of establishing the company’s elevated purpose.
  2. There is a direct empirical and mathematical link between organisations that have a clearly specified and resonant purpose and a company’s bottom-line and profitability.
  3. Establishing purpose is one of the highest drivers of success.

For more information on how the PBC solution can help your business feel free to get in touch, we would love to talk with you, at:

info@poweredbychange.com

me@jonathanmacdonald.com

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