Purpose Driven Strategies – How the Purpose of an Enterprise Can Drive Successful Strategies

Thursday, 23. May 2019

Post-reporting on the 19th Annual Strategic Management Conference by Horváth & Partners

How to find an inspiring and future-oriented enterprise purpose? Why is the purpose of an enterprise key in today’s business environment? And how can one succeed in positioning an enterprise accordingly in terms of strategy to match its purpose? Strategy experts attending this year’s annual conference on Strategic Management dedicated themselves to those and other questions. Last week, the conference in Stuttgart, Germany, took place for the 19th time already and provided around 150 attendees with impulses and ideas to take a look outside of the box and to make organizations fit for the future.

Horváth & Partners had gathered speakers from renowned companies such as Vorwerk, Daimler AG and Mastercard in Stuttgart, who provided exciting insights into their purpose-generating corporate strategies according to the motto “Purpose Driven Strategies – How the Purpose of an Enterprise Can Drive Successful Strategies”. As a longtime cooperation partner of the strategy conference, SOLYP was there, too, this year.

Purpose Movement in Times of Change

What is Purpose?Right when Dr Tim Wolf and Svenja Stöveken welcomed the audience, the question arose how to understand purpose in the first place. What does purpose stand for, and how does it drive corporate strategy and leadership?

In a world changing rapidly, the only thing that’s constant is change. But how do overpopulation, trips to self-discovery and many more changes affect enterprises and their purpose? The so-called purpose movement has formed in order to inquire about this.

To find a common base for the conference day, organizers and attendees made some tries at defining and translating the term purpose. Not that easy at all, as the huge variety of answers showed. The top 4 answers were meaning, goal, significance and right to exist. On the one hand, this affirmed how versatile the meaning of the term is, and on the other hand, that in practice, it is applied in various ways.

What is Purpose?

In their presentation, Christa Gyori, CEO and co-founder of Leaders on Purpose, dared to try to define purpose, what it actually means and how purpose drives leadership in the 21st century in a trageted way. Purpose described a superordinate goal, a long-term bestowal of meaning. It provided an answer to the question about the meaning of one’s own actions. Therefore, the most important questions were: Why does the enterprise exist? What superordinate goal can it serve?

By recognizing one’s own purpose, it became clear, what drove the enterprise to implement certain points, and therewith provided support with strategic decision-making in a fundamental and intuitive way.

How Does an Enterprise Find Its Purpose?

What to Do Once a Purpose Is Detected? Dr Maximilian Bode, head of corporate strategy and M&A at Vorwerk & Co. KG, offered a glance behind the scenes of the successful company. In his short presentation titled “Customer in Mind, Entrepreneur at Heart: From Purpose to Transformation” he explained how to succeed in finding a genuine purpose in a diversified enterprise. Any enterprise needed to pose two questions: “Who are we: What makes the enterprise unique and authentic?” as well as “What does the world need: What role does the enterprise play in society?”. Purpose derived from the essences of both questions – the superordinate goal. “At the point where your talents and the needs of the world overlap is where your mission lies”, said Dr Bode and ascribed this quote to Aristotle. The path of change was challenging and required courage – to renew oneself as well as to get rid of established things within the enterprise.

It wasn’t easy to draft out the adjustment of the enterprise to a strategic purpose. Once the following questions were answered, an enterprise would decisively come closer to its purpose: What are the strongest motivations? Where is there something wrong in the world the enterprise can help to improve? What are the enterprise and its employees especially good at? What is important to the enterprise and its employees, what are they passionate for? What enthuses employees in particular? Enterprises needed to stand for something beyond their own product and services offered.

What to Do Once a Purpose Is Detected?

presentation at the Horváth and Partners annual conferenceThe purpose found engages employees as well as customers. Furthermore, it’s key when it comes to create shared values, since a purpose is a means to generate a long-term value for the enterprise. With its purpose First Move the World for Mercedes-Benz cars, Daimler succeeded in creating a long-term corporate value. Jan-Michael Graef, Director Finance Transformation Mercedes-Benz Cars at Daimler AG, provided attendees with deep insights. He explained why purpose became important to his enterprise and how they built it up. For example, they succeeded in really integrating strategy and financials by having strategists reporting to the CFO.

