How Can An Organization Move From Profit To Purpose Driven?

Change is required to survive and thrive in the twenty-first-century economy.

A prominent Canadian pension plan company recently announced its intention to shift from being a profit-driven to a purpose-driven organization. The change feels unparalleled from a company whose sole existence hinges upon its ability to generate revenue and create profit, and a pivotal question remains — is the transition possible?

If change is required to survive and thrive in the twenty-first-century economy, why is profit-driven no longer a viable way to work? And what does purpose-driven mean, if not some aspirational lofty and unattainable goal? In this article, we answer these questions through the lens of Stephen Denning, Neil Perkin, Michael K. Spayd, and Michele Madore. All of them are today’s go-to thought leaders in the area of organizational development and agile transformation.

Good-Bye Bureaucracy

Stephen Denning, a Senior Contributor for Forbes who writes about 21st-century leadership, agile, innovation & narrative, authored a thought-provoking research paper on Lessons learned from mapping successful and unsuccessful agile transformation journeys. In his paper, he describes how the traditional organizational structures emerging from the industrial age into the twentieth century are bureaucratic, holding distinct behavioral patterns, reminiscent of the vertical world of tall skyscrapers in New York City. According to Denning, hallmarks of bureaucracy include:

• Strategy set at the top.
• Tight control from the top; power trickles down.
• Big leaders appoint little leaders.
• Individuals compete for promotions.
• Compensation correlates with rank.
• Tasks are assigned, communication flows down, as do instructions.
• Rules tightly circumscribe discretion.
• Make money for shareholders.

In his Forbes March 2019 article, Dennings elaborates how the traditional model is fraught with challenges, the once-dominant conventional business model of bureaucracy is in decline:

The dynamic was conservative: to preserve the gains of the past. The workforce tended to be dispirited. The firms had a hard time with innovation. They are still being systemically disrupted.

Neil Perkin, the author of Agile Transformation, Structures, Processes And Mindsets For The Digital Age, supports Dennings quest for a new operating system in today’s organizations:

Digital technologies have impacted in countless ways to create a climate of rapidly changing competitive and consumer dynamics, heightened unpredictability and disruptive new market entrants, and yet many businesses remain stuck. Stuck in outdated modes of working that keep them from moving fast. Stuck with structures that originated in a different era and that actively hinder agilty and horizontal collaboration. Stuck with processes that make bold innovation difficult if not impossible. Stuck with cultures that reward conformity and status rather than entrepreneurialism and originality. Stuck with approaches that celebrate efficiency over learning.

What resonates with Dennings and Perkins is an immediate call to action, for organizations to “wake up” before the tidal wave of nimble, hungry disruptors take over, decimating the old guard in their wake.

To prevent the tsunami, organizations must possess raw self-awareness of their current operating models. One way of performing the self-assessment is to consider the altitudes found in the Integral Operating System as discussed in Michael K. Spayd and Michele Madore’s book Agile Transformation, Using The Integral Agile Transformation Framework To Think And Lead Differently.

The bureaucratic style described by Dennings and supported by Perkins is represented by the following characteristics as found in the lower altitudes on the Integral Operating System:

Conformist-Amber Altitude

• Processed focused; belief there is one way of doing things.
• Focus on order, control, predictability.
• Fixed hierarchy with formal job titles.
• Planning happens at the top, execution on the bottom.
• Workers need direction and are unable to make decisions for themselves.
• Distance from expressing genuine feelings.
• Social belonging becomes more figural for employees as opposed to self-expression.
• Donning of the social mask, internalize behaviors associated with people of rank and file.
• People associate with those within their hierarchy, never engaging with others at a higher level.
• Strong silos based on business function.
• Command and control vested in a given role like a general in an army.

Let’s return to the investment company example. Spayd and Madore aptly demonstrate how society has a genuine need for order found in the Conformist-Amber Altitude:

Further, there is a deep vein of honor, duty, and service in the Amber altitude that enables the human spirit and is the very foundation of civilized society. Without structure like regulating bodies, and rules and laws, social discourse and commerce become impossible.

How, then, can a fund management company shift from the bureaucratic Conformist-Amber Altitude into one encompassing a purposeful operating model — while still generating profit? While the challenge feels daunting, Dennings, Perkin, Spayd, and Madore each offer a pathway of hope.

