It has been mentioned and described often enough in management and economic literature, the dominant perspective on strategy is rational and masculine. It is based on analysis, numbers and models, it strives for the ideal strategy and considers the maximisation of competitiveness as the ultimate goal. The yardstick for success: profitability. Over the years, profitability has even become a goal in itself and strategy has become the best way to make more money. In quite a few publications, this is attributed to the far-reaching “financialization” of our society.
In this article, I would like to present a different view on the purpose of strategic thinking. A view in which the purpose of strategy is not profit maximisation but vitality. Strategic vitality. Vitality as in "the capacity to successfully live on, to successfully continue to exist". Often referred to in literature as Organisational Longevity.
A venture starts with an entrepreneurial reason for being.
Companies are born from an Idea. The idea of the entrepreneur. Call it "the entrepreneurial reason for being". This entrepreneurial reason for being, PURPOSE, has nothing to do with making money and profit. The majority of start-ups starts with a REASON, an entrepreneurial reason, a PURPOSE. It is the answer to the question: "Why am I starting, are we starting this business?" Simon Sinek calls this the WHY? That WHY of Sinek, or that PURPOSE of VIBRANT STRATEGY is much broader than purely economic. Usually, this PURPOSE is social, has a societal connotation and impact. It focuses on what the entrepreneur wants to add to this world. And that is rarely money. Money as in profit is the consequence of a good fulfilment or delivery of your PURPOSE, the consequence of a valuable execution of your "entrepreneurial reason for being". In addition, it is a means. A means to realise your PURPOSE, to give it shape and to keep it alive. But it is never as Milton Friedman claimed in the 1970s: "the sole purpose of an organisation".
So, a venture starts with a PURPOSE. An entrepreneur starts with a PURPOSE. By the way entrepreneurship is a nice word to think about in this context. Enterprise and entrepreneur, they imply an activity. In the box opposite, I dwell on it a little longer.
Excursion: Entrepreneurship has two meanings in the dictionary. They are an an extension of each other:
1. to take upon oneself,
2. to begin to do; = to execute.
Related concepts are: to dare, to embark, to tackle, to start, to begin, to be active, to dare, to set up.
An enterprise is defined in the same dictionary as: something you undertake. Both are action-oriented concepts. They have a high degree of initiative and taking initiative in them. A high degree of starting, initiating and daring.
Both are old concepts. In the 16th century, the Netherlands and the United Kingdom were full of enterprises. The V.O.C. being one of the most well-known amongst them as is Lloyd’s of London.
Managing is a different concept entirely. Managing has the following definition: to lead, to control. And a manager is someone with an executive function. That is a completely different perspective. Do not misunderstand me, I do not want to imply that a manager does undertake anything. They are often very busy and make long days but with a different approach than an entrepreneur. Managing and manager are much more recent concepts. I even think that at the V.O.C. or in the ealy days of Lloyd’s of London they had never even heard of a “manager”.
You may ask yourself since when and why there are so many managers and so few entrepreneurs in our companies. When and why did we start putting the fate of our companies in the hands of managers who manage instead of entrepreneurs who undertake?
Back to PURPOSE. A venture starts with an “entrepreneurial reason for being”, a PURPOSE. And that PURPOSE goes beyond "profit for the shareholder". A nice example in this context is the German start-up NU Company. NU is the initiative of Mathias, Christian and Thomas. They produce amongst others. Energy Bars and Drinks. So far nothing special. But these three entrepreneurs started their company with only one goal: “to contribute to a liveable world in a tasty way”. Their objective: to plant one billion trees by 2030. How? By planting a tree for every energy bar and every drink they sell. Or to put it in their own words:
"We want every beep at the checkout to become a signal for a healthier and greener world."
Comparably impressive is the PURPOSE of SHARE. A company with a distinct PURPOSE that is not about making money but about giving money away. Or as they put it:
Sharing is our Mission
share is based on the 1 + 1 principle. And it's as simple as its name: with every purchase of a product, you do something good for yourself and help someone in need at the same time. Finally, share without giving!
