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For any organization, the starting point of great-ness is not in meeting expectations—whether ofshareholders, board members, or constituents—

but fulfilling a Purpose that fits the identity of the or-ganization. For example, is a foundation chargedprimarily with discovery: inventing new approaches tohelping people? Or with excellence: promoting a highstandard of service and execution? Or with altruism:making greater numbers of people happy? Or withheroism: proving that difficult challenges (such as nat-ural disasters) can be mastered?

The answer will vary from organization to organization,but the central point is universal. Organizations thatthrive over time do so by invoking and fulfilling a pur-pose: ideally one based on a moral tradition that has stoodthe test of time. In my book Purpose: The Starting Pointof Great Companies, I apply this principle to commercialfirms and corporations, but the value of a moral basis ofpurpose is just as relevant to social sector organizationsand their leaders as it is to leaders in any other sphere.

While it may be tempting to think of organizations asbeing made up of instructions, processes, and resources,it should never be forgotten that people are their fun-damental components. And one of the distinguishingfeatures of people is that they have strong ideas aboutwhat is right and wrong. If you can resonate, collec-tively, with those ideas, then you can tap into people’scommitment and creativity to a far greater degree. Karlvon Clausewitz, Prussian general and author of OnWar, was right to believe that in war the physical factorsare “little more than the wooden hilt, while the moralfactors are the precious metal, the real weapon, thefinely-honed blade.”

Many people who talk about organizational purpose areconcerned either with accountability or responsibility—what the organization must do to fulfill its obligations.But if you are interested in promoting greater levels ofsuccess, then purpose must be considered as a form ofchoice: to what ends are the leaders, and the rest of theorganization, willing to commit themselves? This way of

E X E C U T I V E F O R U M

PURPOSE:

THE STARTING

POINT OF GREAT

LEADERSHIPNikos Mourkogiannis

S P R I N G 2 0 0 7 2 7

looking at purpose may not be familiar to all readers,so I will spell it out—first in the context of commercialcompanies, and then for the social sector.

The Power of PurposeThe sole purpose of commercial companies is to makeproducts or to provide services in order to create profits fortheir shareholders. Undoubtedly this sounds familiar. Itis the mantra taught in the economics departments ofour universities and repeated by many leading econo-mists in the media. This view of heartless Mammonismis reinforced by the stories of WorldCom, Enron, andArthur Andersen, and many other stories of corporatecorruption, and it is further reinforced by such legisla-tive prescriptions as Sarbanes-Oxley, which is so dra-conian for U.S. companies that they are struggling tocompete in the global marketplace. And why do com-panies need Sarbanes-Oxley? Because, it is said, theycan’t be trusted. Because all they care about is money.No wonder many morally committed individuals seekwork in the social sector; based on this purpose, theyhave every reason to fear that their aspirations will findno home in business.

There is, however, another tradition in economics, atradition that does not seek to exclude human moralityfrom the graphs and equations. This is the tradition ofJ. M. Keynes, of Amartya Sen, and of James Buchanan.It is a tradition that dates all the way back to AdamSmith, regarded by many as the founder of economics,who, before he wrote The Wealth of Nations, wrote TheTheory of Moral Sentiments.

At heart, the concept of purpose belongs squarely inthis tradition. This is not to argue against commercialfirms’ making money—quite the reverse. In fact, com-panies that employ a purpose tend to produce greaterprofits than those that don’t. But by aiming for somelong-term objective that is more important than money,companies actually provide more financial rewards fortheir shareholders and employees (so long as the pur-pose they pursue is compatible with the strategic assets).

Purpose is so powerful because it is founded on deeplyheld ideas about what is right and what is worthwhile.These ideas are normally rooted in one or more tradi-tions that have been articulated by moral philosophers.Because these traditions have been shared in some formthroughout history, they draw on common experienceand worldviews. They thus link top management andother employees in a natural and organic way. When acompany or foundation is driven by such a shared pur-pose, its morale will be higher, the quality of innova-tion will improve, its internal and external relationshipswill be strengthened, and its leaders will be able to pointthe way forward with genuine conviction.

The Four Moral TraditionsThe four moral ideas that are most effective today inmotivating people and creating globally successful orga-nizations are discovery, excellence, altruism, and heroism.

Companies with a purpose

tend to produce greater

profits than those without.

Purpose is so powerful

because it is founded on

deeply held ideas about

what is right and what is

worthwhile.

2 8 L E A D E R T O L E A D E R

These Purposes can be linked to moral traditions thatoriginate from four of the greatest philosophers human-ity has produced: Søren Kierkegaard, Aristotle, DavidHume, and Friedrich Nietzsche. These Purposes helpto create and support organizations that stand the testof time because they are based on ideas that have stoodthe test of time.