Hello Purpose

Stephen Denning’s research paper Lessons learned from mapping successful and unsuccessful agile transformation journeys coins the new twenty-first-century disruptive evolutionary process as the post-bureaucratic management style of “The Creative Economy.” And within the Creative Economy, we find the organizational raison d’etre oriented towards possessing a purpose. Common characteristics of the purpose-driven Creative economy are:

• Focused on continuous innovation.
• Delight customers.
• Produce solutions for the jobs they need to do.
• Agile management processes promote a continuous innovation system is enablement rather than control.
• Processes are designed to liberate the full talents and capacities of those doing the work.
• Ability to understand and create the future.
• And above all else, making money is the result, not the goal of its activities.

In the case of the Canadian fund management company, when a cultural shift sheds heavy processes in favor of nimble, iterative, agile, and customer-obsessed, much greater freedom can be achieved. The future is sustainable and can weather the storm of disruption on the horizon by fintech companies itching to rattle the entire ecosystem.

Where Denning provides the meta-view of what is possible, Neil Perkin helps us understand how to shift into the mindset required for the digital age. Perkin sums up the strategy in five words — “start small to scale fast.”

With any change in habit, when we focus on micro-changes over time in an environment where experimentation and failure are permitted, the risk impact is much lower than a big bang approach. Innovation happens through failure and the ability to quickly pivot when a new solution to a complex challenge is discovered and iterated upon.

Michael K. Spayd and Michele Madore further build upon Denning and Perkin’s work and articulate the process of “transcend and include” from an amber orientation to that of a Pluralistic-Green Altitude, which we will get to in a moment. Spayd and Madore define the progression as “transcend, negate, include and destroy” whereby:

transcending the limitations (of that altitude), including the healthy, valuable, or partially true aspects of that altitude, negate the unhealthy (no longer valuable) aspects, and destroy (break down or move beyond) the boundaries that limit our thinking.

Now that we understand the lever that organizations must undertake to move from one altitude to another let’s look at the characteristics of the next level after Amber, that of the Pluralistic-Green.

When an organization such as the Investment company wishes to embark on the movement away from Amber to Green, the action signals a wake-up call. Amber, as Spayd and Madore aptly describes:

can take us only so far in our complex, interconnected, diverse post-modern world.

Organizational self-awareness and a hunger for change allow migration in altitudes to occur.

Pluralistic-Green Altitude

The following behaviors are present within the Pluralistic-Green Altitude:

• A search for belonging and inclusion over success.
• People-oriented and relationship-driven rather than goal-driven.
• Preference for bottom-up processes.
• Consensus-driven decision-making.
• Worker empowerment with decision-making abilities.
• Validate different ways of thinking from different people.
• Servant leadership.
• A greater emphasis on company culture.
• Stakeholders encompass more than shareholders and may include employees, customers, suppliers, society, and the environment.
• Corporate social responsibility permeates throughout the culture.
• Value-driven culture.

In the Pluralistic-Green Altitude, we see a direct correlation to the Agile Manifesto value of “people over process,” whereby relationship building is at the heart of every conversation and decision. People become the sole purpose of enabling the organization to not only survive but thrive.

The well-established Canadian pension plan has a long journey ahead and, at times, will meet resistance while the company navigates from the choppy waters of Amber to the calmer Green Altitude seas.

With small, incremental changes, over time, the shift from profit to purpose-driven is possible; otherwise, the behemoth companies which rose in prominence in the last century will become shipwrecked, the parts salvaged for scrap.

References

1. Denning, Stephen. Lessons learned from mapping successful and unsuccessful agile transformation journeys. Research Gate, (June 2019)
2. Perkin, Neil. Agile Transformation. Structures, Processes, And Mindsets For The Digital Age. Kogan Page Limited, 2020.
3. Spayd, Michael K, Madore, Michele. Agile Transformations, Using The Integral Agile Transformation Framework To Think And Lead Differently. Addison-Wesley, 2020.

The original story was published on Medium 06-02-2021

Lisa Bradburn is transitioning into an Agile Coach and is a Gestalt Psychotherapist-In-Training. She writes about the intersection of technology and the human condition. Follow Lisa on Medium.