Of the few things that can clearly be distinguished as being purely in the leadership realm – that is to say, something that management cannot do – is the establishment of the purpose of an organization. There are valuable things that managers can do with respect to purpose in an organization, but they cannot legitimately decide what it will be.
Purpose is the very seed of an organization. It is the impulse that causes it to form and begin to grow. It is an idea, an aim, that attracts support of all kinds, from capital to labor to business relationships. Moreover, it implicitly provides most of what is necessary for the initial organizational structure itself, as well as offering guidance regarding everything else influencing that, and future planning and action, from strategy to administration.
Management cannot do this. Managers are hired to make organizations accomplish the purposes of their owners. They cannot legitimately determine what that purpose is, themselves. To the extent that they do this, whether dual-hatted as chairs of their boards or not, they undermine the fundamental integrity of the organization itself, by weakening the fiduciary tenets upon which it is founded. We have discussed this elsewhere.
For the present, it is enough to say that purpose is established by owners. When these owners themselves found and run (rather than simply fund and contract out the management of) their companies, they can be referred to as entrepreneurs. Indeed, they can probably be legitimately called entrepreneurial leaders.
But it is worth noting that this otherwise awful term has been developed by gurus looking for a new niche to spur non-owner executives (never mind stock awards and options) to behave like entrepreneurs, or to adopt the entrepreneurial mindset in directing the companies they manage. This is, sadly, a widely accepted idea, and so it is important here to emphasize that purpose can only initially come from, or later be modified by, owners – no one else properly has that authority.
Can you imagine starting a company to build a new kind of widget, hiring a management team to run it, only later to find out that your CEO, spurred by training as an “entrepreneurial leader,” has determined that he or she has to keep ahead of the competition by modifying, maybe even beyond recognition, the purpose for which you funded the firm?
If you simply yield passively to this, abandoning your purpose for promises of higher returns on your investment, then there is not really any entrepreneurial leadership going on there anymore – not by you and not by your CEO. There is no real business purpose, strictly speaking, for the investment, either. You might as well go to Atlantic City – or put your money in the stock market and hope for the best.
So, purpose is clearly a leadership function, and one that cannot be performed by managers. But the only “leaders” it can be legitimately performed by are true owners (not hired managers fig-leafed with a few shares or options).
Okay, there’s one in the leadership column, but not necessarily in the generic “leader” column. Next we’ll look at a related item: vision. Please do stop back.
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6 Comments
Jim - Great article as usual. Thanks for the link to HR World’s Top 100 list…there’s some excellent blogs linked from there.
Interesting article, I was surprised by your approach, and ponder how your view may affect a leader in a business setting struggling with what delegation may look like.
As a leader is required to delegate, but also to provide a framework that guides that delegation
However very thought provoking
I kept struggling with commenting on this article. I feel as if there should be an ability for managers at levels below the owner to set lesser purposes, but every time I came up with an example, it seemed as if it that “purpose” was more of a way to carry out the higher purpose, and not a purpose in and of itself.
I also left the post wondering how many owners really set a purpose and not just a plan to generate return on an investment. In that case, would it be legitimate for others within the company to set a purpose relating to the plan?
Hi Eric,
The list is excellent, isn’t it? I’m still going through it identifying more sites for my daily reading list.
Thanks for stopping by and for your kind comments!
Hello Ian,
Thank you for connecting this general topic to the key managerial duty of delegation. You used the need to establish a frame of reference within which the delegation is made, understood, and guided to make that connection. This is a wonderful way to view the process of delegation and its place in the wider enterprise.
I think a vital issue additional issue here is organizational integrity, or legitimacy. This, obviously, will have an influence on the effectiveness of the general management of an organization, including the means of expanding the reach of that management through delegation.
At this point in the current discussion, then, to keep your connection of it with delegation in perspective, perhaps we could look at what we’re doing as discussing the legitimate foundation or establishment of that framework you referred to, and the role in its development of leadership or management, together with their relationship to each other.
I hope you’ll continue to visit this topic as it unfolds, and offer your thoughts.
Thanks again for your visit!
Hi Beth,
You’ve touched on some of the key factors behind why I’m doing this series right now. One thing I try to combat is the notion - most widely spread in publicly held companies in the US - that the manager, or more specifically the CEO, is the company, and has the authority to establish - or change - even the fundamental purpose of an organization. This, it seems to me, inevitably undermines the fiduciary integrity of an enterprise. The resulting weaknesses can remain benign for a long time, they can even be altogether concealed by temporary or apparent success - but they are there, and they can only manifest at some point, as they so often do.
But presuming that error isn’t made, then, as you ask, what is there for managers to do? You are right that their elaboration of the fundamental purpose of the endeavor into subordinate goals is a key role of the manager, as is continuing to examine, understand, elaborate, and communicate that fundamental purpose.
But your reference to owners whose real purpose is not a business aim as we are discussing it here, but an investment goal, a return on their money, points to a real problem. Unfortunately, it is not altogether uncommon; even when owners nominally state a purpose, they may abandon it at the first proposal of an alternative and higher-profit business plan.
In such cases it can certainly be argued that someone needs to provide an organizational purpose just to hold things together, and if the owners don’t have one, then perhaps managers simply need to step in. It also describes, in many ways, the de-facto condition of many anonymously owned public companies.
But in this case it is a stop-gap, insufficient to address a deeper problem. When purpose and ownership are separated like this, organizational drift is the least that can be feared. Sadly, the landscape is littered with much worse.
I should probably have made a post of this response - thanks for your thoughtful comments! I hope you, too, will continue your visits during this discussion.
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