The most prevalent of these purposes in the social sec-tor is altruism, but all four of them have played a role inshaping the identity of great foundations, agencies, andnot-for-profit organizations. In describing these differ-ent moral philosophies, I do not intend to suggest thatthey are the only possible ones for an individual to haveor that one of them is morally better than another.Rather I present them as approaches that have provedsuccessful in driving organizations to greatness.

Discovery

Discovery is based on the insight articulated byKierkegaard, and subsequently by the existentialistphilosophers, that human beings are free and so have anobligation to choose for themselves. This does not meanconstantly changing direction. Precisely because we arefree to choose a course, so we are obliged to pursue thatcourse once we have chosen it. In other words, discoveryrepresents the morality of having a conviction to do some-thing new and then staying with it. It is the purpose be-hind IBM under Tom Watson, who plastered the slogan“THINK” all around the company’s offices. Watson rec-ognized that he could not hide behind conventional busi-ness practice, and he would have to live with theconsequences of his decisions—which took the companyto the edge of bankruptcy on more than one occasion.

In the social sector discovery is often the purpose of re-search-driven organizations, like The Scripps ResearchInstitute in California (TSRI), the biomedical researchinstitute that was founded by the philanthropist EllenBrowning Scripps in 1924. The philosophy of TSRIcenters on “the creation of basic knowledge in the bio-sciences for the application of medical and material dis-coveries; the pursuit of fundamental scientific advancesthrough interdisciplinary programs and collaborations,and the education and training of researchers prepar-

ing to meet the scientific challenges of the next cen-tury.” Note the vocabulary in this statement: pursuit,advances, challenges, and of course discoveries.

But the purpose of discovery carries its own impera-tives. When Intel CEO Andy Grove titled his bookOnly the Paranoid Survive, he was taking note of the factthat the discovery-oriented leader can never rest.Richard Branson operates with a similar ethic in his Vir-gin companies: He continually seeks new challengesthat will test his informal, customer-centric businessmodel. The most successful Internet organizations, in-cluding such not-for-profit enterprises as Craigslist, aresimilarly driven; so are research-oriented organizationslike the Aspen Institute. If you are the leader of such anorganization, can you continue to embrace the persis-tent voyage of discovery?

Excellence

Excellence implies standards, like those of an artist, de-fined by the craft rather than by customers. This type ofpurpose is rooted in the intuition or belief that excel-lent performance of our role in life is the supreme good.As a moral philosophy it derives from Aristotle, who ar-gued that the ultimate end of human activity is eudai-monia, which can be translated as happiness, but isperhaps closer to fulfillment, flourishing, or success. Byseeking to perform our roles in life as best as we can,we aspire to quality and fulfillment for their own sake.

Excellence is the purpose behind a company like Apple.Apple did not invent the portable MP3 player, insteadit sought to make the best possible one, the iPod, whichhas transformed the industry. By making the best pos-sible portable music player, it hoped to appeal to con-

The discovery-oriented

leader can never rest.

S P R I N G 2 0 0 7 2 9

sumers who valued quality highly enough to make theproduct viable, even if it proved to be more expensivethan competitors’ models. Indeed, Apple’s history is lit-tered with excellent products—like the Pippin gameconsole and multimedia center—that were too expen-sive to survive and succeed.

In the social sector, the purpose of excellence is mostoften found in educational establishments and artsfoundations. An organization that combines both is theArt Institute of Chicago, which consists of a school anda museum. Tracing its origins back to 1866, the schoolhas as its mission: “To provide excellence in the deliveryof a global education in visual, design, media and re-lated arts.” The museum is widely considered to be oneof the best fine art galleries in the world, housing out-standing collections of Impressionist, Post-Impression-ist, American, and Modern paintings. The continuingcommitment to excellence is reflected in the announce-ment in 2005 of a $350 million addition to the mainbuilding, designed by Pritzker-winning architect RenzoPiano, to house the 20th-century collection.

If your purpose is excellence, forget about budget ac-countability as your primary criterion for success; youare not going to be judged for your frugality but foryour achievement and quality. Apple prices its comput-ers at a significant premium over Dell’s, precisely be-cause people know they are paying for a differentstandard of machine; similarly, your donors and con-stituents know they are paying for a different level ofservice. Organizations such as the World Wildlife Fundand many premium universities have thrived by adopt-ing a purpose of excellence; when they try to combinethat with cost leadership, they lose constituents. At thesame time, you don’t need a large organization withhigh overhead; you can succeed with a small, innova-tive hierarchy. Warren Buffett’s Berkshire Hathawayfirm has only six employees. Your vulnerability is medi-ocrity; you will suffer when you are no longer perceivedas the gold standard for the services you provide.

