VISION
Disney had conceived of his company’s purpose as to make cartoons, rather than to make people happy; we probably wouldn’t have Mickey Mouse, Disneyland, EPCOT Center, or the AnaheimMighty Ducks Hockey Team. One powerful method for getting at purpose is the five whys . Start with the descriptive statement We make X products or We deliver X services, and then ask, Why is that important? five times. After
ite Rock Company of Watsonville, California, won the Malcolm Baldrige National Quality Award–not an easy feat for a small rock quarry and asphalt company. And Granite Rock has gone on to be one of the most progressive and exciting companies we’ve encountered in any industry. Notice that none of the core purposes fall into the category “maximize shareholder wealth.” A pri- mary role of core purpose is to guide and inspire.
a few whys, you’ll find that you’re getting down to the fundamental purpose of the organization. We used this method to deepen and enrich a discussion about pur- pose when we worked with a certain market-research company. The exec- utive team first met for several hours and generated the following state- ment of purpose for their organiza- tion: To provide the best market-
Listen to people in truly great companies talk about their achievements–you will hear little about earnings per share.
Maximizing shareholder wealth does not inspire peo- ple at all levels of an organization, and it provides precious little guidance. Maximizing shareholder wealth is the standard off-the-shelf purpose for those organizations that have not yet identified their true core purpose. It is a substitute – and a weak one at that. When people in great organizations talk about their achievements, they say very little about earn- ings per share. Motorola people talk about impres- sive quality improvements and the effect of the products they create on the world. Hewlett-Packard people talk about their technical contributions to the marketplace. Nordstrom people talk about heroic customer service and remarkable individual performance by star salespeople. When a Boeing en- gineer talks about launching an exciting and revo- lutionary new aircraft, she does not say, “I put my heart and soul into this project because it would add 37 cents to our earnings per share.” One way to get at the purpose that lies beyond merely maximizing shareholder wealth is to play the “Random Corporate Serial Killer” game. It works like this: Suppose you could sell the com- pany to someone who would pay a price that every- one inside and outside the company agrees is more than fair (even with a very generous set of assump- tions about the expected future cash flows of the company). Suppose further that this buyer would guarantee stable employment for all employees at the same pay scale after the purchase but with no guarantee that those jobs would be in the same in- dustry. Finally, suppose the buyer plans to kill the company after the purchase – its products or ser- vices would be discontinued, its operations would
research data available. We then asked the follow- ing question: Why is it important to provide the best market-research data available? After some discussion, the executives answered in a way that reflected a deeper sense of their organization’s pur- pose: To provide the best market-research data available so that our customers will understand their markets better than they could otherwise. A further discussion let team members realize that their sense of self-worth came not just from helping customers understand their markets better but also from making a contribution to their customers’ success. This introspection eventually led the com- pany to identify its purpose as: To contribute to our customers’ success by helping them understand their markets. With this purpose in mind, the com- pany now frames its product decisions not with the question Will it sell? but with the question Will it make a contribution to our customers’ success? The five whys can help companies in any indus- try frame their work in a more meaningful way. An asphalt and gravel company might begin by saying, We make gravel and asphalt products. After a few whys, it could conclude that making asphalt and gravel is important because the quality of the infra- structure plays a vital role in people’s safety and ex- perience; because driving on a pitted road is annoy- ing and dangerous; because 747s cannot land safely on runways built with poor workmanship or inferi- or concrete; because buildings with substandard materials weaken with time and crumble in earth- quakes. From such introspection may emerge this purpose: To make people’s lives better by improv- ing the quality of man-made structures. With a sense of purpose very much along those lines, Gran-
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HARVARD BUSINESS REVIEW September-October 1996
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