A couple of weeks ago I joined one of Greg Satell’s weekly discussions on The Clubhouse, in which he has been exploring some of the many fascinating subjects raised his latest book Cascades. This week’s on the subject of exploding myths was particularly interesting because it emphasised the importance of purpose. The Japanese have a word for it, as they do most things. They call it “ikigai”, but however you refer to it, it could be the difference between your success and failure in the post-Covid, digital economy.

We all know how littered the business world is with anecdotes founded on nothing more than the whim of someone trying to reinforce their point of view with “evidence” that has no relationship with the facts.  In Cascades Greg explodes three such myths — the failure of Blockbuster to recognise the Netflix threat, that of Kodak’s supposed lack of response to the advent of the digital camera and how Xerox supposedly shot itself in the foot by not recognising the potential of Apple. As you might expect, none of these cases is as it is customarily represented, but you might be surprised by just how far from the truth they stray.

Of course, the point of these discussions is learning and at one point we navigated to the question of whether failure of senior executives to recognise opportunities or their companies to innovate is a matter of stupidity or omission. Putting aside for a moment the notion that these may be one and the same, we found ourselves briefly reflecting that the senior executives at the centre of the supposed mistakes explored in Greg’s book rarely justify the mantle of stupidity. After all, they have invariably built and run very successful businesses and that takes know-how and some ability. Greg points out that word of Xerox’s demise was total fiction — they are, after all, still alive and kicking, but what is it that caused the other two to take a wrong turn or indeed drives any business to make what is often a single wrong decision that results in their demise?

It’s a sad fact of human nature that people often seek to counteract their own shortcomings by belittling others. There’s an old Czech fable that describes how a farmer prayed that his neighbour’s prize pig would die rather than put in the hard yards necessary to breed a better pig himself. To some extent this may be what’s behind these stories of supposed executive incompetence. However, there is, I believe, another far more tangible and fundamental explanation for why smart executives make such monumental mistakes.

I think it’s important to acknowledge up front, that we all make mistakes all the time. The measure of a great business leader is in reality dependent on the ratio between the good and bad decisions they have make in their career. The more right decisions, the more successful they become and while there are ways to ensure that your ratio ranks you higher, it’s unrealistic to expect anyone, however smart they may be, to score 100%. Everyone has an “off-day”.

It’s my belief that while there may be many reasons given for poor decision-making, like the reasons given for, what we are told is the 70% of business transformations that fail, they all have their roots in a single cause. That cause is an absence of focus.

When I take my clients through my Brand Discovery  programme, which is the first step toward success for any business in the digital world, I start by questioning their “purpose”.

I can guarantee that the majority of the senior execs in my kick-off workshop will respond with product or service-focussed answers — “We make widgets!” Indeed, it’s often said that the downfall of many start-ups is that they are product-focussed. It’s understandable how this may arise with start-ups because they often start with a product rather than a need that they have identified. Sometimes this perspective continues with a business into maturity, when, if they don’t understand the importance of purpose occasionally they’ll slip into “product mode” simply because they lack stimulation.

You’ll usually find that product-founded start-ups that become successful, once they recognise the demand, have reverse-thought to understand the reason for that demand and design their business model around satisfying that fundamental market need in different ways. The product becomes secondary and its lifespan, which has always been in decline, fleeting. In recent decades the emergence of digital technology has compressed product lifecycles still further, but the recent impact of the coronavirus means that the pace of change in society and markets has shifted up to a gear we hadn’t previously imagined.

In the past a business may have been able to survive for a while with a product focus, but this is no longer the case. Your products and services are not your reason for being. They are increasingly transient, more rapidly obsolete. Tom Peters used to tell the story of how he agonised and researched the market before buying a new lap-top, he was convinced was state-of-the-art, only to be asked by his son when he got it home “Why didn‘t you buy the latest version?’ His point was that the products on the shelves of our high-street stores are already obsolete. However, he was talking twenty years ago. Things are moving much faster now.

It’s my belief that the reason businesses take these wrong-turns is that the decision-makers take their eye off the ball. It’s all about focus and in particular understanding your reason for being. Such is the importance of purpose.

Hence my opening question to my room of senior executives. “What is your purpose?” Because, until you focus on that you will always be in danger of taking a wrong turn. It’s remarkable how, once my delegates get used to interrogating their pre-conceptions of purpose they quickly apply the same principle to other aspects of their business. Things like values, beliefs, brand character and differentiation and what is for us all the summation of a brand, the promise it makes to their stakeholders — their “brand promise”. This drilling-down process, in itself, is often the first and certainly a major turning point in the fortunes of many businesses I have worked with.

Once you have a purpose it’s relatively straightforward to keep a business on track. I help my clients develop tools that ensure the decisions they make every day contribute to their purpose. New initiatives, new products, new processes are all viewed in the context of their relevance to what the organisation is trying to achieve, then decisions are made accordingly. This makes a business more efficient, which has always been the fundamental differentiator between successful and unsuccessful businesses and is absolutely critical in the fast-paced digital world.

Technology, digital technology in particular, enables us to do things previously beyond our reach. We can gather information more easily and crunch data faster, often without any human intervention, thereby enabling us to understand market needs. It helps us respond to those needs far more efficiently too, so we can deliver products and services that people genuinely need, when they need them. In the past, products and services have always been compromised by the capacity of the companies delivering them. You may not have been able to provide EXACTLY what was required, so you have settled for the closest you could get with the sources at your disposal and, because businesses tend to have very similar resources, so too have customers.

That’s why traditional salespeople were “persuaders” rather than “advisors”. However, that’s no longer the case now that we can even deliver products tailored to precise, individual needs. These products are the perfect solution, they are invariably better made and offer flexibility way beyond their predecessors. Furthermore even if they aren’t cheaper — although they usually are — customers recognise them as better value than their predecessors. Technology also puts us in contact with our customers like never before. We can identify individuals who are hungry for what we can deliver at their most needy moment and let them know it’s available. They can even, buy it without leaving their armchair and have it brought to them at a convenient time.

With this capability now at our fingertips all we need do is leverage it to help us realise our purpose faster, better, and at the lowest possible cost.

This is why appreciating the importance of purpose, is very much a key to success in the new digital economy. There are businesses today applying technology of all kinds in all manner of ways, but surprisingly few are doing so in a truly focussed way. There are so many interesting distractions and great new ideas floating around it’s easy to see how those steering our businesses and signing-off projects and initiatives can be tempted away from the real objective. However, taking your eye off the ball like this will only waste money and resources and even accelerate your demise.

Greg’s discussion last week emphasised the importance of purpose. Yes, I’ve been advising my clients on building their brand models for years and setting purpose as the first of twelve coordinates they have to pin-point as they go through this process. Nevertheless, when you drill down into some of the most oft-quoted wrong-turns in business history, there’s really no doubt that, in the fast-paced, digital world, the failure to recognise the importance of purpose is behind many of them.


Phil Darby
April 6, 2021

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