Nikos Mourkogiannis is a senior partner at Panthea Strategic Leadership Advisors, a global consulting firm advising chairmen and CEOs on leadership strategy. Nikos lives in London. In addition to being senior partner at Panthea, he is also senior executive advisor on leadership to Booz Allen Hamilton. He helped to create the Harvard Law School Center on Negotiation with Roger Fischer, the author of “Getting to YES.” Nikos has worked on some of the most complex and important business deals of the last 30 years. His new book is called “Purpose, The Starting Point Of Great Companies.”  

View upcoming Thought Leaders webcasts here.

KE: Given that you’ve had such a busy and successful career, why did you bother to take time out to write a book and why this book in particular?

NM: I wanted to give back for all the education I was privileged to receive and the experiences I have had in my life. A lot of ‘how to’ books are out there, but people have raised the standard and want to understand what the purpose is of various things; they are preoccupied with questions of why. I believe that if we get enlightened about why, then issues of strategy, issues of top teams, whether in the public sector or in the private sector, from Iraq to California, will be easier to handle by the leadership cadre of the next century.

KE: Help us understand how purpose fits into the leadership agenda.

NM: Purpose is the anchor of the leadership agenda. I think that purpose is what successful CEOs, the people who have made it already, are worried about. They are trying to create enduring institutions. I believe purpose will be as central to leadership as notions of competitiveness, strategy and execution have been in the last 20 years. 

NM: Purpose is an individual's reason for doing something because the individual feels that it is right and worthwhile. A lot of people have summarized my book by saying purpose is the moral DNA of an organization. Purpose is a relational concept. It is something that the individual has, the company has and they relate to each other on the basis of it. Purpose is not just a mission or vision statement, or just a set of values. As a matter of fact, depending on what your purpose is, the values to which one should assign importance get pretty defined or at least get different priorities.

Purpose is not about corporate responsibilities and is not about balancing demands of stakeholders. It is not something that is a drive for equality. It definitely should not be a slogan because if you do not walk the talk and talk the walk of purpose, then the results will be very counterproductive. Instead of building an enduring institution, one could end up just building cynicism in an organization.

KE: I have heard it described as an organization’s reason for being. Would that aptly capture what you are indicating here?

NM: That would be spot on. As a matter of fact, it is a translation of a French expression, raison d'être, that I think captures purpose quite well. 

KE: On the cover of your book you chose to go with the image of a tree. I am assuming then that purpose is represented by the roots?

NM: Yes, not everybody knows that there is as much of the tree underneath the ground as there is above the ground. The deeper the penetration of the roots, the taller the tree, the stronger the roots, the stronger the alignment with purpose, the more lasting, the more enduring, the more impressive is the organization, (the company that is built on it). 

KE: Does that suggest, Nikos, that an organization would only ever have one purpose - that purpose would not change?

NM: Well purpose is also like character. It is like the character of people. As Nietzsche said, "the good news about true character is that once you get it, it is difficult to change it." So, it is possible for an organization to change its purpose, but this is a major undertaking. It cannot be just decided in a board meeting or in a shareholder meeting or it cannot just be a mere suggestion of a strategy consultant. Changing purpose means nothing less than transformation. It often means a new leadership team, and definitely means a new strategy, new organization, and new systems. Changing purpose is something that takes not less than five years.

KE: I was thinking of your earlier comment about purpose being like an organization’s DNA. How does one go about changing one’s DNA?

NM: It is very difficult and if you do not do it with care and commit the resources, and get the right advice, all you end up doing is killing the organization. We have a lot of examples of companies who tried to have transformation on the cheap, for instance, by just changing strategies or attempting what is called a transformational acquisition. Those things are part of the program, but are not enough to have a purpose-led transformation, which is the only transformation I would recommend to anybody. To do it right is really hard work for the leadership of the firm and if I am allowed, on the basis of experience, it is very hard work for the advisors also.

KE: Jim Collins and others have long talked about the need for organizations to have an enduring purpose. I am curious about what is new about your book on this topic. 

NM: Well to be honest about it, if Jim Collins had not written his book, I am not sure I would have written mine. So, I am very very grateful to him because in “Build To Last,” he says something to the effect that if he was to write the book again, he would not write it about values, but he would write it about something that he calls the “unchanging core.” Although I am very very impressed with what he did, I think that he is dealing on the first derivative of purpose level. He is dealing with values and not all values, in my opinion, are equally relevant for each organization. I believe that values are derivatives of purpose and depending on which purpose a firm is pursuing, it has to honor a set of values that are not identical for everybody.

