Companies Need To Look Beyond Purpose To Find Their Soul

The concept of “purpose” in business — while receiving a lot of attention lately — has, as Ralf Specht points out, been around for some time. And, while he is anxious not to question its value, he suggests that it has become a little too much of a focus in itself. “Very often it feels like, once you get purpose sorted everything will fall into place,” he says. “For me, purpose is a means to an end.”

And that end is building organizations with “corporate soul.” He concedes that this might open him to the accusation of being “too airy fairy,” but he insists that this is not the case. Instilling soul in organizations requires being firm and making tough decisions. Indeed, he says that talking about things like purpose and principles is a waste of time if leaders continue to incentivize the wrong behaviours.

Specht is not some fresh-faced consultant. He came by his ideas the hard way — working in advertising for some of the biggest names in the corporate world before leading his own highly-successful joint venture. He had always thought that corporate culture was important, but it was when he left the joint venture and reviewed the feedback he had received from colleagues that he “realised there was something here that’s more important than anything else.” This led to the just-published book Building Corporate Soul and the consultancy and website of the same name. 

Purpose is, as he says, the starting point. It is vital. But just stating that is not enough. Far too many organizations fail to share it or properly embed it within themselves so that there is a clear commitment to it that manifests itself as a shared understanding of how and why things are done. This leads to the shared behaviours — things like How does a company recruits new staff? How does it compensate employees? Who gets promoted? How do leaders reinforce what is important?

The “soul system,” as he calls this, provides a framework to leaders at all levels of the organisation to synchronize these three facets — purpose, understanding and behaviours — so that the leadership behaviors which build soul become synonymous with those that build success. To illustrate this, he has created “the soul index,” consisting of the Top 20 companies meeting his criteria (many of them technological companies, incidentally) and found that they have delivered a 199% increase in market value between 2016 and 2020 — nearly 2.4 times more than the S&P 500. As he says, “It seems to work.”

If there is such a clear link between what Specht is proposing and success, it seems odd that the approach is not more widely adopted. But, then again, this is a complaint often aired by management thinkers and others. For example, Happy, a small training company based in London, has for many years insisted that treating people with respect is not at odds with financial success. But it could be that, after the upending of much conventional wisdom about the world of work over the past couple of years, this is about to change. Having seen that working flexibly and/or remotely does not necessarily destroy corporate profitability, managers might be more prepared to embrace new thinking. 

One firm seeking to influence this is The Kindness Corporation, which has recently released its State of Kind Business Report and found that, among other things, 68% of executives said that kindness was a core component of their business and 100% of them believed that a company could be both kind and profitable.

There, again, earlier this month, the CEO of the unfortunately named mortgage lender Better.com made headlines when he fired 900 employees over a Zoom call. So maybe Specht — who contrasts this with how Airbnb CEO Brian Chesky went about a similar task early on in the pandemic — still has his work cut out.