Altruism

Altruism is the moral philosophy that corresponds withwhat many people think of as “morality.” It derives from

the work of David Hume, who argued that we careabout others’ well-being as well as our own. Indeed, wemaximize our own happiness only by taking into ac-count the happiness of others, trading off our selfishpleasures against those generated by our instinct to careabout others.

Altruistic companies or organizations exist primarily tohelp others: to deliver outstanding personal service, todeliver products at affordable prices, to improve or evensave lives. Altruism does not necessarily have to be di-rected at fellow humans. There are altruistic organiza-tions that have been set up to care about animals andthe environment. The purpose of altruism is present inthe majority of social sector organizations. Now esti-mated to be the largest charity in the world, the Bill &Melinda Gates Foundation “works to reduce inequitiesand improve lives around the world.”

If your purpose is altruism, you are vulnerable to theextent you are perceived as hypocritical. Telephone com-panies and power utilities have a history of altruism,which is one of the reasons they suffer so badly in scan-dals; people expect better of them. And they also expectbetter of not-for-profit philanthropic organizations. Atthe same time, altruistic organizations are often embat-tled—by competitors or community members. Thusyou must maintain rigorous financial discipline tomaintain the wherewithal to be altruistic.

If your purpose is

excellence, forget about

budget accountability

as your primary

criterion for success.

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Heroism

Companies that set out to dominate their industries, tolay down the standards for everyone else to follow, aremotivated by heroism. This moral philosophy derivesfrom the work of Friedrich Nietzsche. Like the philos-ophy of discovery, it is based on the premise that humanbeings are free and should not be bound by convention.However, while an existentialist would contend that weare all free, a Nietzschean would argue that only excep-tional people are able to achieve this freedom. Such menand women are the elite leaders who can commandthose who lack the necessary character.

Henry Ford—who single-handedly transformed the au-tomotive industry—is an obvious example of a heroicleader. Bill Gates, with his plan to put his operating sys-tem onto every desktop, is another. Microsoft has con-sistently fought to make sure that its products are themost widely used—whether that product is the Win-dows OS, Office, or Internet Explorer. As Craig Mundie,the chief research and strategy officer of Microsoft, saidin a recent interview with the Financial Times: “We’rethe only company, as far as I know, that potentially hasa leadership product in every category.” To lead in everycategory—that is a true aspiration for a heroic company.

It is interesting to note much of the profit from thisheroic organization (Microsoft) has gone into fundingan altruistic one (the Bill & Melinda Gates Founda-tion). Indeed, this has often been the pattern of large-scale American philanthropy. Ellen Browning Scripps,who also founded the Scripps health care delivery net-work, inherited her money from her brother, EdwardW. Scripps, who heroically set the standards in thenewspaper industry in the early twentieth century(Scripps’s companies live on in the E.W. Scripps Com-pany media conglomerate and the United Press Interna-tional news agency, UPI).

Heroism does not tend to be a popular purpose of socialsector organizations. But some organizations, such as theRed Cross, clearly draw power and strength from theheroic aspect of their purpose. Another example is theInternational Olympic Committee, which draws inspi-ration from the age when sports teams were not profes-sional and athletes played simply for the glory of winning.

If your purpose is heroism, others accord you respect be-cause of your strength and effectiveness. Attempts to bemore altruistic may have less impact than you expect;instead, you will be expected to set the agenda in yourfield. Combativeness suits your purpose; Jack Welch’sline, “Control your destiny or someone else will,” repre-sents a heroic strategy. Thus heroism requires scale, atleast enough to dominate a niche. To realize the benefitsof this purpose, your organization doesn’t have to bedominant now; but you and your fellow leaders have tohave a plausible path for getting to preeminent status.

A large proportion of my book Purpose is concernedwith explaining how these Purposes work in practice,through exemplary business stories. For discovery I lookat Tom Watson at IBM; for excellence, Warren Buffettat Berkshire Hathaway; for altruism, Sam Walton atWal-Mart; and for heroism, Henry Ford at the FordMotor Company and Siegmund Warburg at S. G. War-burg. Anyone interested in gaining a greater under-standing of purpose would do well to study the historiesof these companies. In my opinion, leadership conceptscome alive only in the cut and thrust of the real world.

