WHAT IS THE PURPOSE OF THE USTA? By Javier Palenque

(The article below is an adaptation to tennis of an HBS Executive education article on Deep Purpose Organizations published the week of October 3, 2022, in HBR- executive insights)

?Earlier in the year, I read a book called “Deep Purpose” by Harvard professor Ranjay Gulati. I encourage anyone working in the for-profit business and most certainly the USTA executives to read and study this book. It would do tennis in America much good if they cared to learn some of the key lessons professor Gulati tries to teach and convey.

Nonprofit organizations are driven by their foundational purpose—a core mission to benefit society in some way. That mission inspires every action the organization takes. ?One would think that this statement should be the driving force behind a not-for-profit and certainly the USTA. Unfortunately, the opposite is true, the USTA states a mission, yet measures everything except the impact of the mission. This fact alone should tell you that there is a major problem at the board level and the executives who are not held accountable for the mission they claim they uphold. It makes no sense to keep track of the profit margins of “Honey Deuces” and not the impact of lack of participation by age, zip code, and race in the 42,000 zip codes the USTA is entrusted with growing. The lack of metrics is by design so there is never bad news to report to the fans. Therefore, the executives with the blessing of the board, conflate participation levels of never-before-heard numbers, from third parties and never from the USTA data itself. This is creating and conveying a false narrative of the state of the sport.

For a long time in America, conventional wisdom held that a company’s purpose was simply to turn a profit and deliver shareholder value and that companies operating in free markets would naturally tend to serve the public interest. In recent decades, however, that perspective began to shift, with executives increasingly becoming skeptical of the capitalist system and traditional business “best” practices. This caught the notice of Ranjay Gulati, Paul, and R. Lawrence MBA Class of 1942 Professor of Business at Harvard Business School, who found himself in more and more conversations with executives looking for advice on how they might achieve meaningful social impact. Just for illustration purposes, tennis should measure its social impact of the benefit of the game being played by everyone, everywhere.

While he had initially dismissed the notion of corporate purpose as nothing more than a superficially deployed promotional tactic, Gulati began to think it might deserve another look. In a study of sustainability programs, he was surprised to discover that some companies that pursued a clear social purpose—even when the economics did not seem compelling at first—were realizing significant profits. Could firms successfully pursue both commercial and social goals at the same time? Could a more ambitious purpose boost financial performance?

These questions led Gulati to uncover earlier research studies, which suggested a positive relationship between a deeply embedded corporate purpose and financial performance. Encouraged, he embarked on a painstaking study of companies across industries and geographies, examining hundreds of company purpose and mission statements and interviewing more than 200 executives. This work became the basis for his most recent book, Deep Purpose: The Heart and Soul of High-Performance Companies.

THE NATURE OF DEEP PURPOSE

Gulati’s research showed that companies for which purpose is foundational—what he calls deep purpose companies—are deeply committed to positive social as well as positive commercial outcomes. By focusing on their purpose and resisting the temptation to prioritize short-term profits over long-term gains, companies can deliver significant benefits to employees, communities, and society, while increasing business value. Results include better strategy making; a highly engaged and passionate workforce; and tremendous loyalty from customers, suppliers, and other external partners.

These companies have certain characteristics in common. For example, they view purpose as a unifying statement of the commercial and social problems a business intends to profitably solve for its stakeholders. This statement encompasses both goals and duties, and succinctly communicates what a business is all about and who will benefit. But for these companies, the purpose is much more than a statement. It is an existential intention that informs every decision, practice, and process—a vital, animating force with near-spiritual power.

“Deep purpose leaders ultimately don’t conceive of purpose as a mere tool,” says Gulati. “To them, the purpose is fundamental, a statement that defines the firm’s very reason for being.” Would it not be nice if the purpose of the existence of the USTA would be not to hide behind a false mission and have a two-week entertainment event for wall street types, but to use the power of the sport, and its customers to make American kids better off and have a significant social impact given the massive funding and opportunities to help underserved kids? Of course, the answer is yes, especially if we consider that the most representative stars that America has ever produced were middle to lower-income families. Williams, Connors, Agassi, etc.

CONVENIENT PURPOSE

Most companies state a purpose—perhaps even a quite aspirational one—but the depth of that purpose and its impact can vary widely. While many companies are driven by true deep purpose, most have established what Gulati categorizes as three levels of convenient purpose:

• Purpose as disguise: Purpose is a side hustle that distracts observers from the harm a company does (to health, the environment, etc.) in the ordinary course of doing business. In the USTA’s case, it tries very hard to position itself as a progressive and socially responsible organization, when a simple look at its finances and resource allocation tells you that the stated mission is the least of its priorities.
• The purpose on the periphery: Purpose is an ancillary goal, often relegated to corporate social responsibility (CSR) initiatives, always taking a back seat to profitability. In the USTA’s case, the purpose is always on the periphery as they believe that the social responsibility to the underserved classes is not for them to care for, even though that is exactly what they convey to the public. Simply look at their budget for the foundation and their budget for marketing or professional services and the truth is unveiled.
• Purpose as win-win only: Purpose is struggling for equality with other goals. While the company formally considers the social impact and commercial value equally important verbally commercial results eventually take precedence. All you must know is that for the commercial part of the organization, the debt level is $726M, for the mission part, there is no debt of any kind or revenue of any kind other than the paltry amount the USTA gives to sections a mere $53M for 17 sections and $50M of this amount is used for administrative payroll.
• For convenient purpose firms, the purpose is often just a means to an end—the end being profit. While companies in the win-win category are more admirable than those in the first two categories, they still have far to go. When forced to choose between financial performance and social good, these companies tend to focus on meeting the expectations of the shareholders. Here in the USTA’s case, it is worse as the organization has losses of over $200M, which of course tells you that they are overstaffed and misallocating the resources it receives. So, it is a lose-lose for the USTA, the exact opposite of what it should be a win-win.

