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Gies Quarterly, January 2023

Purpose is More than a Buzzword

Purpose has emerged recently as a crucial topic in business and management. Professor Matthew Kraatz explains this shift and how ISOI is helping theory and research catch up with practice on the topic.

As a result, researchers are asking important questions around the concept of purpose. What is it, really? Where does it come from? What impact does it have? How do organizations create it and sustain it?

“It is a topic that has been mostly overlooked by management scholars until quite recently,” Kraatz said. 

ISOI is helping to change that and has established purpose as one of its three core focus areas. The initiative held an international conference on corporate purpose in June 2022 with participants from places like Harvard Business School, University of Pennsylvania’s Wharton School, University of Oxford’s Said Business School, HEC-Paris, University of Michigan’s Ross School of Business, University of Toronto’s Rotman School of Management, and University of Southern California’s Marshall School of Business. ISOI faculty are currently co-editing a special issue of Strategy Science based on this conference. It will be published later in the year.

According to Kraatz, the conference and special issue cover the ways in which purpose can be understood and have impact at three levels: societal, organizational, and individual. 

Purpose  

“Societies hold taken-for-granted assumptions about the basic purpose of corporations, in the same way that we hold shared assumptions about the core functions of any other category of organizations like schools or universities, for instance,” he said. “These beliefs vary across time and place, and they are also continuously debated.” 

During the last 40 to 50 years, the dominant view has been that the central objective of the corporation is to maximize returns to shareholders, with an implicit assumption that this would, in the long run, improve economic welfare. Now, many are starting to understand the corporation’s purpose in a broader way – one that emphasizes creating value for multiple stakeholders and not just investors. This is partly a response to ongoing criticisms of shareholder capitalism with growing concerns around climate change and wealth inequality. 

Many corporate leaders are embracing this perspective, if not leading the charge. The emerging idea is that corporate purpose should be a sort of “meta-goal” that encompasses and aligns the goals of different stakeholder groups, according to Kraatz. “This task is difficult, and not everyone believes that it is possible or desirable. But it’s an idea that has a lot of currency at the moment and one that pervades the current conversation about purpose.”

At the organizational level, purpose is an overarching, long-term goal. “It defines the identity of a particular organization, unites its members, and serves as a ‘north star’ in guiding its actions and decisions,” Kraatz said. “This kind of purpose doesn’t always, or even usually, exist. When it does, it can be a powerful thing.”

Individual purpose, meanwhile, is a person’s sense of calling or vocation. “Not everyone feels this way about their job, and not every organization tries to encourage it. But it is definitely a part of the broader purpose movement. It’s also something that a lot of people are looking for these days,” he said. Many companies are aware of this characteristic, especially among younger people, and they are using it as part of their strategies to attract and retain talented employees.

The CEOs of Ralph Lauren, Swiss Re America, and the apparel company Cotopaxi have also given seminars on corporate purpose and related topics at Gies through ISOI. It’s all part of the initiative’s transdisciplinary focus.

“The world seems to have changed faster than our theories and research,” Kraatz said. “We have a lot to learn – and may need to unlearn some things we thought we knew. It is an interesting time and exciting new things seem possible.”

Helping an operation flex

Professor Gopesh Anand and his collaborators developed methods for sustaining process improvement in healthcare by participating in making changes to a process for post-op education delivered to kidney transplant patients. Published in The Journal of Operations Management, the paper received ISOI’s 2021 Best Paper Award.

The team worked closely with providers at a large hospital in the United States to redesign the education that patients receive after a kidney transplant. They also developed a general method for implementing process improvements in such interactive environments and sustaining those improvements long term. 

“For a hospital, there are trade-offs at the frontlines. There, the compromises come in terms of how much you want your employees to be following standard procedures and how much you want them to be able to flex when it is needed by a particular patient or a caregiver who is interacting with those patients.” Anand explained. “We’re talking about: How does a hospital function when patients have varying needs? By varying needs, it could mean their health status, but it could also mean their preferences. Some people like to chat when the nurse or doctor comes in. Some people like to mind their own business. How can an operation flex and still have a certain level of standardization?”

Finding the right balance with such a variety of behaviors and scenarios required deeply understanding them by observing them. Intense interaction with service providers – and lots of them – was crucial to the research. The team worked in a 1,500-bed hospital for three years. Over the course of that time, the hospital did more than 570 kidney transplants. The research team collaborated with 32 caregivers, who were engaged to different extents in the development of the post-transplant care curriculum.

“We’re not telling them how to do kidney transplants, of course, or even suggesting content of the post-transplant education. We’re helping them design a better education system for the patients and the caregivers,” Anand said.

The key was providing the caregivers, who are engaging with the transplant patients on an ongoing basis, a sense of the organization’s strategy and what the hospital was trying to achieve as an organization. Then, empowering those caregivers with plenty of room to explore the trade-offs between following exact rules and making adjustments to processes in the moments of delivering care.

“When we talk about process improvement, they are the ones involved in coming up with these combinations of rigid ways of doing things and flexibility in those ways of doing things," said Anand. "If they can come up with those combinations, they have a much better understanding of why this flexibility was built in and why this rigidity was built in. They’ll be following [procedures] for the right reasons. Not just because the manual says so or because they have to check these boxes. But because they believe it’s the right combination. And if they’re involved in process design, that’s the best way.” 

An evidence-based, team-designed procedure is powerful. But, if an organization puts in the effort to build it, it should be built to last. Salary can incentivize working within procedures. However, there’s often more an organization can do to create buy-in, especially in healthcare environments, according to Anand and his co-authors. 

“It’s more than just saying, they can get more money or promotions," Anand said. "There’s already a lot of interest in how to best treat patients. There are many people in healthcare who are not just in it for the money. There are many who are there because they like doing this, who are there because it is important work. The ‘what’s in it for them?’ becomes showing how this will help them do their jobs better.”

Ultimately, the team showed that improved processes, combined with engaged and intrinsically motivated caregivers can positively impact patient outcomes. Their analysis indicated that patients were readmitted to the hospital 25 percent less than the control group after the new system was fully implemented. Patient satisfaction also improved.

“When improvements are based on insights from frontline providers and evidence they see about potential impacts of changes, we can achieve the things we’re trying to achieve with process improvement initiatives. Doing that and applying it on a day-to-day basis – some level of standardization and some level of flexibility, and participating in making process changes – are things that people can and want to do,” Anand said. “People want to do their jobs better. In healthcare, they want to spend more time talking to their patients. These methods helped them do that.”

ISOI Distinguished Speaker Series