The end of the previous blog suggested that productivity and efficiency are functions of effectiveness, that is they are not absolute but are relative measures and the idea they are relative to is that of the ‘purpose’ of the organisation.
Some of you then contacted me asking ‘what do you mean, purpose?’
Organisations, are a human construct, they exist for a reason, they are purposeful (or intentful), they have a ‘why.’ That ‘why’ is about the achievement of some objective(s) chosen by the stakeholders, an objective that reflects its identity.
Identity: the system of values and beliefs espoused AND enacted by the leaders of an organisation.
Hence, a purposeful organisation is acting with intent to achieve the objective(s) of its stakeholders in a manner consistent with the beliefs of its leader(s).
Purpose is then enacted identity.
Of course this is not easy stuff for people in organisations.
Typing the words ‘purpose of an organisation’ into a search engine, the first statement I found was:
“Our purpose is to deliver products and services that will add value to your business today and tomorrow.
Well, d’uh, of course it is. As an organising idea, an expression of the identity of the particular organisation that it would be unfair to name, it says ‘the purpose of OUR company is to make money out of YOUR company.’ It says nothing of the need, opportunity, value proposition, product or service. It could equally apply to an energy company, a bar or a casino. As an organising idea, those who have sanctioned this statement are, in effect, saying as long as we are doing SOMETHING that adds value, it doesn’t matter what the something is.
Compare that with this from the Oxfam website:
“Our purpose is to help create lasting solutions to the injustice of poverty. We are part of a global movement for change, empowering people to create a future that is secure, just, and free from poverty.”
https://www.oxfam.org/en/our-purpose-and-beliefs reviewed 24th June 2019
In this instance, Oxfam have defined the thing they seek to achieve (solutions to the injustice of poverty), they have not though constrained themselves to any particular means of doing so. That clarity of purpose enables them BOTH to choose the means of achieving the ends (means which will no doubt evolve over time) AND, by adopting measures of the ‘injustice of poverty’ to understand whether that purpose is being achieved. They can measure their effectiveness, their efficiency, their productivity.
In order then to be effective:
Identity and purpose must be consistent – values, beliefs and behaviours must align;
Purpose constrains the operational meaning of Effectiveness;
Effectiveness constrains the operational meaning of Efficiency;
Efficiency constrains the operational meaning of Productivity
So, our whole structure depends on Purpose; on understanding WHY we do what we do.
Something to consider:
Public sector, public service and third sector organisations (charities, CICs, NFP’s) ALL have a purpose to fulfil. ALL are constrained to generate over time at least as much income (whether from trading, grants, gifts, commissions or donations) as their expenses. None have profit as the primary purpose of their existence.