How Looking Backwards Helped LEGO’s CEO Save His Company

To launch and scale a successful venture, it helps to define a higher purpose for the enterprise, one that includes but also transcends the pursuit of growth and profits. my new book, Deep Purpose: The Heart and Soul of High-Performance Companies, catalogs the tremendous benefits that the serious pursuit of purpose confers on companies.

Drawing on extensive interviews conducted with leaders at high-growth firms like Etsy, Gotham Greens, and Livongo–as well as larger companies like Microsoft, LEGO, and PepsiCo–the book distills the winning strategies of what I call “deep purpose” firms. These are the takeaways that I found most useful for entrepreneurial leaders:

Make Purpose an Organizing Principle

Many leaders conceived of purpose instrumentally, as a tool they can use to obtain results. It is that, of course–you can and should mobilize purpose to help attract customers to your brand and employees to your organization. But leaders who value deep purpose go further than that, making it an organizing principle for the enterprise, the inspiration or anchor for the firm’s strategy, operations, policies, and decision-making.

As Microsoft CEO Satya Nadella told me, “Writing a purpose statement is easy, what comes next is much harder.” Not only do you have to have a compelling communication strategy but you need to get those lower down in the organization to internalize and connect with the purpose. It’s like writing a new operating system for your organization. To get there you need to make sure that your organizational structure, processes, and metrics reinforce the purpose of the organization.

For LEGO CEO Jørgen Vig Knudstorp, that meant revisiting the foundational principles that LEGO’s founder had put in place to craft a forward-looking purpose for the organization. He found that LEGO founder Ole Kirk Kristiansen started LEGO in 1932 to provide children with play opportunities that fostered creativity and growth. In fact, the name LEGO itself is a combination of two Danish words that mean “play well.” He also found that Kristiansen’s son and successor had expanded on that mission. Under his leadership, the company strived to adhere to the idea that “Only the best is good enough.”

Those are lofty mission statements, but they gave Knudstorp a way forward. He told me, “I decided that, to me [this] meant a constant striving, or continuous improvement… that we should always be [providing] the best play material for children, be the best supplier to the retailers we served, and always be the best place to work. So for me it was an obsession with being a great company, as opposed to a good company.”

Paradoxically, focusing on LEGO’s past helped catapult the company more decisively toward its future. Rediscovering the company’s historic purpose galvanized employees and other stakeholders, altering their impressions of the company and intensifying their commitment to its strategies. Understanding itself as an enterprise that delivered a unique and premium “system of play” allowed LEGO to, over the next several years, pursue a wide-ranging growth strategy. It developed closer bonds with customers and retailers, enhanced its innovation around its core product, returned to in-house manufacturing (the company had previously outsourced production), and managed complexity better, executing with newfound passion and determination.

Make Purpose Personal

It’s one thing to communicate the purpose and serve as its cheerleader and advocate, quite another to embody the purpose for people. Deep purpose leaders I studied inspired their people by telling personal stories about their company’s reason for existing, made large and small decisions that reinforced the importance of that purpose, and adopted behaviors that exemplified commitment to the purpose. LEGO’s Knudstorp did this by examining the ethos that built LEGO, but also by paying attention to the environment in which LEGO exists. Knudstorp said, “If you want to transform–not just turn around–a company, you need to find the essence of the brand, your unique identity… it’s not up to leaders or management to decide that. rational choice. You don’t ‘decide’ what your calling is. You detect it.”

At the health technology startup Livongo, founder Glen Tullman has a son with diabetes. For him finding a company that allowed people with diabetes to live on the go (hence the name Livongo) was intensely personal. He spoke often about how his son had benefited in a profound way by being able to access Livongo’s services. And as it turns out, more than a third of all employees there had a personal connection to someone with the disease. All this made the purpose of the company even more intensely personal

Give Employees the Tools They Need

Most leaders know that they should communicate organizational purpose to employees, but they often don’t do what it takes to help people bring it alive at work. In addition to understanding and internalizing the firm’s reason for being, employees must look inward and discover their own, personal sense of purpose, and they must connect personal purpose to the organization’s existential intent.

Microsoft’s leaders promote the importance of living a personal purpose at work. They provide opportunities with the help of coaches, online tools and even in-office exercises for employees to explore and communicate their own, personal mission and to articulate how that can coincide with the company’s purpose: “to empower every person and every organization on the planet to achieve more.”

The Takeaway

The world is full of leaders that pursue purpose superficially. As my research shows, those that go deep with it from the start enjoy a determining advantage. I hope my book inspires readers to fundamentally rethink why they and their companies do what they do, launching themselves on an adventure that is at once financially enriching, personally fulfilling, and socially beneficial.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

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