Furthermore, I think the approach that he is taking is quite legitimate, quite good, but different than mine; he is taking the empirical approach as most business books do. He observed reality and he deducts conclusion. What I do hopefully is both different and deeper. I go to the philosophical traditions, at least in the west, define what is good and what is great and having isolated them, I study how they overlap with competitiveness. From there I derive the four purposes that are consistent with competitiveness, so they can make a company do well, while it is doing good at the same time, and with the same actions.

KE: How would an organization know that it was lacking a purpose?

NM: You can tell by several expressions that you hear. More often than not, the first to get the early warning systems is the head of HR, because some of the talented people of the organization would go to her office or his office and say, “I am getting another job and it is not the money, it is that I feel we have lost our way.” People in company meetings will say, “It doesn't seem like we do what we say we will.” This issue of complaints about not walking the talk and talking the walk are big red flags that the purpose has been lost, and as a tool, the appendix in the book has a web-based profile of purpose, which people can use to find out whether there is alignment of purpose within their organization.

One problem is to have lost your purpose and another problem, which in many circumstances is worse, is if the organization is fragmented into many purposes. There are two ways of diagnosing it: one is by listening to people very carefully, by doing what my teacher called 'active listening' - listening to the low voices of the people - and the other way is by using a marvelous new technology. Have people get on the web and fill out a questionnaire. HR professionals can tell easily and in a data-driven way whether all of the organization is marching to the same purpose or not.

KE: Low employee engagement scores seem like they could reflect people feeling a lack of meaning in their work. What are your thoughts on this?

NM: I have run into that research; you are talking about the 'Solo Factor.' Chapter 8 is devoted to what I think HR professionals are worried about on a daily basis, which is morale. According to my research and that of others, there are four things that affect morale. First is knowledge - acquiring new skills that are the passport in today's mobile economy. The second is that they get rewarded adequately, both financially and in other ways. The third is whether the community is supportive of each other, especially in difficult times, but also in times of success, and the fourth is purpose. Does this firm that I go and work for, stand for something or not?

So there is a very high correlation between morale and purpose. What has also been quantified by others, more qualified in this than I am, is the relationship between morale and capitalization of the firm. Literally one third of the stock value of the firm depends on morale of the employees -- whether people just work, or work with purpose to build a community for a better life, for themselves and for the world.

Here is where I think HR professionals can make a huge difference. When the CEO stops looking at his or her screen every five minutes to see how the stock is doing, perhaps the HR professional can help the CEO by saying, "you know, we need a purpose, let’s see whether we have lost our way and whether we can find a way to rediscover our purpose." That is the ultimate service that the HR professional can render, both to the employees of the firm and the firm itself, including its valuation in the stock market.

KE: Nikos, even companies that have an enduring purpose go through rough times. How would an organization know to attribute these symptoms to a lack of purpose, versus a poor strategy or a change in the competitive landscape, some other factor outside of purpose?

NM: Well you asked a very important question, Karen. The issue with purpose and purpose diagnosis is that purpose is rarely in and of itself the problem. Usually, we find purpose as a result of a double diagnosis of a problem. For instance, the organization is badly designed and purpose has been lost, and the two problems together are more than two problems. There is a multiplier effect there of four. Purpose and strategy are the usual suspects of creating losses and fatalities and regression in a firm and you are right, purely theoretically, one can have a purely purpose issue, one can have just a pure strategy issue.   The money is in the alignment.

I am not proposing that I have invented the hammer and the rest of the world is like a nail. Purpose is not the only problem out there. It is a very much-overlooked problem that can make a difference between good and great. Usually the problems that the managers do face everyday are of double diagnosis. The issue is if you fix the strategy by itself, as has been advocated by many in the last 20 years, you might address the flu but not the cancer.

KE: Nikos, you work with a lot of companies. How frequently do you find organizations that are focused exclusively on making money? 

NM: Yes, I do encounter clients like that, less than one would expect, perhaps 10% to 15% of the people I talk to are just interested in money. They do not find me interesting to begin with, so I do not think that my data is representative of the world, but overall the older I get, the more I am surprised by how many people do not just care about money. Definitely what I see is that once people become successful, they look for something more than money without forgetting about money, but they would like to also give themselves and their institutions a sense of meaning, which is beyond money. 

By the way, I do not think that every organization should have a purpose. Just making money is fine if you want a good purpose with a small “p.” However, in my observations, if you want to make a lot of money for a long time, then you need a Purpose. You just cannot sustain the loyalties of many stakeholders or employees for a long time just by telling them about your share price. Secondly, the more you talk about money, the evidence, I think is abundant, the less you are likely to make, because basically you know you are telling people about your interest without listening to what they care about, which is at least high salaries that decrease the money that you make.