MOVING TOWARD DEEP PURPOSE—WHAT LEADERS CAN DO

• Transitioning from convenient purpose to deep purpose is a significant effort—but one that is increasingly on the minds of today’s executives, especially at a time of global conflict, economic disparity, and concerns about the climate. Companies and leaders can start by reflecting more seriously on purpose as a foundational principle for organizing, examining the company’s reason for existence, and determining what it intends to accomplish over the long term.
• Gulati emphasizes that a strong purpose always takes a moral stand. “Leaders should recognize that an organization’s purpose is intrinsically moral, expressing an implicit or explicit critique of the world—something needing to be addressed,” he explains. “While business leaders have tended to shy away from moral issues when they take a principled stand, they are bringing humanity back into the business. To make that principled stand more than a mere statement, they must commit themselves to do the hard work of imbuing business dealings with meaning and moral sense.” Growing the sport should be the only purpose of the USTA.

That hard work is the purpose behind Gulati’s book, which lays out a framework for evolving a deep-purpose organization. Becoming—and remaining—a deep-purpose company is a comprehensive, ongoing process—not a discrete initiative. It can ultimately involve a fundamental reshaping and reimagining of the business, which may seem overwhelming. Leaders can take small steps, starting with actions that seem most relevant to today’s business challenges, to evolve the company’s view of itself and its role in the greater world. America is new and changing fast, the reach of the sport is minuscule, and it is in danger of becoming irrelevant. It is time for the board and leaders to stop and think that the purpose of the best-funded sports not for profit cannot be to have a two-week show for Wall Street types, but rather to use the sport as a means of improving America through the sport and broadening opportunities for all Americans who love the sport, of course doing this while keeping the show for wall street types. Otherwise, the market simply becomes so small and insignificant that it lacks traction in the culture in general.

?Translating Purpose into Action

Here are some actions that the USTA can take to evolve into becoming a more purpose-driven organization, one that helps our youth and country be in a better place in the future through tennis.

1. Take stock: Challenge your existing purpose statement and embrace a new understanding of purpose. If we don’t help, we are not serving anyone other than ourselves, then a nonprofit you should not be.
2. ?Lean into trade-offs: Clarify trade-offs, communicate them, consider the long term, and make decisions using your purpose as your “North Star.” The purpose can only be to “grow the game”. Putting a two-week show for Wall street seems purposeless for a not-for-profit. Remember the board chose the not-for-profit designation, why if all it does is for profit?
3. ?Align core business actions with your purpose: Build purpose into key conversations about strategy, talent management, branding, partnering, and more. Trying to develop a star and wasting in the last decade $250M to entertain Wall Street seems as foolish as foolish can be.
4. ?Foster the growth and evolution of your purpose: Look back and look forward. Study the roots of purpose in the organization’s past, periodically stress-test your purpose, and train people in principled decision-making. The more money the USTA made the less important the mission became, and the fewer players chose tennis.
5. ?Exemplify purpose-driven leadership: Craft and tell the stories that dramatize your organization’s purpose. Live the purpose in everything you do. Hard to spend 52 weeks trying to plan how to entertain Wall Street types. That is a business, not a not-for-profit, everyone knows this.
6. Make the personal purpose connection: Encourage everyone (including yourself) to examine their purpose and connect it, in unique ways, to the corporate purpose. When the CEO and the in-house attorney make as much money as what the false not-for-profit gives its foundation, you know it's all wrong. Looking the other way does not make it right, ignoring the critics and blocking activists also does not make it right. It is just a bad business model that is not sustainable for the sport.
7. ?Revisit your current organizational design and processes: Allow more autonomy in pursuit of purpose. Disrupt silos and improve coordination and cooperation in pursuit of purpose. Only new leadership can achieve this, very hard to do if the board chooses a status quo guy that does not know tennis or understands the mission.
8. ?Continually nurture your purpose: Monitor the organization’s commitment to its purpose and keep it from eroding. Inject purpose into succession planning. Identify purpose-driven metrics and monitor performance concerning all stakeholders. There is nowhere to hide USTA, nowhere to hide. Your results are poor under any metric.
9. Bring a team of people who understand how tennis should be run. Continuing with the same executives that created the problems is foolish and is only going to repeat the poor results we have today, enormous debt, and big losses that are the consequence of poor management. This is a fact that you must contend with. To top it off these executives have no idea what the purpose is at all, other than preserving their jobs. This is your indication that the status quo is a proven failure, why repeat it once again?

Maybe through a few lines, I can convince a few board members that the status quo is once again failing the sport, the country, the clubs, the coaches, the parents, and the kids. What is the purpose of the USTA may I ask?

I think it is time for new leadership at the helm of the best-funded not-for-profit in the world that has the oldest adults and the least amount of kids playing the sport. Certainly, a very poor demographic for the sustainability of the US Open itself. I hope the leadership realizes that what they are doing has been and continues to be wrong.

I can be reached at jpalenque@yahoo.com