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The 5 Ps of Purpose

Editor's Note: Take a look at our featured best practice, Organization Design Toolkit (103-slide PowerPoint presentation). Recent McKinsey research surveyed a large set of global executives and suggests that many companies, these days, are in a nearly permanent state of organizational flux. A rise in efforts in Organizational Design is attributed to the accelerating pace of structural change generated by market [read more]

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Most of us have experienced a uniqueness in some organizations.  These organizations stand out, exude fervor and zeal.  Their customers are pleased with the Customer Centric Design of the company, Employee Engagement is high, and investors and shareholders take pride in being part of it.  It is not their exceptional product or service that is the base of Value Creation rather the Purpose that makes organizations unique—their reason for existence and the resulting impact it makes on the world.

Stakeholders identify with organizations that genuinely follow their Purpose.  Leadership allocates resources in-line with the Purpose.  Employees keep the Purpose front and center while making decisions for the company.  On the other hand, in-genuine Purpose may harm the reputation of the company by turning away the stakeholders.

In order to be genuine, Purpose has to be embedded in the company’s DNA, which is no mean task.  The “5 Ps of Purpose Framework” shows how this can be successfully achieved.  The 5 Ps Framework identifies 5 areas of focus:

  1. Product Portfolio Strategy
  2. People & Culture
  3. Processes & Systems
  4. Performance Metrics
  5. Positions & Engagement

There are numerous benefits to transforming into a Purpose-driven Organization.  The 5 Ps Framework contributes to unlocking the sources of value for the company and detect points of weakness.  Purpose can pay lots of dividends, but it has to be authentic and imbued in the organization’s business model.

Let us delve a little deeper into the first P of the 5 Ps of Purpose.

Product Portfolio Strategy

An organization’s Product / Service offerings and the associated modalities of market and position planning that best cater to the target market ought to imbibe the Purpose of the company in order to appeal to the stakeholders.

The 1st step for achieving this objective has to be the alignment of business portfolio with the company’s Purpose–i.e. we need to integrate Purpose with our Portfolio Strategy.  Companies already in existence may not be able to start afresh but they can surely reshape their business mix in a dynamic and resolute manner.

In step 2, the business portfolios are filled out with Products or Services that match the Purpose, and the ones that do not are rooted out.  Certain key actions are needed to embed Purpose into the Product or Service offering, they include:

  • Rethinking product portfolio — for example pulling out certain products, launching new products.
  • Modifying pricing in line with Purpose.
  • Re-evaluating portfolio and testing rationale of individual assets in light of common criteria.

A case example is an energy company in the extractive industries, founded 85 years ago, which has proved successfully that Purpose can be reinvented.  Being in the extractive business for such a long time has not restricted the company from reexploring what an energy company may look like in the transforming environment of the future.

The company has significantly transformed its Purpose — “reimagining energy for people and planet.”  In line with its Purpose, the company has divested from its petrochemicals businesses and plans to reduce its legacy oil and gas business by 40% by the year 2030.  The company will instead augment its low-carbon energy businesses such as bioenergy, hydrogen, electric vehicle charging businesses, and aims to be a net-zero carbon emitter by the year 2050.

Interested in learning more about 5 Ps of Purpose Framework?  You can download an editable PowerPoint on 5 Ps of Purpose here on the Flevy documents marketplace.

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About Mark Bridges

Mark Bridges is a Senior Director of Strategy at Flevy. Flevy is your go-to resource for best practices in business management, covering management topics from Strategic Planning to Operational Excellence to Digital Transformation (view full list here). Learn how the Fortune 100 and global consulting firms do it. Improve the growth and efficiency of your organization by leveraging Flevy's library of best practice methodologies and templates. Prior to Flevy, Mark worked as an Associate at McKinsey & Co. and holds an MBA from the Booth School of Business at the University of Chicago. You can connect with Mark on LinkedIn here.

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