KE: In your book you described four specific kinds of purpose. Let’s review them briefly.

 NM: I have studied the moral philosophers. What is a good purpose and what is not a good purpose, is after all, an issue not of economics but of moral philosophy. On the basis of those studies, the four enduring purposes include:

Discovery - of pursuing something new, as advocated by the Greek philosophers.

Excellence - which has been widely advocated as the only purpose by Aristotle and his followers. 

Altruism - which has been packaged and worked on by the Anglo-Saxon philosophers, by the likes of Hume as a philosopher, and Adam Smith and is about helping people. Heroism - the notion that the superman or superwoman that Nietzsche admired so much, can change the world. 

Now aligned to those four purposes, one can find many successful companies. When it comes to Discovery, a company that comes to mind right away is Sony. Masaru Ibuka, the founder of Sony, said that what he did, he did for the purposes of the joy of creating technological innovation. When it comes to Excellence, I think of Warren Buffet and his reference to the “thrill of outstanding performance.” Then, on Altruism, I insist despite several objections, that Sam Walton of Wal-Mart, in the early days at least, was trying to make millions of people to be better off. And, as an example of Heroism, when it comes to building a machine to improve the world, I think Henry Ford and Bill Gates can claim that they had this purpose.

KE: Currently Ford is experiencing a lot of financial trouble. Does that indicate to you a sign that they have lost their purpose?

NM: The succinct answer is yes, and I assume the fact that they lost their purpose quite some time ago. I think Henry Ford had, in the thirties, the purpose, the strategy, the organization, everything beautifully aligned and it worked, and he created, quite frankly, enormous wealth and good for society. People have forgotten, but it was Henry Ford who introduced the $5 minimum wage,which was a great social achievement of the times, it was Henry Ford whose ingenuity about industrialization has taken millions of people, if not billons out of poverty, and has saved us from the diseases of having animals in our cities. So, Henry Ford made enormous contributions, but at some point, he lost the ability to have a strategy that was aligned with the purpose. In came GM, understanding the American environment, at least at the beginning, and understanding that the consumer wanted choices versus dictates.

KE: Do these four categories translate to purpose for individuals as well?

NM: Yes, as a matter of fact, I talk a lot about this in the second book I am writing now. There is no question that each of us has a dominant psychological disposition and there are four Jungian categories, with due respect to the great Austrian, which are a repackaging of Plato. “Magicians” are very suitable for discovery, and “Sovereigns” are very suitable for excellence, and one needs “Lovers” for altruism and “Warriors” for heroism. So, there is a matching of psychological characteristics and purpose of a firm, and quite frankly, if this is not taken into account, the top team of the firm cannot be optimally constituted and this is the area where Panthea, my firm, is consulting some large organizations around the world.

KE: So in other words, it is important for organizations, at least at their senior level, to have leaders who personal purpose is in alignment with their organization, is that what you are saying?

KE: Let’s continue looking at these four types of purpose. What might be some other examples, say, in the technology space?

NM: Let’s take Microsoft, for instance. As I mentioned earlier, I would dare say that our friend Mr. Gates is definitely and squarely a heroic personality as is his company. He is out there to combat the competition and sometimes the competition is a company, and sometimes the competition is a disease, as with his foundation work. I would suggest that Apple is about excellence and Google is about discovery, and Dell is about heroism again. What is difficult, of course, is in the IT world, to find altruistic examples, and Linux, I suppose is an example.

KE: Nikos, is there one kind of purpose that drives financial success more than the others do?

NM: Yes, there is no question that a company that has a heroic purpose, because this is extremely compatible with economies of scale and the strategy of low cost, is more likely to produce a huge amount of money for the shareholders. Having said that, I think we have excellent examples of companies of excellence that have fared very well. Consider Warren Buffet’s Berkshire Hathaway. That is a corporation that is really populated by a very small number of people that can produce huge returns to shareholders. So, heroism makes for heroic earnings if you want, but it is not necessary.

KE: So, heroic purpose may drive returns even a little higher than the others, but if you are really good at living your purpose in any of those quadrants, you can have a successful and enduring organization.

NM: Exactly, I mean Disney with altruism has done pretty well, and IBM with its commitment to excellence and others, who just believe in discovery, like Virgin.

KE: How might companies go about discovering the purpose?

