Professor Ranjay Gulati, whose research looks at how the most resilient companies approach growth and profitability, chaired the Advanced Management Program at HBS for many years. Over time, more and more of his students challenged the scope of his thinking: You can’t talk about success and strategy without also understanding purpose, they said. Gulati was skeptical. But he decided to explore it, and in conversations with leaders like Blackrock CEO Larry Fink and Microsoft’s Satya Nadella, Gulati discovered that for many organizations, a deep sense of purpose was their key to growth. Humans are wired to find meaning in what we do, and tapping into that can have a transformative effect on an organization—and the people who work there.

Here, in a conversation with Associate Editor Jen Flint, Gulati talks about some of the learnings captured in his recent book, Deep Purpose: The Heart and Soul of High Performance Companies.

Photo by Evgenia Eliseeva

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Flint: Why don't we start by talking about what you mean by deep purpose and how it’s different from the mission statements and the kinds of corporate purposes that we hear a lot about in the news?

Gulati: You know, if you told me five years ago, “Ranjay, you're going to write a book about purpose,” I would've said you're crazy. Not a chance. For me, purpose was like mission statements. You know, it’s wallpaper. And who listens and reads mission statements? It’s like something out there and it's kind of just a checkbox. And I was on the hunt to understand unlocking growth in companies. That was the question I’d been studying for much of my career. And I’ve always bucketed understanding growth into two buckets: building the right strategy and having an execution plan to get the strategy done.

And so much of my thinking was hovering around these two topics. And I suddenly discovered a subset of companies where they would talk about purpose as the big unlock for growth, that without it, they couldn't have accomplished any of what they were trying to do. It is how they chose to be in everything they did. It informed their strategy, it informed their organizational practices, it informed their culture and hiring, it really permeated the organization in two significant ways.

The first was purpose was like a compass, it was an orienting scheme. What business do we want to be in? What's our long term vision for why we are here? Just like ancient mariners used compasses to kind of direct themselves, purpose was an orienting scheme. The second was: Purpose became like an operating system. It’s the way organizations worked, how people showed up to work, how customers perceived the organization, how your ecosystems of partners related to you. It isn’t about having a statement and a slogan and using it as a rallying cry or a convenient statement. It was much deeper than that.

Flint:  What does it really look like? How do you know it when you're seeing it?

Gulati: I think the way you come to understand purpose is when you see an organization that starts from a place of intention, clarity about why are we here. Now, when you think about the purpose itself, purpose has several components to it. So when you ask a company, tell me why you’re here? You have to understand, first of all, don't get confused by purpose statements. Theranos had one. Purdue Pharmaceutical had one.

Facebook pulled one out in 2016 when they were in trouble. And you read those statements and you’re like, you gotta be kidding me. So the first thing is it has goals, commercial and social goals probably, but definitely commercial too. Businesses are here to make money. So we have ambitious goals that are energizing to everybody. It also has a sense of duties that we here have duties to our customers, to our communities, to our employees and to the planet, to society at large, which means they inherently are thinking long-term.

And when you imagine your business for the long-term, you naturally think of different stakeholders. So this idea that multi-stakeholder is somehow bad for business, it’s not, because if you're thinking long-term, you’re thinking about your customers, you’re thinking about your employees, you’re thinking about your communities and you’re thinking about the planet. It’s palpable. You can see how they talk about themselves. You can see how they envision their strategy. You can see how employees show up to work. You see how the brand and the organization is perceived by its customers and partners. And all those things conspire to elevate performance. And I want to repeat financial and social performance— purpose is not a tax on business. I think there’s a lot of cynicism because you see all these companies that kind of pretend purpose, so you say maybe this is just a checkbox. But honestly, I think doing purpose is hard work. It’s not some kind of change management exercise. You can’t just launch a purpose and then cascade it out into the organization. People have to buy into it. And to do that is really hard work. And the payoffs take time. And it involves fundamental change. It also involves the leaders changing themselves. I think it’s hard work, but my hope is to convince people that it’s worth the effort.

Flint: Do you think all businesses should have a deep purpose, should do this work of engaging in these questions to figure out their deep purpose? And where does it come from?

Gulati: One of the questions people ask is that, well, maybe if I’m a startup and I’m just starting out, I just got to get my business idea together and I need to get funding and then we’ll think about it. But think about it. Every entrepreneur has thought about having an elevator pitch. What's your elevator pitch? Is it: I have a cute widget. Or I have a cute app I want to share with you. Or we’re going to transform the way customers buy and sell, we think we can solve a real problem, and it’s going to be uplifting for everybody.

I think people want to be inspired. You have a better elevator pitch. How are you going to convince people to come and join you? Who do you want to have come and join you? It’s never too early to have a purpose. Having said that, what I’ve also observed is that even the ones that maybe had a purpose when they began, there is something I would call purpose decay. It’s not something you can do once and check the box. And I saw in companies like Boeing or even Johnson & Johnson, which were famous for having a strong purpose orientation, that how, over time, they kind of started to lose it. They lost their edge, they lost their thinking about purpose. It became wallpaper. So it’s one of those things you have to constantly refresh. And, and I think it's not just only the CEO’s job, though CEOs play a critical role, I think it’s everybody’s job. But how do we make it real? That I think is the heart of the challenge that I try to talk about in the book.

Flint: You talk about leadership. Let’s talk more about what is being asked of leaders in these companies. Your book describes a process that goes beyond storytelling, and you say that deep purpose leaders craft something that you call a big story, that evokes values in a way that connects a person’s day-to-day work to the values or the purpose of the organization. And you say that this is a fundamental task of leadership in a deep purpose company. What is this transformation like for leaders and what does it mean for the profile of leadership pursuing this kind of deep purpose?

