Many leadership teams do a good job of creating compelling missions and visions and shape strategies that help their organizations execute. Some deploy structured planning processes and others use more intuitive, less formal approaches but most fail to define the leadership team’s collective role in executing a strategic direction. When we ask members of leadership teams to articulate their team’s purpose, we often receive incredulous looks and statements like “our purpose is to carry out the company mission” or “our purpose is to execute the firm’s strategy.” Mission and strategy are important components of a leadership team’s purpose but as we illustrate below, they are not sufficient.
Several things happen when leadership team’s fail to define their purpose beyond mission and strategy. First, leadership team members will naturally focus on the parts of the strategy that relate to their areas of responsibility and often without adequate consideration of other units. For example, the marketing lead of a firm with a customer concentration problem created a marketing plan that demonstrated the breadth of services the firm offers while each business line lead developed individual go-to-market plans to attract new customers in their respective segments. Well intentioned attempts to address priorities with a unit focus misses the opportunity to leverage the collective experience and talent of each leadership team member and fails to provide necessary integration from the organization’s most senior leaders. The downstream impact can also be quite consequential as nuanced differences in how individual team members address organizational priorities often results in confusion and units working at cross purposes. Finally, when leadership teams lack purpose, the time they spend together tends to be focused on reporting and sharing information rather than collectively addressing what’s most important. Inevitably the work of the leadership team is seen by team members as less important than their individual efforts.
Beyond the faulty mission-vision assumption there are two other reasons why leadership teams often fail to develop a specific purpose. CEOs sometimes struggle to select among competing organizational priorities. Selecting the wrong priorities risks setting the organization back and selecting too many priorities detracts team members from effectively running their business units. This is a logical concern but the consequences of no leadership team purpose—competing perspectives on how to execute, downstream confusion and operational chaos, inability to leverage the talents of team members—are too significant to ignore. Some CEOs also worry that defining purpose will surface disagreements among team members about the direction of the organization or which priorities are most important. Disagreements exist on any team, especially a leadership team of talented and experienced members. Disagreement should be embraced and discussed openly as it is in these discussions where creativity and alignment will emerge. Avoiding the discussions simply kicks the can down the road as the disagreements will no doubt emerge one way or another and usually in a disruptive manner.
Now that we have made the case for the importance of creating a leadership team purpose let’s discuss a few essential requirements for shaping a purpose that focuses and accelerates an organization.
1. Ensure the purpose is vital. The first requirement is to ensure that the purpose is vital. It is surprising how many leadership teams wind up addressing trivial issues such as planning the holiday party or designing the new office space. The stakes are just too high for leadership teams to spend time on these types of issues. A leadership team’s purpose should focus on a limited number (one or two) of the organization’s most significant priorities (e.g., acquisitions, a serious competitive threat, restructuring, shoring up infrastructure, retaining talent, etc.).
For example, when a community bank began to outgrow its infrastructure—processes were poorly defined, systems were disjointed, roles and accountabilities were confusing—the CEO focused his team. All 500 employees were told that “for the next 18 to 24 months the leadership team will focus the organization on building an infrastructure that will enable us to scale in an efficient, secure and compliant manner.” Often a leadership team’s purpose is quite easy to identify such as when an organization is faced with an immediate threat (e.g., new competitor taking market share, significant loss of talent, loss of a big customer, etc.). Other times the purpose may not be as apparent and in these cases the best place for the leadership team to turn is the strategic plan. The team should evaluate the strategic plan and discuss the priority initiatives that will benefit from their collective talent and leadership.
2. Select priorities that have a cross-organizational impact. Purpose should focus on broad initiatives that impact all or most areas of an organization rather than priorities that can be handled by single organizational unit. For example, the membership VP of a mid-sized trade association took on an important initiative to overhaul the association’s membership database. While essential to the work of her teammates, the leadership team felt that this initiative could be driven functionally with regular updates on progress. In contrast the leadership team of a $75 million management consulting firm decided that for the next 18 months its primary focus would be to lead the firm’s effort to add new high revenue customers in order to reduce customer concentration risk by 20%. The team believed that together they could accelerate progress by first identifying the interdependencies among business units and then creating a coordinated plan of attack—a consistent go-to-market approach; an innovative approach to recruiting and training resources to work across business lines; and a financial plan to invest in the new approach. Shaping an important purpose with a cross organizational focus helps to leverage the talents and experience of each team member and galvanizes a team to work together rather than at cross purposes.
3. Makes sure there is clarity. This might seem like an obvious condition but sometimes it can be difficult for teams to be clear. Often a purpose is too broad because the team is trying to appease competing voices. Other times the challenge the team is facing is so difficult that it is hard to articulate a clear statement of purpose. Simply put, these challenges must be overcome. To qualify as clear, a leadership team purpose should present the challenge (too much revenue from one customer), identify a goal (reduce concentration by X%), and provide a time frame (18 months).
The following are a few insights for shaping a clear purpose that the team and the rest of the organization understand. First, describe the purpose from the perspective of an employee without buzz words or vague phrases that the leadership team has grown accustomed to. Next, don’t avoid the natural disagreements that will emerge when smart, thoughtful people are asked for input. Finally, the CEO will sometimes decisively have to use her authority to settle on the team’s purpose.
A clear leadership team purpose will help everyone strengthen their skills as effective leadership team members and will provide great context for influencing the cadence the team uses to keep itself focused and organized.