Most corporate strategy today suffers from three faults:
- It is too internally focused – we are obsessed with how we operate on a day-to-day basis.
- It is incremental – let’s take last year’s results and see if we can improve on that by 2-3% next year.
- It is reactive – when we see a problem or an opportunity, we react with knee-jerk initiatives. It is easy to see why this approach leads to unfulfilled visions, sluggish performance and uninspired teams.
How can companies become more focused on the outside world and its opportunities? How can we take big leaps rather than small steps? How do we become proactive and ready to lead our industries?
Our research shows that putting purpose at the core of corporate strategy is a critical driver of growth, profitability and organizational relevance. To achieve this, purpose must play two distinct roles to:
- Redefine the playing field – beyond traditional boundaries to grow and transform the ecosystem
- Redesign the value proposition – beyond transactions to foster deep and wide customer relationships that endure.
Redefining the playing field enables companies to avoid market share battles and pursue growth with the logic, “we grow by growing the ecosystem.”
Consider the case of US-based Mars Petcare. Its purpose of creating “A Better World for Pets” provided impetus for it to extend its ecosystem from pet food to pet health and pet care. It invested in systematic acquisitions of several veterinary hospital chains in the US to become the largest American veterinary operator. Significant synergies soon emerged between the food and pet health businesses. The company now seeks to grow by enabling wider pet ownership, making it a seamless, convenient and fun experience. All these moves have contributed to Mars Petcare becoming Mars Inc.’s largest as well as fastest-growing business segment.