Peter Bakenecker, Divisional President Germany/Switzerland at Mastercard, also pointed out how purpose successfully affects the performance of an enterprise. According to the credo Doing Well by Doing Good, they managed to make use of the strength of technology, think in a new way with their own purpose in mind and evolve further.

One thing was clear: Leaders with a purpose were more innovative. In turn, this affected developments oriented towards the future in a positive way. Now, this desired heartbeat of a modern enterprise had to be aligned to day-to-day working life of employees, and the enterprise needed to live up to this. However, purpose on its own was not enough. On the one hand, corporate strategy and planning were adjusted to it, and on the other hand, purpose was also placed into a context of sustainability.

Purpose, Sustainability and Strategy

Annual Conference "Strategic Management"In his presentation, Prof Dr Thomas Wunder, professor for strategic management at the university of applied sciences in Neu-Ulm, Germany, underlined the relevance of sustainable strategic thinking and how sustainable strategic work can succeed – and even must succeed. He put the three circles sustainability consists of into a logical relation: This was the planet (ecological component), the population (social component) and profit (economic component). Considering today’s overpopulation issue and the living standard in Western countries, and regarding a course of development from 1990 to 2014, it was quite obvious: “We are eating up the planet!” The bio capacity available was 1,7 per person – in numerous parts of the world, we were way above that. For example, Northern America had an ecological footprint of 8 per person.

But how to translate sustainability in strategy and action? “By rethinking strategic management!”, said Prof Dr Thomas Wunder. “We change the way of thinking in order to combine strategy and sustainability.” In the short run, enterprises should improve continuously, in the long run, they would transform themselves. In the future, innovations were to determine, how and where value can be created. Even “CEOs’ agendas should be placed into a social-economic context by using technology.” In order to get ready for the future, “the creation of value and risk management will be required to have the superordinate purpose drive profit.“

Guiding Principles for Unbeatability

Annual Conference in StuttgartDr. Oliver Greiner, partner and head of the Competence Center Strategy, Innovation & Sales at Horváth & Partners and Nikolai Brosch, managing consultant at the Competence Center Strategy, Innovation & Sales at Horváth & Partners, presented the results of their Purpose Study 2019 and came to the conclusion that enterprises rarely adhered to a consistent guiding principle. However, a “strong guiding principle is at the center of any good strategy”. In general, a guiding principle needed a mission, a vision, guidelines and values – each of those need to be in line with the purpose of the enterprise.

But how to discern vision, mission and purpose of an enterprise? Purpose went beyond vision and mission. Vision was about WHERE, mission about WHAT, and purpose about WHY. To put it a little easier to grasp: Let’s take a manufacturer of contact lenses, for example. His vision: To be the best supplier of contact lenses. His mission: To provide a broad audience with contact lenses enhancing the ability to see and the comfort of users. His purpose: We would like the world to have a better ability to see.

Another aspect of the topic was presented to the attending strategy experts by Thomas Hitzlsperger, sports chairman of the soccer club VfB Stuttgart 1893 AG and headmaster of the youth training center of the VfB Stuttgart 1893 e. V. He introduced the concept of the youth training center and pointed out the complexity of success when training young soccer talents. “The purpose of the enterprise needs rethinking.” This was the only way to achieve sustainable success.

Our Conclusion:

The Annual Strategic Management Conference provided lots of ideas and food for thought for the future – this time, in terms of purpose and sustainability! In this year, too, mingling with old acquaintances and like-minded strategists was an inspiration. Within our SOLYP display area, we intensely discussed the digitalization of strategic management processes. As a cooperation partner of the conference, we would like to express our appreciation to all the attendees, the host and organizers – we are looking forward to meeting again in Stuttgart in 2020.

Credits (from top):
© Horváth & Partners
© Horváth & Partners
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© Horváth & Partners
© Horváth & Partners