Gulati: It’s a great question. And I’d like to kind of borrow from the late Jim March, who was a professor at Stanford. He made an interesting distinction between leaders as plumbers and poets. The idea was that when we are plumbers, we are focused on strategy, focused on implementation plan, we’re focused on kind of the financial model, we’re focused on kind of driving energy into the organization in some way or the other. That’s plumbing. Yes, leaders need to be plumbers, right? You’ve got to get everything working, you got to figure out the financial and the economic model and the HR model and getting it all working.

But he said leaders need to also be poets. Now, what is a poet? A poet is somebody who creates a vision, a beautiful view of what the world could be, and tries to get everyone personally engaged with that vision. I think it’s important for leaders to recognize that, yes, you need to do a lot of time on plumbing, but don’t forget the job of a poet. In that context, then I try to unpack what is a poet as a leader. And one of the pieces I talk about is how they build a grand narrative about why are we here and make it personal for people.

You see, part of the challenge I think that has happened in organizations is we have progressively over time changed the nature of organizations into what economists like to call a nexus of contracts. Everybody is in a contractual relationship with the organization. And we call it, “pay for performance.” I like to call it the coin-operated monkey theory of management, that all of us people, our employees, are coin-operated monkeys. You put a coin in us, we’ll do a dance for you. You put two coins and I’ll do two dances for you. And if the dance is fun and interesting, I’ll maybe do three for you, but we’re still monkeys.

And I think we've known this for 50 years or more—dismissed this idea that we are just mechanical automatons driven by only financial rewards. We know that. But somehow in our practice of organizing and building organizations, we have regressed into that model. We talk about kind of non-financial rewards and kind of put out some nice benefits for you. And we’ll give you leave of absence, we’ll engage in parental leave, we’ll do this and the other. But we haven’t understood that human beings, we are also wired to want to be inspired. We want to find meaning in what we do. But then we said, Let’s compartmentalize it. Work, life. Work is work, and life is life. So if you want to find meaning and purpose in what you’re doing, well find it after 5:00 pm or on the weekend, Saturday, Sunday.

I think people are now looking for more integrated lives. We want to have more coherence in our lives. And so as a leader, we have to ask ourselves, how can I connect our organization’s purpose and make it real for people and make them feel it’s part of their personal purpose as well? It taps into something else inside a human being. And I think that’s a very important connection that I think can have a transformative effect on the organization and also on the people who work there.

Flint: I know you’ve been having a lot of discussions with people since releasing this book—you’ve been talking to CEOs, you’ve been talking to students. What are you learning from the questions that come back to you about your book? What are the questions that are on the minds of leaders and, and people who are earlier in their journey in figuring out how to integrate this meaning and connection into their work and careers?

Gulati: It’s interesting, a big section of my book talks about organizational purpose and how do you build the purpose into the organization. And I have one section in the book that talks about personal purpose and how people are able to connect their personal life purpose to the organization’s purpose. And people have, a number of them, zeroed in on that section of my book. And it was one of the most interesting findings I had. And it came out of an observation I had that not all, but many of these companies would actually encourage employees to think about their personal purpose, their life purpose. And I was like, well, this is a bit intrusive, why are you poking your nose in people’s personal affairs here?

And I came to realize that the idea here was that you can’t get people in an organization to buy into some company slogan if they themselves are not thinking of their own purpose. And, by the way, if I’m a caring leader, I know that when human beings have a stronger personal purpose orientation, they are happier, more fulfilled, they’re healthier, less likely to have a heart attack. And, by the way, they become more receptive to thinking about an organization’s purpose and how maybe they can live their purpose partially through work.

I hadn’t thought about that. And I saw this in a pretty vivid way, actually first at the Seattle Seahawks, the football team in Seattle, with Coach Pete Carroll talking about it and trying to get employees to think about their personal purpose. But then I saw it also vividly at Microsoft, where Kathleen Hogan, the CHRO, said to me, she says, “We encourage our employees to really think hard about their own purpose.” They have a whole purpose activation exercise they make them go through. And her take was, you don't really work for Microsoft until Microsoft works for you. And then I saw it at KPMG, where they asked every employee to fill out an index card, which said, “Why do I come to work?” And they had to write it and put it on the wall. I discovered that organizations are becoming much more proactive in helping employees find their own personal life purpose, and then think of a way to connect the purpose of the organization with themselves. And if it doesn't connect, then maybe the fit isn’t there.

Now, you may say, well, I don't believe in that. And then you’re going to bring in transactional people who will come there and they will think of work as a nexus of contracts. So I think the labor market will have a sorting system in place. There are going to be those of us who think of work as a transaction and nothing more. And there are going to be organizations that are going to say, come work for me as a transaction, and that’s it. Others will come in and say, How are you thinking about your purpose? And can you live your purpose through work here?

Flint: I know you started out as a skeptic years ago about this idea of purpose. Did this exercise of writing the book change your own notion of your own personal purpose?

Ranjay: Absolutely. It really got me to clarify for myself what was my purpose, and also to ask myself to what degree was my own purpose in some way aligned with my organization’s purpose. And I feel really fortunate and lucky to be working in an organization where the purpose alignment is significant. We educate leaders who make a difference in the world. And that has deep personal resonance for me. It changes the way I feel I show up at work, where work doesn’t feel like work. So, yes, the book has been very transformational for me. But it’s also been very inspirational for me, because I had the opportunity to interact with leaders and others who really had elevated their thinking, taken themselves and their organizations into a very different place.

Skydeck is produced by the External Relations Department at Harvard Business School. It is available on iTunes or wherever you get your favorite podcast. For more information or to find archived episodes, visit alumni.hbs.edu/skydeck.

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