Updated: May 2019
Purpose, vision, strategy, culture, mission, the Why, the What, the How: it gets quite messy when it comes to corporate buzzwords and the questions how they relate and what comes first. In order to help our clients structure and organize their conversations, we created a “Company Nutshell Model” that proved to be simple, comprehensive and useful in corporate real life.
The Company Nutshell Model distincts 5 key dimensions in 4 layers. Although all of them are strongly interrelated and co-arising, we suggest a basic “what drives what” hierarchy:
Purpose answers questions on the level of BEING: who are we now and why do we exist?
In the very center we see purpose, or the “WHY” of an organization. Purpose describes the key reason why an organization exists and was created in the first place. While every organization serves several purposes, in this model we focus on the purpose addressing customers, clients or other beneficiaries. It is the reason why a company exists and why anyone would care and pay for any output or impact an organization creates for the OUTSIDE of that organization, e.g. markets.
Other purposes for example focus on the wealth for shareholders and owners, give employees a sense of purpose, a stable income and bring prosperity to societies. These are derived or implicit purposes, as no customer will every pay for a product or services just for the sake of increasing shareholders wealth. Therefore this can never be a primary purpose of an organization, even tough many people live and act by this believe.
“Saving elephants with sustainable tourism” is one example of a strong purpose by “Elephant Village” in Laos, near Luang Prabang. We visited that camp and although it is a touristic camp offering Elephant experiences, the purpose was evident in every step of the process: to make money FOR the sake and future of the Elephants – not WITH them.
Exploring Purpose deeper adds an even metaphysical aspect to the conversation, creating “Spirit” many leaders talk about these days. Rather than constructing a “save the world” purpose or abuse purpose to falsely motivate people (The Dark Purpose of organizations), organizations should simply know and express what they do for others.
Vision answers questions on the level of BECOMING: who do we want to be in the future?
Vision expresses the purpose as a specific and desired future state of being, making it tangible and operational. A Vision is a promising and interesting picture of a desired Future State or Goal of the Organization, directing focus and attention of the whole organization towards that vision, bundling all given energies and resources while excluding other possibilities which are not included. While purpose is neutral in terms of time and data, Vision gives orientation to all actores on “what future we want to create and live into by when”.
Let me give you an example: client of ours distincts the Purpose “reducing poverty by inclusive education” and the Vision “10 Million kids with disabilities in inclusive classrooms in the region of Subsahara by 20xx”.
For employees and partners it can very equally be motivating to feel they are part of an interesting and promising journey with an attractive destiny. BIHAGs are “big hairy ambitious goals” which get people aligned and funnel the collective energies towards the accomplishment of a shared Vision. Yes, there is a difference between aiming towards “Champions League” or a good ranking in 2nd or 3rd league. Without even mentioning one single activity it precisely pointes towards and declares the arena of necessary activities to follow in the future to come. It is a conscious choice with completely different implications when it comes to implementation.
In a nutshell: Purpose has its foundation in the past, Vision is grounded in the future and both inform and transform the Present – and the other way round.
Strategy answers questions on the level of DOING: What do we need to do in order to honor the purpose and accomplish the Vision?
Best way to work with strategy is to create clarity around some basic strategic questions:
- What market and business do we operate in?
- What are our key products or services?
- What are the most important Trends (in our business) and Megatrends (beyond our business)?
- What drives customers and markets?
- Who are our key competitors?
- Who are our key customers and clients?
- What value do we create for others?
- What are our core competencies – what are we very good at, or best at?
- What is our true passion?
- What are our key assets? (brand, technology, people, patents, partners, relationships, networks..)
Creating the future:
- How are we going to create value for our customers in the near future?
- What are the products and services they will care for?
- What are the key innovations driving our business?
- What are possibilities for strategic innovation = business model innovation beyond market- or product innovation?
- What are our key strategic directions we focus on together?
- Who do we want to serve with what and how?
Just some short guiding questions, as there has been basically everything said which is to say about strategy.
The strength of strategy is simplicity, clarity and a deep routing in Purpose and guidance by Vision. Strategies without grounding become vulnerable, technical, erratic and confusing when they should be flexible, fluid and adaptive. Great strategies translate Purpose and Vision into action, based on sensing and responding to market changes and opportunities in a given time.
4. Structure and Culture
Structure and Culture are key factors to empower strategy execution, actually they ARE manifested strategy, vision and purpose.
Structure gives form to a living organism and organizes the work in different way: organizational structures, processes, systems, tools and more. Structure is the sum of all explicit expressions and “written rules” of an organization.
Culture could be described as the implicit logic and subtle structure of all interacting within organizations. It defines the way people interact and collaborate on a personal, emotional as well as professional level. Culture defines in what way structural elements are lived and expressed: how reliable are people in keeping commitments? What are the shared values? How do people dress, behave, talk, interact? What can be said and what not? Who gets promoted, hired and fired? What kind of behavior is appropriate? What is the overall spirit: Fear or Fun? Cynicism or Enthusiasm? Kindness or depreciation? Helping, blaming or Hunting? Formal or Informal? Diversity or Uniformity?
Different Purposes, Visions and Strategies, but also industry and business model will favor and ask for different sets of cultures and needs different cultures. Culture can be crafted by explicit values and intentional principles and leadership. We could even say that culture is a strategic choice that can be cultivated by defining, practicing and executing a specific way of being and interacting.
Culture and Structure are co-arising as a result of conscious choices and clear leadership, grounded in purpose, vision and strategy. Structure is the result of culture and the other way round. In best case a culture of openness and trusted interaction results and manifests in open structures and the other way round. More: How Tech companies boost their success by creating amazing corporate cultures, Unternehmenskultur zum Angreifen
Organizations should NOT start strategic conversations on a structural level: the organizational form is an obvious and natural manifestation of strategy and purpose implementation. Reorganisation is the most popular distraction from necessary but difficult strategic decisions. If you struggle to figure out the best organizational form it is a strong hint that you are not ready yet and homework has to be done first (1,2,3). Not all strategies need an “agile organization”. Organizational form is always a means to an end and never a cause per se.