SHARE produces Energy bars, just like NU Company. Besides that, they sell mineral water and hygiene products. For every energy bar they sell they spend a meal for someone who has difficulty providing for himself. For every bottle of mineral water, they sell they provide someone with drinking water for a day. One of the founders, Sebastian Stricker, has a background at the United Nations World Food Program. Many SHARE projects are therefore in South America, Africa and Asia.
If PURPOSE is at the core of every entrepreneurial venture and is such a central concept in VIBRANT STRATEGY, what then is the purpose of strategy formulation, of strategic thinking from a VIBRANT perspective? For if, contrary to the popular belief, profit maximisation is not the sole purpose of an organisation (and never has been), then what is the benchmark, the objective of the strategy process in a more dynamic perspective?
STRATEGIC VITALITY is the sole objective of strategic thinking
In the dynamic perspective, the goal which strategic thinking serves is not profit or return, within VIBRANT STRATEGY vitality, strategic vitality is the goal of the strategy process and of strategic thinking. Vitality to be understood as “the vitality to successfully continue to exist”. The vitality to keep working on the realisation of the PURPOSE in a changing context. Organisational longevity.
Excursion: STRATEGIC VITALITY: the power to continuously adapt and improve the organisation, products and services so that a company continues to successfully fulfil its PURPOSE as its context changes over time.
Strategic vitality is the ability to constantly give new relevant substance to the original “entrepreneurial reason for being”, the realisation of the original PURPOSE. Since form and execution become outdated over time, companies have to innovate continuously to keep their PURPOSE, their "entrepreneurial reason for being" powerful and vital in a changing context. Strategic vitality is the ability to do just that.
Here is an example: NIKE. Once founded by a number of young American athletic talents. Students at the University of Oregon who came to the conclusion that their bodies were capable of greater performance but that the gear they used (shoes and clothing, they were runners) stood in the way of this superior performance. For the sake of sports excellence, they decided to develop their own shoes. Shoes that would allow them to perform better. The rest is history.
NIKE is still all about sports excellence but its current products are in many ways incomparable with the ones that started it all. And while all efforts were focused on improving Phil Knight's performance in the early years, more recently, a NIKE team has been working closely with Kenyan marathon runner Eliud Kipchoge in an attempt to break the 2-hour barrier at the marathon. 12 October 2019 was the day, and together with a team of 42 pacers (runners who help him maintain tempo), Eliud Kipchoge was the first to break the magic barrier of 2 hours. SPORTS EXCELLENCE.
Over the years, NIKE as a company has changed tremendously. Assortments, lines, technologies, R&D, in nothing does NIKE resemble the start-up of the young athletes. But one thing has not changed: its PURPOSE, SPORTS EXCELLENCE. Everything is still focused on that. And its strategic vitality allows it to constantly find new, exciting and powerful ways to realise its PURPOSE.
Profit is the result of goof strategy, not the objective
The purpose of strategy in a dynamic perspective is therefore to keep the original idea, the “entrepreneurial reason for being” alive. The world is constantly changing, strategy and execution become dated over time and so companies must constantly renew themselves. Not as an end in itself or for a narrow economic objective, but aimed at the lasting powerful interpretation, execution and exercise of its original PURPOSE. Strategic vitality is the basis of this permanent renewal. Strategic vitality is the objective of strategic thinking within VIBRANT STRATEGY. And rest assured, profits will be the reward that falls your way.
1: See K. van der Heijden, R. ten Bos, D van der Leest & F. Roozen
2: See amongst others Marjolein Quene, Voorbij de Management maatschappij, 2018
3: See for example Arie de Geus, The Living Organisation, of Peter Senge The Fifth Discipline
4: Simon Sinek, Start with WHY?, 2009