Behind the moral DNA of a great enterprise

Listen to this article

00:00
00:00

Purpose
The Starting Point of Great Companies
By Nikos Mourkogiannis
Palgrave Macmillan $27.95

The relative merits of short- and long-term approaches to running companies have been argued over for many years. Which is best: to focus on operational effectiveness and immediate financial returns or on longer-term strategic positioning? Neither, says consultant and author Nikos Mourkogiannis, in Purpose.

What really matters is the even longer-term quality of purpose, which “is like your moral DNA. It’s what you believe without having to think . . . purpose becomes the moral engine of a company, the source of its energy.”

Thus Mourkogiannis flatly contradicts Milton Freidman’s assertion that profit maximisation should itself be the purpose of a company. Only a clear – even idealistic – purpose, he says, can provide the direction, unity and mutual respect that binds a company to itself and its customers and creates a truly unique and exciting brand.

Mourkogiannis’s early years shaped his outlook and instilled a lifelong quest for purpose. Born and raised in Greece during a vicious civil war, a horrific lesson came early, at the age of six. Communist insurgents visited his family’s village and shot and killed 52 women who refused to denounce the author’s father.

After studies at Athens Law School and Harvard, a loathing of communism and fear for his country’s future drove Mourkogiannis to work for Westinghouse’s defence division and, later, General Dynamics. Along the way he helped mastermind the sale of F-16 attack aircraft to the Greek government during the 1980s.

Then the Berlin Wall fell and communism died. Mour-kogiannis returned to Harvard to study business strategy and joined Monitor Company, the consulting firm founded by Michael Porter and Mark Fuller, Harvard Business School professors.

Since then, consulting experience with hundreds
of chief executives has
convinced him that a
leadership-driven grand purpose is what distinguishes great companies. Purpose can be created only by leaders who take the time, possess the intellect and marshal the courage to posit and defend an overarching ideal, whatever the risks.

One of the most interesting themes in the book is the author’s delineation of four essential kinds of purpose and his descriptions of the leaders and companies that have profited from them.

The first is the purpose of discovery, which drives innovation and technological breakthroughs. IBM, Sony and Intel have thrived because of their quest for discovery. “A technical lead,” Mourkogiannis says, “can create a near monopoly, which generates high profits, and which in turn pays . . . to maintain the lead.”

The second kind of purpose is excellence, inspiring leaders and companies to offer the best products and service possible, such as Berkshire Hathaway, Apple and BMW. In Warren Buffet’s case at Berkshire Hathaway, excellence is manifest in the commitment to invest every penny of shareholders’ money as if it were his own. With Steve Jobs and Apple, the purpose is to provide peerless ease of access to network-based services via iMac, iPod and now iPhone.

Third is the purpose of altruism, or a wish to be genuinely helpful to customers, as with Wal-Mart, Marriott and Body Shop. But here is where the author’s arguments start to slip. While we are told that Sam Walton was driven by a burning desire to offer customers the lowest prices, that hardly seems altruistic, especially in the light of the myriad complaints by citizens of US towns whose high streets have been wrecked by Wal-Mart’s predatory pricing.

Still, just about so far so good. It’s Mourkogiannis’s fourth category, heroism, that appears startling and ill-defined. He cites Ford, Microsoft and ExxonMobil as championed by heroic leaders. Given Ford’s decline in the face of Japanese competitors that build better cars, and the lawsuits levelled at Microsoft and ExxonMobil for everything from unfair competition to environmental damage, these seem poor examples of heroism.

The author also tends to ramble misguidedly into the realm of philosophy in digressions that simply look pretentious.

Still, the book is rarely dull and makes some re­freshing points about the value of integrity and having a genuine vision of one’s business. And it offers practical guidelines on how senior executives can identify and promote a sense of purpose.

While a clear purpose defines most successful start-ups, it is harder to introduce to older companies that have been adrift for years. In order for business leaders to identify a purpose, says the author, it is crucial “to feel as deeply as you think – if you are uncomfortable with feelings or hostile to information you get from your gut, purpose is going to be a problem for you”.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.