With the best chief executives, those at the helm of the most effective companies that we advised, I knew that there was something more driving their decisions than simply the need to make immediate profits. Some advice was deemed a natural fit; some, even though it would be difficult to execute, was taken on as part of a long-term strategy. And some "slam-dunk" options were dismissed immediately, often with a comment like, "This is not what we are trying to do here." I came to recognize that the more consistent this type of reaction was, the more successful the leadership team, because its members knew where they were going. In other words, while strategic alignment and execution were always essential to success, the most successful leaders were those who knew which strategy to pursue.



All leaders, not just top CEOs, face difficult strategic decisions throughout their careers. The single factor that helps them make these decisions correctly is an understanding of what their organization is really trying to do: its Purpose. That's because the Purpose of the organization--the shared recognition of the reason why it exists--is the context that determines whether a decision is the right one to make at any particular time.

Purpose does not mean making money. It does not even mean producing goods or services, satisfying shareholders or paying taxes and contributing to society. Those are all the things that an organization must do in order to fulfill its Purpose. The Purpose is a moral conviction: a rationale that explains why a particular group of talented people-- leaders and employees--should spend their valuable time working together in this particular organization doing these particular things. For example: Are we here to discover new inventions? To increase people's happiness? To create beauty and quality? To control the direction of our industry? Or for some other reason?

When a Purpose appeals to the moral conviction of employees, then they are capable of acting with conviction and self-determination, without being micromanaged. When the strategy of a company is aligned with its Purpose, then its moves will make sense, whether in the short or long term. When companies operate over time with a clear and well-aligned Purpose, then they become great and influential.

The Four Purposes

For today's global companies, based on my research, there are four moral traditions on which a successful Purpose can be based: Discovery, Excellence, Altruism or Heroism. These moral traditions help to produce organizations that stand the test of time because they are based on ideas that have themselves stood the test of time:

1. Discovery: Discovery centers on the search for the new. Discovery put America on the map, men on the moon and the dot-coms in business. Sony, IBM, Google and many technologically based companies have succeeded by making innovation and exploration the center of their effort.

2. Excellence: Excellence focuses on providing the best possible product or service. Excellence built the great cathedrals of Europe and today's most successful professional and creative businesses. Apple, BMW and Warren Buffett's firm Berkshire Hathaway have all built their identity around the artistry of their endeavors.

3. Altruism: Altruism is built on compassion. Altruism is the driving force of any organization that exists primarily to help others, like many political parties or most charities. Nordstrom, Hewlett-Packard and even Wal-Mart have established appeal around the idea that they are, first and foremost, making their customers happy.

4. Heroism: Heroism sets the standards for everyone else to follow. Heroism resulted in the Roman Empire, Wimbledon champions Serena and Venus Williams and many spectacular growth companies. Microsoft, ExxonMobil (and its predecessor Standard Oil) and GE have dominated their markets and industries by focusing on their capacity to win every competition.

To be sure, Purpose is not monomaniacal. Wal-Mart beats the competition; Nordstrom provides excellent service; and IBM has had its heroic moments. But the underlying rationale for the decisions made by these companies becomes clear when you study their history; and it always has to do with fulfilling an idea, often set in place by a leader or a leadership team, about "what we are really trying to do here."

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