An firm’s purpose is comprised of several elements —your vision for the future, your current mission, and your company culture and values. A well-designed purpose is memorized by staff, so it should be intuitive and short. Historically, a “tagline” has helped many companies define their purpose.

 

The book Good to Great by Jim Collins provides a practical map to developing a firm’s purpose. One of its key points is the Hedgehog Concept, named after the parable of the fox and hedgehog. The fox uses his creativity and quick feet to find his next meal, but he rarely outfoxes the hedgehog. The Hedgehog concept is the intersection of what you are most passionate about, what you do best in the world, and what keeps your company solvent. It is a “simple, crystalline concept”—otherwise known as a purpose statement. The Hedgehog arises each day hungry (passion), sets out to forage with laser focus (solvency), and use his defenses—his quills and his flexible spine—when the fox approaches (best skill). The hedgehog knows his purpose.

 

The companies profiled in Small Giants by Bo Burlingame repeatedly show how strength of purpose can lead to greatness. They all nailed purpose on the head. Their purpose was to be world-class companies in their niche and remain relatively small. They didn’t wander into tangential areas and they refused buy-out offers. These companies identified their purpose again and again, made sure their team knew the purpose well, and waltzed into the business hall of fame.

 

How will you know if your purpose needs refinement? You have high turnover, your team spends time on tangents, and typically profits are low to non-existent. When staff knows why they are present and you have clear buy-in, they have a loyalty that you cannot imagine. The human spirit is bent on seeking purpose—and your staff is full of that spirit. Your job as a leader is to stoke the embers and connect them with the fire. Giving regular pep talks, encouraging those who exemplify the purpose, and providing direction that makes reference to the purpose are just some of the ways successful business leaders lead with purpose.

 

In summary, make it a habit to spend time on company’s purpose. While this is best done every day in every interaction, a periodic review is worthwhile. The cycle to consider for this work is an annual refocus, and in young companies a mid-year review as well. In that case, your total investment is 8-16 hours per year