Purpose in the Social SectorIn many organizations in the social sector, the purpose isclear from the beginning. It may even be included in the

Some organizations,

such as the Red Cross,

clearly draw strength

from the heroic aspect

of their purpose.

S P R I N G 2 0 0 7 3 1

group’s name or motto. Consider for example the Britishcharity, the Royal Society for the Protection of Birds.The emphasis on “protection” in the name makes it clearthat it is an altruistic organization whose purpose is tolook after birds. Clearly, it faces decisions over whichbirds it seeks to protect and how it seeks to protect them,but its fundamental purpose is easy to discern.

However, even a readily identifiable purpose may needrevival and refreshment—in other words, it may need tobe directly linked to what happens in the organizationat an everyday level. Anyone who has worked in the so-cial sector will be able to tell stories about organizationsthat are disconnected or distracted from their purpose.Indeed, this is the key leadership challenge faced byleaders in this sector.

In a thoughtful article about organizational culture innonprofits in the Winter 2006 edition of Leader toLeader, Tamara J. Woodbury describes how an organi-zation “often loses sight of the commitment or purposethat brought people together in the first place.” In herexample, the Girl Scouts in Arizona had become sopreoccupied with issues of safety that volunteers nolonger felt trusted. Woodbury tells us how, in a four-page brochure to introduce new volunteers to GirlScouting, the words must, mandatory, and requiredcame up 84 times.

The process that the leaders of the Girl Scouts of Ari-zona used to transform their organization had at itsroots a commitment to reconnect with the purpose. In-stead of assuming that they knew what was most im-portant for the girls, the leaders recognized that thefocus of their altruistic endeavors (the girls themselves)should also have a say. So they conducted research anddiscovered that the girls were much more concernedabout their emotional safety than they were about theirphysical safety.

As a result the organization is working to develop a cul-ture that “values its volunteers and the girls we servefirst, above and before protecting our physical assets.”One of the first strategic priorities was to reduce theamount of paperwork—from 18 different types of per-mission slips to just 2. This is not to say that the orga-nization now disregards the girls’ safety, only that

excessive concerns over safety no longer detract fromthe most important elements of activity.

The Girl Scouts’ purpose and their draconian attitude torisk were inconsistent. To maintain the health of the orga-nization going forward, the leaders had to address this in-consistency and then begin a process of transformation.This is one of the key ways in which a clear sense of pur-pose can help an organization. People who are driven bya purpose are much more likely to question why and howthings are done. Leaders then have to make sure that theyrigorously follow up on any inconsistencies, thus under-scoring how much they genuinely value the purpose.

Making an organization more consistent also makes itmore effective, which is especially important as the op-erating environment of social sector organizations be-comes ever more competitive. Different organizationsbattle for grant funding, for donor support, for the beststaff, and for the best volunteers. With greater compe-tition also comes greater scrutiny: Charities, for in-stance, are now monitored by independentorganizations that compare how much of their incomethey spend on administration and fundraising.

A shared sense of purpose helps with the key aspects ofan organization that depend on people: morale (by cre-ating a strong sense of direction and belonging), inno-

A shared sense of purpose

helps build morale,

innovation, relationships,

leadership, and

accountability.

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vation (by reducing risk aversion and encouraging lead-ers to make radical decisions), relationships (by under-pinning trust and making individuals more sensitive toeach other’s needs), and leadership (by providing direc-tion and a source of inspiration). In the social sectorthere is a further significant benefit: accountability.Nonprofit organizations lack one thing that commer-cial companies have: the permanent imperative of hav-ing to earn profits. This provides a simple, cleardiscipline to action (the difficult task for private sectorcorporations is then to connect this discipline with ahigher purpose). Social sector organizations lack thisimperative, but by translating the purpose into clear ob-jectives, leaders can impose a degree of external account-ability on their people. For example: If the purpose isdiscovery, is the organization tracking the number ofinnovations it has introduced and the extent to whichthose innovations have succeeded?

Purpose is not a panacea. Leaders must still draw on alltheir existing skills, techniques, knowledge, and experi-ence. But before anything else, they need to be headingin the right direction. That is why a conscious attentionto purpose can be the starting point for greatness in thesocial sector—and a way for the organization and itsconstituents to find a meaningful common ground.

Nikos Mourkogiannis is the author of

“Purpose: The Starting Point of Great Companies”

(www.purposethebook.com). He is a senior partner

at Panthea, a global consulting firm advising chair-

men and CEOs on leadership strategy. He is also

senior executive adviser on leadership to Booz Allen

Hamilton. He helped create the Harvard Law

School Center on Negotiations with Roger Fisher,

the author of “Getting to Yes.” He lives in London.