NM: Well, first of all, I like the fact that you are using the term “discovering” purpose, not to be confused with “Discovery” as one of the four types of purpose. I like the word “discover” because it is not like you can create a purpose overnight. A very, very quick and dirty way is to use the profiler, which I highly recommend. It is in my book, it is free and people can go and see what is the purpose of their organization (www.purposethebook.com) In my consulting projects, it includes interviewing the top team, taking inventory of the strategy, understanding the assets of the firm and the history of the firm. Once you have the history, people, and assets information, you can triangulate and easily arrive, you know, with not much straining, at what the purpose is and whether it works or does not work for a firm.

The oxymoron about purpose is that purpose is a goal, but purpose is also a means, it’s a goal that keeps people mobilized, but it is a means also to make money on a sustainable basis. So, once one arrives at purpose, one has to check relevance of the purpose for today's environment to see whether a transformation is needed. The questions that are material here are: How does the purpose compare with that of competitors? How does the purpose fit with the existing assets? (We may have the right purpose, but the wrong assets, or vice versa.) Does the purpose allow for a viable strategy?

For instance, if you are in an industry that now requires a low cost strategy in the matter of who are you, except if you are one or two guys, and you don’t have a heroic purpose, something has to give, or the coupling doesn’t work. So, these are the hygienic questions about purpose, and then there is a second level of analysis and application that has to do with how to use purpose to drive transformation. Or, what to do if you are confident that you do have the right purpose and something else is wrong. Maybe you have the wrong leadership, strategy or communication problems, or your organization has structuralor process problems. 

KE: You mentioned an organization’s purpose in relation to their competitors. What works best for a particular company– is it better to share the same purpose as competitors, or to be unique?

NM: Well, that’s an easy one and quite frankly, I am wondering why more CEOs don’t ask the question that you so kindly and wisely put on the table. The answer is that you are much better served if you are an animal of your own; if nobody else has a purpose that you are aspiring to. If another competitor shares your purpose, and has a better product line or strategy, you are at very high risk. On the contrary, if you are a different animal from your competitor, chances are that you might survive. So convergence of purpose is a very, very dangerous thing, especially for the smaller of the competitors, or those less aligned to their purpose. 

KE: I was thinking of Virgin Airlines, where Richard Branson walked into an airline industry that was already very crowded and yet found a way to really distinguish itself, based on a purpose of Discovery.

NM: By the way, if you allow me, you are touching on exactly 25% of the success story. The bridges or levers by which purpose moves a company from good to great are four. First of all it increases morale. So morale by itself is 30% of the capitalization. Take company A vs. company B, everything the same, A has purpose, B doesn’t, believe me A would be higher in the stock market. So morale by itself is a lever. The second thing is as you said; competitive advantage can be extremely aligned by purpose. You couldn’t have been more eloquent by describing Branson, I mean he came into an industry that was crowded, and where most airlines want to be heroic. Unless he had full alignment to a purpose of its own, he would never have flown the first airplane.

The third big lever of purpose for providing companies advancement is through innovation. People write volumes and volumes about innovation but they forget something, with all due respect, I find obvious but not trivial. Innovation is politically risky, especially in big firms. I think nine out of 10 innovators I have met in my career as a consultant have been fired because innovation in any case is wasteful, and in most cases, by definition does not work. The reason there are so many innovations during wartime is not because people all of a sudden become smarter, it is because they don’t care if they get fired. In normal circumstances, unless there is a corporate purpose such as that of 3M, encouraging people to take risks and protecting those who do, why should they innovate?

Last but not least, unless there is clarity of purpose, one can never really have a leadership team. One can have a group of people trying to lead the organization, but unless they are united for something that goes beyond themselves, their lack of purpose will become transparent and they will never become fully energized, much less a fully energizing team for others. So, purpose is important for competitive advantage as you said, but it is also very important for stimulating innovation, for morale and as a ray of leadership. As such I think it is probably the most undervalued concept in business literature these days. I think the head of HR is the natural gatekeeper of the leadership agenda of the firm and the introduction of purpose makes for a true undertaking of many of these issues.

Audience Question: Nikos, what can damage a company's purpose? 

NM: One word, more than anything else, greed. Frankly people don’t understand that to make good money, it takes some time. We need to ask ourselves, what do we stand for? For what do we want to be remembered? What is unique about this company? These are the questions that are more important to people than we realize. We all like money, but we don’t live for bread alone.

For those interested in knowing more about Purpose, you can visit www.purposethebook.com and find out more information there, purchase the new book by Nikos Mourkogiannis called Purpose: The Starting Point of Great Companies.