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I by IMD Book Club

Business

Creating the organization of the future 

IbyIMD+1 September 2023 in I by IMD Book Club

Bernie Jaworski, author of Creating the Organization of the Future, discusses the critical importance of crafting a clear mission, vision, and purpose for your firm. ...

Companies are increasingly putting purpose at the heart of their organization, yet many still struggle with how best to communicate this to their customers and stakeholders. A major stumbling block is a lack of clarity on the question of, “What business are we in?” and relatedly, “How do we know when we have achieved our mission and purpose?” said Bernie Jaworski, who co-authored Creating the Organization of the Future with Virginia Cheung. 

Speaking at an I by IMD Book Club event, Jaworksi outlined five so-called direction-setting choices organizations must make. These encompass the firm’s mission, vision, purpose, values, and culture. The first three choices inform industry choice, the specific enterprise-wide vision, and how the firm helps society function. The next two choices – values and culture – set the guardrails on how to achieve the mission, vision, and purpose.  

For a company to be successful, individual employees also need to understand the purpose, mission, and vision of the company and how this matches their strengths. 

Against a backdrop of economic volatility, rapid advances in technology, and growing uncertainty, having a clear purpose, mission, and vision become more important than ever, said Jaworksi. 

“I think we’re in a very turbulent time. With Chat GPT, COVID, and the world becoming more complicated, the timing is right for us to be asking questions related to who we are. Where are we going? What do we want to accomplish?” 

Build a mission statement 

The first step for organizations is to build a mission statement by thinking about what business you are in. Jaworski cited the example of Disney, which has a wide variety of TV channels and theme parks. Instead of restricting its mission to the products and services it offers, Disney describes itself as being in the business of storytelling. This is important because even if their products and services are constantly changing, their mission – to tell great stories – remains constant. 

Moreover, a good mission statement should be focused on a particular portion of the marketplace your company believes it can uniquely serve. 

Ideally, it will be short and inspirational. “People should read it and say: ‘I can’t wait to work for that company,” said Jaworksi.  

Set an organization’s vision 

When considering a firm’s vision statement, executives should ask the question, “What will the world look like when we have accomplished our mission?”  

To do this, it’s important to imagine the future in five to eight years’ time and consider how to create a narrative where your workforce, shareholders, and other key stakeholders can see what the world would look like as a result of the company completing its mission. 

“There are a couple of criteria here,” said Jaworksi. “You’ve got to articulate the ‘clear end state’. You can’t be ambiguous about what you’re trying to achieve but it still has to be attainable. 

“It can be challenging, and it has to be distinct from your competitors. You’re motivating people to get to an end state where you’ve got a vision and a narrative that is one that people see as distinctive from your company.” 

Habitat for Humanity is a demonstrable example of this. Their mission is to aim for “a world where everyone has a decent place to live”. This is concise, powerful, and has a clear end state. 

Define the purpose 

Gone are the days when organizations should focus simply on making a profit for their shareholders. Increasingly, firms believe they have a moral and ethical responsibility to contribute to society. 

When coming up with a purpose statement, it’s important to ask, “Is society better off as a result of this company’s existence?” 

The purpose statement should ideally come from both a cognitive and emotional standpoint. It should energize those who come to work for you every day by clearly connecting the dots between what the company does and its impact on society. 

Johnson and Johnson clearly answer the question, “Why does the firm exist?” Their purpose is, “We blend heart, science, and ingenuity to change the trajectory of health for humanity.” This connects the three dots to social impact. They are committed to using their reach and size for good and this is clearly shown. 

Craft organizational values 

Typically, if you look at value statements, they include a combination of specific ones as well as ones that are unique to that organization. For example, many organizations say they value teamwork or being customer-centered. However, this doesn’t really distinguish them. The more specific you can be the better, particularly if you are able to connect these values to specific behaviors. 

Edward Jones, an investment firm in the US, has strong organizational values. Their clients come first, and they believe in a quality-orientated, long-term investment philosophy. This is reflected in their 15,000 branch offices and over $1 trillion dollars’ worth of investments while focusing on individual, long-term conservative investments (not institutions). 

Shape the firm’s culture 

When culture is an essential part of business practice, workflows and habits take shape.  

In some cases, the culture is invisible, and you’re trying to figure out what the culture looks like. If you join a company with a very strong culture, after one week on the job you’ll know what that culture is. A strong culture is one that’s actually deeply embedded and lived inside the company by its employees.  

Culture identifies tension points between cultural elements. Take the example of a team-based culture which might be all about winning. The side effect of this is that there will naturally be people in the organization who are perceived as, or feel like, the losers. 

Netflix are the classic example of this, and it is embedded throughout their whole company’s approach. They are there to win, and if that suits your mindset then you can thrive there – though it may not work for an individual who prefers to be part of a more family environment. 

Costco, on the other hand, have a people-first culture. They are a great example of a firm that focuses on employee satisfaction, internal collaboration, employee training and growth, and a learning environment. They say, “We are not offering jobs, we are offering careers,” which reflects how the company believes it will succeed – and why. 

Conclusion 

By getting a good grasp on these five fundamental elements, you have the opportunity to create your organization of the future. 

Expert

Bernie Jaworski

IMD Visiting Professor and Drucker Chair in Management, Claremont Graduate University

Bernie Jaworski is a visiting professor at IMD. He has worked with IMD in a variety of capacities since 2012. He has taught a range of topics including leadership, corporate strategy, marketing, leading professional service firms, and the philosophy of Peter Drucker.

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